East Lansing City Council voted unanimously on Tuesday night to give City Manager George Lahanas a new contract that runs until the end of June 2024.
The package is worth over $200,000 per year and comes with one-year severance payable if a future Council fails to offer Lahanas a renewal contract with “substantially similar compensation,” including in terms of benefits and severance.
The new contract was approved after two weeks of closed-door performance reviews between City Council and Lahanas. That included what Lahanas called a 360-degree review, which ELi reported consisted of a survey of 24 City employees Lahanas chose – chiefly top administrators whose own packages include benefits decided by Lahanas, such as assigned vehicles and car allowances.
Council members praised Lahanas on various points. Mayor Aaron Stephens said he felt he has had a “partner” in Lahanas. Mayor Pro Tem Gregg applauded Lahanas for his “level-headedness” during the pandemic, and Council member Dana Watson said she appreciated him.
Council member Lisa Babcock called his institutional memory very valuable and said she was impressed with his handling of racial equity and justice issues, and Ron Bacon said the City staff handles a lot of business on a shoestring.
Per the new contract, the next performance review for Lahanas will be May 31, 2022 – not until 20 months from now and after next year’s City Council election, when three seats will be up.
The new contract will pay Lahanas $167,000 annually for the first year, the same as his base pay in his most recent contract with the City.
The new contract includes an automatic annual increase of 1.75% beginning on July 1, 2021, bringing the salary to about $176,000 by July 1, 2023.
Other features of the contract include a $3,600 yearly car allowance along with payments for professional development, home internet service, a cell phone and computer, term life insurance worth three times Lahanas’s annual salary, and an annual contribution to his retirement equal to 10.5% of his salary.
If Lahanas retires after age 60 but before age 65, he and his family will receive health insurance from the City until he turns 65. If he dies before that period is up, his spouse continues to be covered. (Council has not responded to a question about Lahanas’s current age.)
If his employment is involuntarily terminated for any reason other than gross malfeasance or death, Lahanas will receive a severance package including one year of salary plus a full year of health, dental and life insurance coverage for him and his family.
“A contract period of four years seems excessive to me,” Hawk Nest neighborhood president Anne Hill told City Council during public comment. “A two-year contract seems more reasonable.”
Hill has been commenting fairly regularly on government spending in East Lansing, and on this topic, she told Council, “if the City should terminate the contract early, compensation and benefits for a full year seems way over the top. A package of six months seems more reasonable. I think this would be a more reasonable balance to strike when weighing a fair package yet protecting the taxpayers of East Lansing.”
But Bacon explained the severance pay in proportion to the 22 years Lahanas has worked for East Lansing — about 17 days of severance per year served — as justification for what, in a lot of professions, would be considered a large severance package.
Babcock, a lawyer and the lead negotiator for Council on the package, also noted the severance was out of the ordinary for certain jobs. But, she said, in a prior version of the City Manager contract, the same kind of severance structure existed. (An explanation of why that was at one point removed was not offered.)
Bacon suggested that the total package would make the job attractive to someone else when the day comes that East Lansing needs to find a new City Manager.
“He won’t be here forever,” Bacon said of Lahanas. “And the ability to attract top talent — these are the standards that need to be in place moving forward.”
Bacon also spoke of the need to formalize the review process by May 2022 – the date when the contract calls for the next review – by centering the review on measurable metrics. He referred to there having been in the past no formalized structure for review by City Council of Lahanas.
Bacon suggested that having such a formalized metric for performance would also help Lahanas if he sought a job elsewhere.
In his remarks, Mayor Aaron Stephens alluded to the claim made mid-resignation by Mayor Ruth Beier when she said that the remaining Council members were “coming for Lahanas next” after they had voted to terminate the City Attorney contract.
With a unanimous vote to keep him running East Lansing’s government day-to-day, that’s clearly not the case.
Apparently referring to the termination of City Attorney Tom Yeadon’s contract and the four-year extension of Lahanas’s contract, Stephens said the meeting yesterday marked a “turning of the page” for the City.
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