Hospital to be audited over $4M retirement package

AP News
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Posted: May 11, 2011 4:39 PM
Hospital to be audited over $4M retirement package

A California legislative committee approved an audit Wednesday of a hospital district that awarded its CEO nearly $4 million in retirement payments in addition to his $150,000 annual pension.

Assemblyman Luis Alejo, who called for the audit, said the goal in part was to ensure patient service at the Salinas Valley Memorial Healthcare System was not compromised. The district, which receives some public funding, recently eliminated about 600 positions.

"The purpose of the audit is to make sure our tax dollars are being spent appropriately," Alejo said during the hearing before the Joint Legislative Audit Committee. "To guarantee that public dollars are being spent in the best needs of the community."

The audit, which is expected to take six months, will probe executive compensation at the hospital system as well as potential conflicts of interest involving hospital board members. It comes after a report in the Los Angeles Times regarding supplemental retirement payments to Samuel Downing, the district's former CEO, totaling $3.9 million.

Jim Gattis, president of the hospital's board of directors, said some of Downing's compensation plan was designed in the mid-1980s, well before the recent job cuts. The money then accumulated interest and was compounded over Downing's career there, which spanned nearly 40 years.

He said there was no link between Downing's salary and the job cuts, which he attributed in part to changes in the healthcare industry.

"We don't have anything to hide," Gattis told The Associated Press after the hearing.

Gattis said the district receives less than 1 percent of its funding from property taxes in the district. But a spokesman for Alejo said the hospital may receive additional state funding. Sasha Horwitz said exactly how much public funding the hospital receives will be examined by the audit.

Downing retired as CEO last month. He was among the best-paid public employees in the state in 2009, when he earned $790,000, according to the state controller.

In an interview with the Times, he said he thought he had earned the retirement package.

"I've stayed here out of my commitment to try to build a great hospital," Downing said. "I worked for this institution and gave them my heart and soul."