THE icing ON THE check

0 Comments | Gazette, The (Colorado Springs), Aug 12, 2007 | by PAM ZUBECK THE GAZETTE

Colorado Springs Utilities has paid thousands of dollars to upper management and at times handed out the cash without documentation in a bonus program that lacks regular oversight.

Employees have collected bonuses of up to $7,376 in the Special Thanks and Recognition (STAR) program, which has cost ratepayers more than $4 million since 1999.

The payouts are on top of Utilities' pay-for-performance system that gave 97 percent of employees bonuses -- some up to a fifth of their base pay -- that totaled $48 million in five years.

"I wholeheartedly support this (STAR) program, because I support our customers, and I link it to the bottom line with customers," Utilities CEO Jerry Forte said in an interview. "I support exceptional performance of our employees, but I believe there are opportunities to make this program better."

After The Gazette asked about the program, Forte initially lauded it in a July 18 e-mail to the Utilities Board, composed of City Council members.

But a day later, he suspended the cash awards and ordered an indepth internal review and immediate changes requiring specific criteria, documentation of savings and disqualification of top managers from receiving the awards.

The amount spent on STAR awards is minuscule compared with Utilities' $943.6 million budget. Utilities' annual compensation totals about $159 million, including benefits, Forte said.

Mayor Lionel Rivera said that when he learned of the program, he expressed concern to Forte.

"In general, I support the program for accomplishments that are basically above and beyond someone's performance plan and if they are ideas or actions that save ratepayers considerable amounts of money," Rivera said.

"I don't think they should be awarded to officers or general managers, because they are fairly well compensated professionals. Anything they would do is something we would expect of them at their level."

The STAR program, set up in 1997, recognizes outstanding job performance. Bonuses totaled $4.1 million from 1999 through June 22 this year, an average of about $480,000 a year. Records for 1997 and 1998 were not available because Utilities used a different payroll system at that time.

The program's first level allows supervisors to bestow on-the- spot praise using $50 and $100 gift cards to Home Depot, Target, The Shops at Briargate, Red Robin, Starbucks and other businesses.

Officials set aside an amount equal to just over two awards per employee per year, $503,000 this year. Utilities did not provide records showing who got first-level STAR awards, and Forte acknowledged there is no regular oversight of the program.

The STAR CEO-level program allows officers, department managers or general managers to nominate employees for up to 5 percent of their annual pay. The cash awards, approved by the CEO, have ranged from $100 for a meter reader to $7,376 for Director Lisa Myers, who left Utilities in 2001.

Utilities budgeted $150,000 this year for the CEO level, and The Gazette analysis of cash awards found managers outpaced subordinates. In 2007 alone, 31.25 percent of the recipients were managers, who received 40 percent of the total.

Managers represent 3.3 percent of Utilities' work force, but in the 8 1/2-year period, 12.3 percent of STAR award recipients were managers, who received 22 percent of the dollars dispensed.

Of the 10 who received the most STAR money, six are managers.

Ranking first is Michael Dugan, a customer operations section leader, who received $17,741 in bonuses in the 81/2-year period. His 2007 salary is $80,558. Dugan also received $8,169 in performance pay this year for 2006.

Manager Alan Goins was next, with $12,808 in STAR bonuses over 81/ 2 years. His base pay this year is $109,262, and he received $5,000 in STAR awards. When that's added to the $12,979 he received in performance pay, his total compensation this year will be $127,241.

Some top managers got bonuses for regular duties listed in their job descriptions.

Chief water services officer Bruce McCormick was given a $2,500 STAR bonus in June for his strategy planning for the city's Southern Delivery System water pipeline project. His job description calls for him to "identify, prioritize, plan and implement current and future infrastructure needs" and to "lead strategic and business planning."

Chief customer officer Kelly Means, whose job description is similar, got a like award for the same project.

Forte said the awards were warranted because McCormick and Means spent 700 hours, including five months of weekends, "looking under the hood" of Southern Delivery and creating a "path forward" that otherwise would have cost ratepayers $100,000 in consulting fees.

Some awards cited dollar savings or value of the performance. Many were based on appraisals such as "managing the media," "shaping public opinion" or developing strategy. Four workers got bonuses totaling $12,500 for helping create the city's Stormwater Enterprise, which isn't part of Utilities.

Forte emphasized that he's trying to make Utilities one of the top outfits in the country and create an atmosphere of excellence. Without naming it, he pointed to a "recent compensation study" that showed 65 percent of utilities nationwide give spot cash awards.