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Willmar City Council panel supports $20,000 relocation payment to Rice Memorial Hospital's new CEO

WILLMAR -- Rice Memorial Hospital Board could provide a $20,000 relocation payment to Rice's new chief executive if the City Council approves a committee recommendation.

The Labor Relations Committee is recommending the council approve a portion of the minutes of the hospital board's April 8 meeting when the board approved the employment contract, including the relocation payment, for Michael Schramm.

The city charter allows the council to veto anything the hospital board does, according to Rich Ronning, city attorney.

The council approved most of the Rice Board's April 8 minutes but tabled the portion dealing with the relocation payment. The tabled portion was referred to committee for discussion.

The payment became an issue during Monday night's council meeting when Mayor Les Heitke said the payment seemed extraordinary for moving from Litchfield, where Schramm is Meeker Memorial Hospital chief executive, to Willmar, where he'll begin his new duties at Rice in June.

During Wednesday evening's Labor Committee meeting, the reasons for the payment were explained by Wayne Larson, hospital board president, and Dale Hustedt, Rice interim CEO.

They said the payment -- which is in lieu of payments for temporary housing, bridge loans, costs connected with the sale of Schramm's house in Litchfield, etc. -- is not inconsistent with what is seen in the marketplace today.

They said this type of arrangement is also in the hospital's best interest because it allows Schramm to quickly move into the Willmar area and to not be worried about selling his home in Litchfield. Instead, he can focus on the most important business, which is providing leadership to Rice Hospital, they said.

Heitke told the Labor Committee that the payment was very generous.

Hustedt said the payment could possibly have been larger if the CEO was moving from outside the service area or from outside the state.

Committee member Bruce DeBlieck said the public expects quasi-government funds to be spent prudently. Larson and Hustedt were asked if the payment would be taxed as income.

They said the payment is a net sum after withholding. Committee Chairman Steve Ahmann estimated total payment before withholding at $31,000. Larson said that amount was about right.

Ahmann said he saw no problem with the payment. He said the primary concern was setting precedent in hiring. Heitke said he is comfortable with the payment if the committee is comfortable.

DeBlieck said he had philosophical concerns and opposed the payment. Voting in favor were Ahmann, Doug Reese and Tim Johnson. DeBlieck voted against.

In other business, the committee approved a recommendation by City Administrator Michael Schmit to fill an accounting position that will become vacant in the Finance Department.

Schmit and Steve Okins, finance director, said the department has a director, a payroll clerk and two accounting clerks. They said one of the accounting clerks is on maternity leave and the payroll clerk is retiring May 6.

The issue was whether the city's hiring freeze should extend to filling the vacancy and the committee agreed to fill the accounting position.