If the city of Santa Ana would decide to fire longtime City Manager David Ream, his severance package could be worth at least $524,544 — two years’ salary — and possibly more, according to his contract with the city.
Ream’s severance would be as high as $786,816 if he were to be fired without cause right after his contract renewal date, which he said is scheduled for February.
Ream was appointed city manager in 1986, and since 1989 has worked under an annually renewed, three-year agreement term. His severance package calls for a salary payout equal to the rest of his contract, which doesn’t dip below the two-year mark because of a city charter provision mandating annual city manager reviews.
If Ream were to be fired for cause (for such reasons as personal conduct, legal or conflict of interest) he would receive three months’ severance, according to his contract.
No other big city manager in Orange County has a severance clause equal to Ream’s, mainly due to a 1993 change in state law that limits public employee severance payouts to 18 months’ pay.
There is no reason to believe right now that Ream is in danger of being fired. And he indicated to a reporter that given the advanced stage of his career, he would be far more likely to retire than be terminated and receive a severance.
Yet his severance package is another example of the high levels of compensation top-tier city officials often receive unbeknownst to the public. City manager compensation became one of the top local government stories of the year after revelations that Bell City Administrator Robert Rizzo, who was arrested two weeks ago on corruption charges, made nearly $800,000 annually.
And before the Bell story broke, Laguna Hills City Council candidate Barbara Kogerman was making news with her Orange County city manager compensation report, which revealed that Laguna Hills City Manager Bruce Channing topped all local city managers with an annual compensation of $460,809.
Ream was also high on that compensation list, making more in salary alone, according to Kogerman’s report, than all other local city managers except San Juan Capistrano’s Joe Tait, who makes $324,000 for being both city manager and utilities director.
Ream has done especially well salary-wise in recent years. He acknowledged that from 2007 — the year the Great Recession began — to 2009 his salary went from $212,988 to $262,272, a 23 percent jump.
Meanwhile, the city has suffered through painful budget cutting — the Orange County Register reported in June that the city was facing possibly $21 million in cuts and had already cut services and laid off workers in past years.
Ream’s severance package did not shock Bob Stern, president of the Center for Governmental Studies. Stern said the payout is small compared with the size of the city budget. He also said someone like Ream might value reputation over a cash payout and might even negotiate down his buyout if the City Council wanted to fire him.
“Nothing is black and white,” Stern said.
When asked specifically about the severance package, Ream said his contract was modeled after the school district superintendent and chancellor contracts at the time. He also said that he is supportive of the state law’s limit, calling it “well within reason.”
Ream said the next city manager would not get such a generous severance package.
“I would think if we were going to recruit a new city manager, it would probably be nine months to a year,” Ream said.
But that would still be more than the severances city managers in other big Orange County cities — including Irvine, Huntington Beach and Anaheim — would receive. Those city managers would only receive six months’ salary, according to contract documents and public officials in those cities.
Huntington Beach City Manager Fred Wilson said he is satisfied with his six-month severance package.
“Is mine reasonable? Yes,” Wilson said. He added, “I think six months is fairly commonplace.”