SAN MATEO -- Recently retired City Manager Susan Loftus vaulted into the 1 percent last year, earning $526,820 thanks to a generous perk that allowed her to cash in more than 2,000 hours of unused sick leave.

The revelation of Loftus' compensation Tuesday left some San Mateo officials scratching their heads. City Councilman David Lim called Loftus' contract "unconscionable" and vowed to make sure it doesn't happen again.

"I think disappointed is an understatement -- I'm shocked," said Lim, who arrived on the council in 2009, one year after Loftus' contract was approved. "It's not like this was a contract that was entered into in the 1980s before we understood the consequences of these unlimited payouts and accruals."

Loftus' compensation last year, first reported by the Palo Alto Daily Post, included $196,152 in base pay, $80,664 in vacation pay and $235,806 in sick pay. Loftus, who retired in November, had acculumated 2,202 hours of sick time since first joining the city in 1987. She received her payout at her final hourly rate of $107 an hour.

Loftus did not respond Tuesday to a call seeking comment.

The city is currently seeking Loftus' replacement, with a decision expected in the next few months. Lim said he will press for a cap on the next city manager's accrual of sick pay. He will also propose that the council hold votes in open session on all employee contracts exceeding $200,000. He floated the idea once before, but it was shot down.


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Jack Matthews, the only current member of the council who voted on Loftus' contract, defended the ex-city manager and her compensation. Loftus worked extremely hard, he said, sometimes six and a half days a week.

"I had to continually say to her, 'You need to take more time off -- you have to take it easy and not work so hard,'" Matthews said. "She was incredibly dedicated to her job."

The contract was fair given the competitive market for skilled city managers, added Matthews, arguing the extra money she made, though surprising to him, isn't that shocking when spread out over the life of her contract.

"If we had paid her $40,000 more a year, I don't think she would have been very much overpaid," he said. "Good city managers are hard to find, and she was really special."

Still, Matthews said, going forward, the city manager should be held to the same standard as other employees regarding sick time accruals and payouts.

Loftus is the only city employee whose capacity to cash out unused sick time was unlimited, according to finance director David Culver. All other employees may accrue up to 960 hours of sick time and are eligible for a payout on 480 hours.

There were no limits on either the amount of sick time Loftus could accrue or how much of it she could cash in, according to her contract, which was approved by the City Council in October 2008. A staff report from the meeting noted that the policy was in line with a model contract provided by the California City Management Foundation, a nonprofit advocacy group for city managers and effective city governance.

The foundation's model contract still contains that provision, said Ken Pulskamp, the foundation's executive director. It is an option for cities to consider, not a recommendation, he said.

"As a rule, it's very difficult for city managers to take much time off," Pulskamp said of the provision. "It's really a 24/7 job."

Policies on sick and vacation time accruals and payouts vary from city to city and region to region. In Burlingame, San Mateo's neighbor to the north, there are no sick-time payouts for any employees, said Carol Augustine, Burlingame's finance director. That includes City Manager Lisa Goldman, hired in 2012. In Redwood City, all employees may accrue sick time up to 1,200 hours and cash in 50 percent of it.

The city's payouts to Loftus for unused sick and vacation time do not factor into her pension, which is pegged to her base salary, Culver noted.

Contact Aaron Kinney at 650-348-4357. Follow him at Twitter.com/kinneytimes.