Categorized | Audits, Featured Stories

Ex-RTD GM’s Pay Causes Ire

Cal Marsella

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By Kristin Pazulski, DENVER DAILY NEWS

Lawmakers were appalled at the salary of former Regional Transportation District General Manager Cal Marsella, who received an annual salary of $295,300 in addition to $2.9 million in pensions over 14 years, while taxpayers voted to pay for the FasTracks program with an increased transit sales tax.

The total of Marsella’s compensation was confirmed by an audit released by the Colorado General Assembly’s Legislative Audit Committee Tuesday.

“I was aware of some of the elements of his compensation but was really surprised at the total,” said Holman Carter, president of the Amalgamated Transit Union, Local 1001 (ATU 1001), which represents RTD transit workers.

Noel Busck, RTD board member and chair of the General Manager Oversight & Performance Management Committee, said the board has “corrected” the practices it used with Marsella. The board hired new General Manager Phil Washington at 57 percent of the former general manager’s 2009 annual compensation, including a benefits package that “complies with every salaried employee at RTD,” he added.

“Whatever the criteria was at that time doesn’t seem appropriate today,” Busck said, referring to when Marsella was given the compensation increases that spurred the audit last May.

Compounding concerns over Marsella’s compensation was that while his pension and salary were increasing, commuters were asked to pay for a multi-billion transit expansion program and transit workers have faced a two-year salary freeze.

FasTracks, the RTD transit expansion plan, will be partially funded by a .4 percent sales tax increase that voters approved in 2004.

And they might be asked to give more.

There is still a $2.4 billion gap in long-term costs versus projected revenue through 2017, according to Scott Reed, RTD spokesperson. Reed said the board has not determined how that gap will be filled, but are looking to get the maximum amount of federal funding and are exploring public/private partnerships and additional sales tax increases.

In addition, drivers and other RTD workers have been operating on a salary freeze since 2009, and it is unknown if they will see it lifted in 2011, Reed said.

Marsella’s clean-up

Marsella, who resigned in July 2009, made a base salary of about $295,300 in 2009, with compensation and benefits that were “significantly more generous than those available to the District’s other salaried employees,” according to the audit.

Marsella’s base salary and “generous” benefits amounted to a total compensation of $725,612 in 2009, read the state auditor’s press release.

The board’s research when hiring Washington revealed how much more Marsella was paid compared to general managers at 18 other transit agencies in 2009.

The 2009 base salary paid to these general managers ranged from $135,000 to $310,000, with a median base salary of about $245,500 per year, according to the audit. Marsala’s base salary was about $50,000 more than the median base salary.

The audit criticized the board for not conducting a similar comparison when it increased Marsella’s compensation. The board only looked at five other agencies when determining Marsella’s compensation, the report read, and the board could not explain the choice of these five agencies.

“The board cannot demonstrate to taxpayers that the terms of the employment agreements [entered into with Marsella] were reasonable or appropriate,” read the auditor’s office press release.

Marsella’s benefits package was another concern.

His benefits included an accelerated pension plan that provided Marsella with two-and-a-half years worth of service for each year he was at RTD, beginning in 2001. If the former general manager had stayed at RTD until February 2010, he would have received about $1.7 million more in retirement money because of this accelerated plan, the audit noted.

But Marsella was not hurt by leaving in July.

Over the entire 14 years of his work with RTD, Marsella earned $2.9 million in pension benefits, which he chose at his departure in July 2009 to accept in a lump sum. Reed confirmed that all this money has been given to Marsella.

“Marsella’s package was exuberant,” said Jon Caldara, a former RTD board member (he left in 1998) and president of the Golden-based libertarian think tank The Independence Institute. “If it was called the Cadillac of packages, that would be an understatement.”

The board also failed to accurately calculate the full cost of the accelerated pension plan, the audit also noted. At the time the pension was approved, the board had not yet received the cost estimate. And when they did a few months after the approval, the estimate had been calculated using “outdated and incomplete salary information,” according to the audit.

The report also noted that Marsella was not given a comprehensive performance review since 2000, despite receiving raises and bonuses after 2000.

Turning a new leaf?

In 2010, the board’s compensation practices with Marsella seem to have changed.

According to Reed, the board agreed upon a more reasonable compensation package for the new general manager.

Washington, whose package was agreed upon earlier this month, will receive a base salary of $275,000 for 2010.

His benefits align with all RTD employee’ benefit packages, meaning he receives vacation and sick days according to his years of service and his pension will be between 7 and 9 percent of his salary, which, according to the contract, are the same as salaried RTD employees.

His base salary combined with his benefits package add up to a total annual compensation of $306,449 in 2010. He is allowed a 5 percent performance-based raise each year, which, if received, will lead to a maximum of $346,816 in compensation in 2012. Reed said the raise is not guaranteed, but he could not confirm if Washington would not be given a raise, even if current salary freezes continued into 2011.

In a comparison, Washington will receive $90,000 less in pension funds this year than Marsella would have received in 2009, according to a comparison made by Bondi & Co. certified public accountants and provided by RTD.

Sen. Lois Tochtrop, D-Thornton, who requested the audit in May 2009, said the board increased Marsella’s compensation to keep him at RTD, a decision that she said was misguided.

“Nobody is indispensable,” said Tochtrop. “If he had done such a great job, we would not be underfunded for FasTracks.”

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