The Palm Coast City Council on Tuesday is set to approve a contract with Matthew Morton, its new manager. Morton would have a base salary of $145,000 a year, or $30,000 less than the previous manager’s annual salary. But the contract also ensures that he would receive annual raises equivalent to whatever raise is awarded employees across the board–and that he would decide what those raises would be.
Morton, 44, would begin on April 8. The contract, still in draft form and subject to council members’ changes, is open-ended.
The council voted 3-2 at a special meeting last week to hire Morton. It then assigned Council member Bob Cuff, an attorney, to negotiate the contract with Morton, along with City Clerk Virginia Smith and City Attorney Bill Reischmann, negotiations done by phone and email. There was an invisible elephant in the negotiations, too: the memory of Jim Landon, the former city manager, whose negotiations with the 2007 council (whose members have long departed) set a new bar for excessive compensation for a local government official, and for a golden parachute: firing Landon last summer cost the council the equivalent of a year’s salary–and the substantial salary of $175,000, not including additional compensation. This council was intent on not repeating the give-away of the 2007 council, though it had help from state law, which has since restricted the breadth of severance packages.
Morton’s contract seemingly reflects the more cautious approach. But Morton is gaining a possibly lucrative advantage Landon did not have: “Annual adjustments provided to all other employees as part of the budget process that are not merit based shall be provided at the same percentage as all other employees of City Manager’s base salary,” his proposed contract reads. In plainer English, that means potentially yearly raises which, starting on an already considerable salary, would swell that salary far more rapidly than would those of rank-and-file employees, only a few of whom are in the six-figure range.
Landon’s raises were dependent on a council vote every time (“in its sole discretion,” as his contract read), which forced the council to justify the raises while also forcing the city manager to bring his request publicly to the council’s attention. The council is now sparing itself and Morton that responsibility, diminishing either the council’s or the manager’s public accountability for the raises.
The contract also sets up a conflict of interest, making the manager’s raises in part dependent on what the manager chooses to award himself: the manager, not the council, decides what annual raise to award employees, “as part of the budget process.” That means that under the current arrangement he will be responsible for deciding what raise he himself will receive, even though he is one of two council employees (the city attorney is the other. The attorney does not have that automatic-raise arrangement in his contract.)
The arrangement veils the manager’s fortunes behind those of the rank-and-file, employees hired under significantly different terms. The difference alone between a 2 percent raise and a 3 percent raise for a rank-and-file employee making $30,000 is $300. The difference for Morton will be $1,450, thus creating an incentive for larger raises. (A 2 percent raise would net $2,900 on a base salary of $145,000, a 3 percent raise would net $4,350. The following year, the raise would be based on the new salary, compounding each year.) Of course the council can knock down a proposed across-the-board raise for employees, but then it’s the council, not the manager, that’s made to look like the enforcer. By ensuring that the council alone awards the manager’s raises, as has been the case until now–as had been the case in the county until 2014, when then-manager Craig Coffey changed his contract’s terms to ensure yearly increases in line with the rank-and-file) the manager remains in whole a council employee.
Landon started at $155,000 a year, was quickly bumped to $164,000, and by February 2009 was at $169,000, where he remained until he got a raise to $175,600 in 2017, plus the promise of a 1 percent automatic annual raise, whatever the rank-and-file got. That made him the second-highest-paid public employee in the county (after County Attorney Al Hadeed). Landon was paid more than circuit court judges and state attorneys, $45,000 more than the governor, and $50,000 more than most local constitutional officers. That was before his additional compensation.
Landon had negotiated an additional annual contribution from the city to his retirement equivalent to 20 percent of his salary. Morton is getting a 13 percent contribution. Landon had negotiated a 5 percent contribution by the city to his deferred compensation plan. In Morton’s case, the city is providing a a 2 percent match, provided Morton puts in a minimum of 2 percent of his salary. Landon used to get $600 a month as an “automobile allowance.” Morton is getting $400. He’s also getting a $35 a month allowance for his cell phone, and $200 a year in equipment allowance. (Council members and Landon also got an electronics allowance.)
Morton gets the same health benefits that other employees do, though unlike other employees, all his premiums, including those of his dependents, will be paid for by the city. Landon participated in the same employee health plan and had all his premiums paid as well, but had a substantial additional benefit: participation in the Mayo Clinic Executive Health Program in Jacksonville, with the city paying all bills, which was not available to the rank-and-file.
Landon’s contract listed only personal leave. Morton’s lists vacation and sick leave separately. Landon was awarded 30 days of leave a year, and had to use a minimum of 10. Morton is awarded 27 combined days.
Part of the heavy cost of Landon’s golden parachute was the days of leave he’d accumulated, and that had to be paid as salary equivalent. He was eligible to accumulate up to 130 days, or half a year’s worth which, combined with his 26 weeks of severance pay, totaled a year’s pay. That heavy cost played a role in delaying the council’s decision to fire him, as several council members took a while to be willing to incur the cost.
State law since 2007 changed, limiting severance packages to 20 weeks of pay. That’s what Morton would get, if he were not fired for cause. The city would also pay him for up to 16 weeks of accrued vacation and sick leave, money it would still owe him if he resigned.
Morton’s contract calls for an annual evaluation. Landon’s did too, though he made it through most of his tenure in Palm Coast without an evaluation. On the other hand, Landon’s contract had tied his pay raises to those evaluations. Morton’s does not.
The city did not itself conduct a background check on Morton, leaving the job to Strategic Government Resources, the consultant it hired to conduct the search. FlaglerLive repeatedly requested SGR’s background checks through the city starting on March 13. It was provided the morning of March 19, minutes before Tuesday’s council meeting where Morton’s contract was to be approved. The background-check document, reflecting the city’s redactions of Morton’s addresses and birth date, is here.