Retirement payment blasted by alderman
At least one member of the Detroit Lakes City Council is unhappy with the Utility Commission's decision to grant a $48,000 lump sum early retirement package to a longtime employee.
The commission voted 3-0 earlier this month to give the payment to wastewater foreman Mike Jahnke, 53, who has worked for the utilities department for 30 years.
Assuming that Jahnke would have worked until he was 62, the utilities department saved about $50,000, after the $48,000 payout, through the early retirement action, said Utilities Superintendent Curt Punt.
Here's how Punt figures the savings: The utilities department will save $28,000 in payroll costs by leaving Jahnke's position open until June, when the wastewater plant gets quite busy with sludge removal, anti-phosphorus grass cutting, and spray irrigation work.
It will save another $30,000 in health insurance benefits that Jahnke agreed to waive as part of his early retirement package.
And by replacing him with a less experienced employee, the department will save $23,300 in longevity pay through 2015, "at which time Mike would be 62 and we would anticipate his normal retirement," Punt wrote in a memo to the commission.
Jahnke earns 5 percent longevity pay on top of his current base wage of about $24 an hour. His replacement will not earn any longevity pay for five years, then will receive 1 percent a year through 2015.
"He was ready for a change, and the bottom line is, there was a savings to our utility," Punt said.
There's no formal policy on early retirements, but the utility department has granted two previous packages, one in 1994 and another in 2001, Punt said. Other employees who have requested early retirement packages have been turned down, because there would have been little or no saving to the utilities department, Punt said.
Alderman Ron Zeman said he is very unhappy about the retirement package, and about the way it was handled by Punt and the utilities commission.
The retirement package was on the Aug. 8 agenda for the utilities commission, which Zeman and several other aldermen routinely attend as non-voting city council representatives.
"They said it (details of the early retirement package) was privileged information, we don't have to give it to you or the public," Zeman said. "Then they went ahead and voted on it."
Details of the early retirement arrangement were only given to voting members -- Dixie Johnson, Duane Wething and George Van Dam.
"I said you can't vote on this without telling us what it is," Zeman added, "but they went ahead and pushed it through."
Zeman said he talked to City Administrator Rich Grabow and Mayor Larry Buboltz, complaining about the way the matter was handled.
The issue was revisited at the Aug. 17 public utilities meeting, where "the intention was to get Jahnke to rescind his signature," Zeman said, "but he went and got himself a lawyer, Lynn Hummel, who said 'we've got a legal, binding contract, and I'm here to make sure it stays a legal contract.'"
Zeman said Punt was apologetic about the way the matter had been handled, and Johnson told him there was nothing in Jahnke's contract that provided for early retirement.
"I didn't like the process. I question the savings," Zeman said. "I think this employee was going to leave anyway ... I question why we're doing these compensation packages, it's a lot of money. We just raised people's rates, apparently they have money to give away."
Punt said the secrecy prior to the vote was designed to protect employee privacy.
"When dealing with people, it's best to keep it as confidential as possible," he said. "Not that we're trying to hide anything."
The early retirement package will not set a precedent for the utilities department, he added, because "if it doesn't create a savings for our utility, we don't do it. We don't just create these incentives to help people out, it has to benefit our utility, that's the bottom line, and that's what we did."