East Lansing's Lahanas gets nearly 12% raise, potential for up to 3% of salary in bonuses

This story has been updated to reflect more information about budget cuts.

EAST LANSING – City officials on Tuesday extended a contract with City Manager George Lahanas until June 2021 and gave him his first double-digit raise in seven years. 

The East Lansing City Council unanimously approved the new contract during its Tuesday night meeting. 

Until that vote, Lahanas' pay was determined by a contract passed in February 2012 after the city hired him that's been amended three times — most recently in 2016. 

According to the city, his base salary for 2019 under that contract was $149,308. That includes $6,000 paid into a deferred compensation retirement plan.  

The contract approved Tuesday increases his pay by about $17,700 to $167,000. That figure also includes the $6,000 paid to the retirement plan. 

That's an 11.8% increase. Lahanas' previous raises have averaged less than 1% per year, Ruth Beier told her fellow council members. 

"This reflects that Mr. Lahanas is no longer a beginning city manager," she said. "I like this contract because I think it will keep Mr. Lahanas here, and I think that’s good for the city of East Lansing."

City council approved the raise retroactive to Jan. 1, when East Lansing started implementing an income tax that voters passed last year. That means Lahanas will get a $1,973 payment added to his first paycheck in March, according to his assistant.

The raise also comes after city council made $1.3 million in cuts to general fund spending last May as the city sought to decrease spending and address unfunded pension liabilities and other financial issues.

Those cuts included some elimination of positions and a couple smaller cuts to programs:

• Reducing hours at the Family Aquatic Center by one hour per day to save $18,000.
• Canceling the city's membership with the Lansing Economic Area Partnership, an organization that assists local governments with business development, to save $15,000.

The city didn't end up making all of those cuts. The head of LEAP said the city didn't cancel its contract after all.

Beier, who worked to put together the new contract, said despite the need to make cuts last year, the recently passed income tax gives the city "wiggle room" to increase Lahanas' pay after not having moved him up within the city manager's pay range as originally expected. 

City council also voted to allow Lahanas the potential for an annual bonus of up to 3% of his salary based on a performance evaluation. The evaluation was included in the previous contract, but the potential for a bonus was not. 

The contract also pares down his retirement benefit and tightens allowed severance pay.

The contract approved in 2012 makes a handful of years of family health insurance available to Lahanas at any age if he were to leave employment with East Lansing. The new contract makes it so he wouldn't be able to access those five years of coverage unless he was at least 60 years old and unless he retires from the city.

The new contract also changes language related to severance, adding a stipulation that if Lahanas were to leave and find employment elsewhere within a year, his severance payments would end at that point. Previously, he would have been guaranteed a full year of severance, even after finding another job. 

"The golden parachute Mr. Lahanas had in his previous contract is not so golden anymore," Mayor Mark Meadows said. 

Beier said as a part of establishing the new contract, she and others looking at changes reviewed several recruitment profiles and salary ranges from comparable communities around the country, including:

• Normal, Illinois — Home of Illinois State University
• Auburn, Alabama — Home of Auburn University
• Ann Arbor, Michigan — Home of University of Michigan

Contact reporter Megan Banta at (517) 377-1261 or mbanta@lsj.com. Follow her on Twitter @MeganBanta_1.