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With Anchorage mayoral term ending, Sullivan signed off on severance pay

  • Author: Devin Kelly
  • Updated: September 28, 2016
  • Published November 22, 2015

Before he left office June 30, former Anchorage Mayor Dan Sullivan rewarded two of his top executives with severance pay even though they should have had no expectation that Sullivan, facing a term limit, would have stayed in office any longer and kept them in their jobs.

The severance pay, usually reserved for sensitive firings or abrupt departures, amounted to just under $10,000 for the two officials, Sullivan chief of staff Larry Baker and employee relations director Nancy Usera. Both were making more than $120,000 in salary plus benefits.

Sullivan described the severance pay as a bonus for two hardworking employees. But experts said severance pay should be reserved for people who expected to stay in their jobs, not for those who resigned because their boss had to leave office.

Usera, a former state labor commissioner, was earning about $130,458 in annual salary and a $10,241 benefits package as a temporary employee. She received two weeks' worth of severance pay, or $5,018, according to data provided by the city's employee relations department.

Baker was earning about $121,493 in salary, plus a $59,358 benefits package. He also received two weeks severance, or $4,673.

No other executives received severance pay, according to city records.

The issue arose in October, when Anchorage Assembly members were questioning the $125,008 salary of Susanne Fleek-Green, chief of staff to Sullivan's successor, Mayor Ethan Berkowitz.

Sullivan did not return calls seeking comment, but answered text messages to say Usera and Baker earned the extra pay.

"The severance pay rewards extraordinary service that includes working for months without pay (Larry) and leaving her home and a comfortable retirement in Arizona (Nancy) to help the city out of the financial mess we were in," Sullivan wrote. "And (...) working many hours of overtime on the nine successfully negotiated labor contracts."

Sullivan did not say whether such service was built into their salaries, but he called the two executives "key players" in developing policies that he said saved tens of millions of dollars for taxpayers.

"Their work resulted in significant benefit for the city," Sullivan said.

In late 2010, Sullivan signed a policy that allowed employees in all city agencies to receive severance pay. The policy took effect Jan. 1, 2011, according to a copy of the policy provided to Alaska Dispatch News.

The idea was to give the city the option of awarding severance in sensitive situations where employees did not or could not remain at work, said Karen Norsworthy, a records and employee classification manager in the city's employee relations department.

Reasons for laying off an employee might include budget cuts, or the city losing grant funding for a position, Norsworthy said. She said the city wanted to avoid situations where employees use their own leave until their last day at work.

"That's why we created the policy, so we could use severance pay (and) they wouldn't have to use their own leave," Norsworthy said.

Mike Abbott, city manager for Berkowitz, called the policy "a very useful tool." He said the Berkowitz administration may employ it in rare situations with personnel.

But Abbott said the policy does not appear to align with the severance pay awarded to Usera and Baker, which he referred to as "severance bonuses."

"Those appear to be very different" from what's in the policy, Abbott said.

Usera and Baker both resigned their positions effective June 30, the day Sullivan reached his term limit in office, according to Norsworthy. After receiving the resignations, Sullivan approved two weeks of severance pay, Norsworthy said.

A summary statement in the policy document states severance pay would be awarded in lieu of hours worked. A later sentence states that pay for executives "shall not exceed two calendar weeks in duration," though it does not refer back to the provision for pay in lieu of hours worked.

Asked whether the severance pay was consistent with the city's policy, since Usera and Baker resigned on the last day of the administration, Sullivan wrote in a text: "I don't get the distinction, but in any event, you've exceeded my attention span. Move along, nothing to see here."

Baker, in a phone interview, said he hadn't known severance was available before the mayor offered it to him.

He said in the overall picture of the city's nearly half-billion-dollar budget, and the amount of time he spent on the job, the extra pay he received was "pretty insignificant."

"Sitting through multiple Assembly meetings and whatnot for years, I don't … have any reason to question the policy at all," Baker said.

Usera started out as employee relations director with the administration in 2009. After retiring to Arizona, she came back as a temporary employee, according to the employee relations department.

In an email, Usera said she requested the severance pay because, as a temporary employee, she had not accrued leave.

"I was essentially commuting from out of State," Usera wrote. "I basically asked for severance pay to help with my return expenses and the Mayor was gracious enough to grant it."

While observing that the amount of extra pay given to Usera and Baker was small, experts said they were puzzled by it.

"Severance pay is very unusual in any level of government, and it's even more so for just ending one's service in the public sector," said David Lewin, a professor emeritus of the UCLA Anderson School of Management who has researched executive compensation and public sector pay practices. "I'm not sure I've even heard of that before."

Cashing out leave or sick days, or high-level executives switching to a consulting role, is more common, Lewin said.

Lewin said the amount of severance was "not outlandish," but questioned whether it would be awarded to every single executive who departed an outgoing administration.

"It's usually a criterion of special treatment," Lewin said.

According to Forrest Nabors, a University of Alaska Anchorage professor who researches American government, severance pay is usually designed to help employees make an unplanned transition -- as opposed to helping executives pay travel expenses when resigning a political office.

"Two weeks is not a long time, that's just half a month's pay," Nabors said. "Still, though, severance for resignation does not make sense."

No model for severance pay exists in Alaska state government, officials said. Andy Mills, spokesman for the Alaska Department of Administration, said staff in the department's personnel division "confirm that the personnel manual absolutely does not allow for severance pay in the executive branch and have never heard of a case."

Apart from Baker and Usera, Norsworthy said the city has awarded severance to employees only rarely since the policy took place.

"It's not been much, I can tell you that," Norsworthy said. "Very infrequent."

Correction: An earlier version of this story incorrectly said that Nancy Usera had a benefits package of $62,120, making her the city's second highest paid executive in the Sullivan administration. Because she was classified as a "temporary" employee, her benefits only totaled $10,241, including employer-paid Social Security and Medicare.

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