TVA, Erlanger tops for public worker pay

For government work, there still is plenty of money to be made in Chattanooga.

As the power headquarters for America's biggest government utility and the home of one of the state's largest public hospital systems, Chattanooga had 17 government employees who were paid more than the president of the United States.

According to salary data received from more than a dozen area government agencies, the 50 highest-paid public employees in Chattanooga all earned more than $175,000 last year, or more than six times the average pay for Chattanooga area workers.

The biggest salaries were paid to Tennessee Valley Authority managers. The federal utility had 30 of the top 50 highest-paid government employees in Chattanooga.

Two TVA executives took home more than $1 million each last year, even though the agency cut out bonuses for top managers following the 2008 coal ash spill at its Kingston, Tenn., Fossil Plant. An additional 14 TVA vice presidents were paid more last year than President Barack Obama, who gets $400,000 a year.

Erlanger Health System, Chattanooga's public hospital system, had 12 of the top 50 highest-paid government workers in the area, not counting the earnings of doctors with whom Erlanger contracts for medical services.

Officials with TVA and Erlanger insist their pay is required to remain competitive with other utilities and hospitals, which often pay even higher salaries. Although publicly owned, TVA receives no tax money and Erlanger derives less than 1 percent of its funding from local property taxes.

David Mould, TVA's $275,000-a-year communications vice president, said the TVA Act requires that the government utility pay "prevailing compensation for similar positions in private industry."

"TVA needs a highly specialized work force in many areas to help assure safe and efficient business and utility operations, including nuclear power plants, an extensive high-voltage electric transmission system, hydroelectric facilities and other highly technical functions," Mould said.

TVA Chief Operating Officer Bill McCollum Jr., whose $1.5 million salary last year was the highest at TVA and the biggest for any Chattanooga government worker, earned one-third less than the industry average for executives in comparable jobs at private utilities, according to a comparison with other utilities by Tower Perrin consultants.

Last year, the chief operating officer of Duke Energy in North Carolina, James L. Turner, was paid more than $4.3 million, while the No. 2 executive for Southern Co. in Atlanta, W.B. Bowers, was paid nearly $2.4 million.

Critics question TVA pay

U.S. Rep. John Duncan, R-Tenn., has questioned the need for TVA to match the executive pay given by private utilities.

"Just because someone else is making a ridiculous or unjustified salary does not mean that a public service agency like TVA should follow suit," he told TVA President Tom Kilgore two years ago.

For the first half-century of TVA's 77-year history, its employees weren't allowed to make more than members of Congress, now $174,000 a year. Last year, 59 managers at TVA were paid more than members of Congress.

In 1981, when TVA was building 17 nuclear reactors, the agency employed more than 52,000 workers, but its top officer was paid less than $100,000 a year.

TVA now employs fewer than 13,000 workers and is building just one new nuclear reactor at a time. Yet the agency paid four executives in Chattanooga and Knoxville more than $1 million each last year.

"People can rationalize about anything, but you don't have to pay ridiculous salaries to entice good people to East Tennessee," Patrick Newton, Duncan's communications director, said last week.

Recessionproof jobs?

Justin Owen, president of the Tennessee Center for Policy Studies, a conservative think tank, complained that government agencies aren't subject to the market discipline of the private sector. Public employers haven't had to trim staff and expenses as much as private businesses during the recession of the past three years, he said.

"With the economy stalling, it seems like the only part of the economy that is not shrinking is the government sector," Owen said.

In metropolitan Chattanooga, government employment in August totaled 34,600, or 100 fewer than the same month three years ago when the economy began to falter. In the same period, private-sector jobs in metro Chattanooga fell by 20,700, from 213,000 in August 2007 to 192,300 in August 2010, according to the U.S. Bureau of Labor Statistics.

Most of the highest-paid government workers in Chattanooga are employed in jobs that compete against private or nonprofit positions.

Erlanger pays its chief executive, Jim Brexler, an annual salary of $550,017 to operate Chattanooga's biggest hospital, which is publicly owned. Memorial Health System, a nonprofit hospital owned by Catholic Heath Initiatives, pays its president, Jim Hobson, a base salary of $445,421, Memorial spokesman Brian Lazenby said.

Vicky Gregg, president of BlueCross BlueShield of Tennessee, was paid more than $2.2 million, or four times Brexler's salary last year, according to BlueCross filings with the state insurance department.

"We need to have the best and the brightest at Erlanger for us to be able to provide the quality of health care we deliver while still having to absorb more than $80 million a year in uncompensated care," Erlanger Chairman Dan Quarles said. "If you look at the record of Jim Brexler and his staff, he has been very successful in managing this 4,000-person operation."

Education pays

The head of the single largest employer in Chattanooga - Hamilton County Schools Superintendent Jim Scales - earned less than half as much as Brexler last year to oversee nearly 6,000 teachers and other school system staff. Scales' $202,275 salary last year placed him 40th among top-paid government employees in Chattanooga, although that was the highest salary of any city or county employee in the region.

Five educators and administrators at the University of Tennessee at Chattanooga also were among the 50 highest-paid government employees in Chattanooga.

Henry McDonald, the former director of the NASA Ames Research Center who helps lead the SimCenter as the chair of excellence in computational engineering, was the highest-paid state employee in Chattanooga last year with an annual salary of $238,743. The director of the SimCenter, David Whitfield, also was among the top-paid professors at UTC with an annual salary of $219,961.

The two computational engineering professors helped establish the SimCenter at UTC in 2002 as UTC's first Ph.D. program.

"It's hard to even put a dollar estimate on the extraordinary national reputation and recognition that comes to our campus because of the SimCenter," UTC spokesman Chuck Cantrell said.

Cantrell noted that UTC staff has not had a raise in two years and UTC Chancellor Roger Brown took a 5 percent pay cut two years ago when the university was forced to trim its overall budget.

The top pay of government workers in Chattanooga still was only a fraction of the salary given to Chattanooga's highest-paid business executive.

Unum Corp. President Tom Watjen, who heads the world's biggest disability insurance company, made $9.3 million in 2009, and that's after a $2.9 million drop in pay from the previous year due to a decreased bonus.