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Checks Without Balances


Out of the spotlight, some NC public agency leaders make major money

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  • The series

    Today: Among public employees, a salary gap

    Tuesday: Working around a salary cap

    Wednesday: Bonuses for the lucky few

  • How the pensions work

    State and local employees are included in a pension system that is administered by the Office of the State Treasurer. The government agencies and employees contribute a percentage of the employees’ pay, and as an employee builds a career, the state guarantees a certain level of pension income.

    For example, a state employee who works for 30 years can retire at nearly 55 percent of the average of his or her top four consecutive years of income.

    For the most recent year available, the state treasurer’s office set the employer contribution, provided by taxpayers, at 14.2 percent of qualifying pay such as salary, overtime and bonuses for state employees and 7.1 percent for most local employees. State and local employees contribute 6 percent, and the system counts on investment returns to help build the fund and maintain its solvency.

    State law requires taxpayers to cover the difference if the pension system falls behind in its obligations.

    For fiscal 2012, the state pension system paid $4.6 billion in benefits, supported by contributions from taxpayers and employees.

  • How we did the series

    In 2010, The News & Observer published a series that exposed what was then one of the most restrictive state personnel laws in the nation. The law did not, for example, allow for the release of pay histories for public employees.

    As a result, legislators changed the law to make that information public. We discovered that much of the information exists in one place: The Office of the State Treasurer, which uses it to manage the pension fund for local and state government retirees.

    The N&O obtained four consecutive years of employee pay, which showed salaries, bonuses and other types of pay. While analyzing that data and asking questions about specific employees at their agencies, we found other types of pay not accounted for by the treasurer: housing allowances, car allowances and retirement supplements. We also found examples of unusually high pay for some employees at agencies that are not in the state retirement system.

    The treasurer’s records are incomplete. For example, they don’t include the position held by a given employee. In some cases, the type of pay has been mischaracterized by the agency involved; for example, we found a $56,000 payment listed as a bonus that was actually back pay after a litigated dispute.

    By the numbers

    An eye-catching pay comparison

    $271,812 2012 compensation for Steve Beam, executive director of the Raleigh Housing Authority.

    $167,382 Total pay for Robert Kucab, executive director of N.C. Housing Finance Agency.

    $176,853 Total pay for Sarah Parker, chief justice of N.C. Supreme Court.

    $248,400 2012 compensation for Charles Woodyard, CEO of Chicago Housing Authority.

With little scrutiny from the public, a select group of officials across North Carolina receive hundreds of thousands of dollars in pay and benefits for running authorities, commissions or institutions, according to a (Raleigh) News & Observer analysis.

During the prolonged economic slump, many local employees have received meager raises, and state employees and teachers have gone five years with only a 1.2 percent raise from the state.

But these public executives have done better:

• Tim Newman, the Charlotte Regional Visitors Authority’s top executive until 2011, received as much as $334,520 a year. He resigned after scrutiny of his management practices, which included inflated attendance projections for the NASCAR Hall of Fame. He had been demoted to a sales position, but when he quit, the bureau agreed to pay him severance worth about $142,000 and $29,000 for unused vacation time. His compensation for fiscal year 2012 was $350,165.

• In Fayetteville, Steven Blanchard, general manager of the Public Works Commission, was paid more than $310,000 last year, about $100,000 more than either the city or county manager.

• In Greensboro, Tina Akers Brown, the Housing Authority director, received at least $242,000 in 2012, putting her among the top-paid employees in Greensboro or Guilford County government that year. Brown did not provide full compensation information despite numerous requests.

In many of these cases, the boards that oversee these executives say the pay is well-deserved. They say the institutions are well-run, with clean audits and few public complaints. They also cite pay surveys that show their executives’ pay is in line with pay at similar institutions.

In Raleigh, Steve Beam, executive director of the Housing Authority, last year made roughly the same pay as the managers of Raleigh and Wake County, despite overseeing a much smaller budget and staff. Annual compensation for Beam, who has been director for 17 years, grew as high as $280,690 in 2011. He leads a staff of about 150 with a $50 million budget.

Raleigh’s manager oversees 6,600 employees with an annual budget of $705 million. Wake’s manager administers a $982 million budget and 3,600 employees.

“You can pay people less (in) salaries, but you end up with more turnover, and that’s more costly,” said Kyle Dilday, the Raleigh Housing Authority board chairman who has repeatedly supported raises for Beam.

‘Personnel matters’

But the pay deals are often done behind closed doors, with little explanation afterward. That’s because the state’s personnel law considers evaluations private.

In at least two cases, these local boards have maneuvered to get around salary restrictions set by a state agency and the U.S. Congress.

Public records show these officials’ pay is often augmented by perks that rank-and-file employees never get, or receive in much smaller amounts, according to the newspaper’s review of data for more than 435,000 employees from 1,216 state and local agencies. The chief executive officer of a government-created nonprofit that purchases electricity for municipalities receives a $53,000 bonus each year just for staying on the job.

At least one official has a car allowance topping $20,000 a year and is among others with additional health care coverage worth several thousand dollars a year. Some of these salaries are also boosted by longevity payments that add as much as 7.5 percent to their salaries.

The pattern of high pay for public officials in lower-profile entities emerged when The N&O obtained four years of data for every state and local employee in the state pension system. This information had not been available until 2010.

Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Reform, a nonpartisan watchdog, was surprised to learn about the cost of salaries and perks in lesser-known government sectors. She said the findings show the need for officials to better publicize how much they are spending on compensation.

“It’s surprising that, one, they are making that much money, but two, that boards are finding ways to compensate people that’s outside of the normal procedure.” she said. “It’s not what I as a citizen would have expected.”

‘Out of whack’

The information on public pay is collected by the state treasurer’s office, which needs it to administer the pensions of 254,000 retirees. That’s because the pay rates determine the size of an employee’s pension.

State law requires taxpayers to cover the difference if the pension system ever falls behind in its obligations. So far, North Carolina has maintained one of the most well-funded pension systems in the nation.

For Beam, Blanchard and others in the state pension system, the bonuses and longevity pay can be factored into their pensions if earned during their four highest consecutive years of pay.

Akers Brown’s agency is not in the state pension system, but the Greensboro Housing Authority contributes the equivalent of 8.5 percent of her pay into a retirement fund, while she and other employees contribute at least 6 percent of their pay. Authority records show she has also been provided with as much as $35,000 in additional retirement pay in one year, which pushed her total pay to more than $263,000 in 2010.

Board members who approved the salaries and benefits often cite compensation studies that suggest these officials have been or continue to be underpaid, or they point out that many of these officials are long-serving and that letting them go would be a great loss to the organization.

Beam and Akers Brown make tens of thousands more in compensation than Congress and federal housing officials wanted. After reports of high pay for public housing directors in other cities, Congress voted in 2012 to limit the federal government’s share for a director’s salary to no more than $155,500.

The federal Department of Housing and Urban Development primarily funds local public housing authorities. It accounts for three-quarters of the Raleigh Housing Authority’s budget.

The cap did not result in pay reductions for Beam and Akers Brown. With little evidence of a public discussion in their board minutes, the boards pulled money out of funds not controlled by HUD to keep the pay up.

Beam’s and Akers Brown’s 2010 compensation put them among the 30 highest-paid public housing directors in the country, according to a HUD survey. They made more than the housing directors in Chicago, Boston and Charlotte, which all have bigger budgets and staffs.

The president and CEO of the Charlotte Housing Authority, A. Fulton Meachem Jr., is paid $195,000 in salary and is eligible for a bonus of 10 percent of that base pay. Meachem, who started in October 2012, hasn’t been paid a bonus yet. He also receives a monthly car allowance of $600.

Meachem’s salary above $155,000 is supplemented with “non-federal dollars received from real estate projects and the operation of non-federal assets,” according to the CHA.

U.S. Sen. Chuck Grassley, an Iowa Republican who drew attention to housing authority salaries, said housing authorities that continue to pay directors more than $155,500 “violate the intention of the caps.”

“The caps are meant to focus housing authorities’ spending on their essential purpose of providing safe, affordable housing to people in need,” Grassley said in an email. “And housing authorities that expend a lot of effort to circumvent salary caps have their priorities out of whack.”

Otis Wilson, chairman of the Greensboro Housing Authority’s board, said Akers Brown, 56, deserves her pay. The authority has been identified as a high performer in HUD audits, he said.

In Fayetteville, a recent study commissioned by the city manager examined whether the city’s Public Works Commission, which is part of city government, has become too independent from that government. The study found that the commission paid its employees, on average, 15 percent more than the city, with a better benefits package.

Blanchard, 62, the general manager, has disputed the findings, but he has said he will work with the city to find ways to consolidate operations to save the commission and the city money. Unlike the public housing authorities, the Fayetteville commission rivals the size of the local city and county governments.

Boards defend pay

At the Charlotte Regional Visitors Authority, the board defended Newman’s compensation, which was higher than that of the Charlotte city manager. Board members said they had determined his pay after doing a compensation study of other convention and visitor authority leaders nationwide in comparably sized cities.

Tom Murray was named the CRVA’s new chief executive in December 2011 at a salary of $275,000, plus an $8,000 annual car allowance. At the time, a spokeswoman said Murray’s salary was based on a salary survey and was roughly 50 to 75 percent of the pay for similar positions nationwide.

Wilson, the Greensboro housing chairman, said his board paid for a salary study for all positions at the time HUD began capping how much it would pay executives. The study said Akers Brown’s pay was not out of line, but it lacked the same comparative analysis provided for the rest of the staff.

Blanchard and the Fayetteville Public Works Commission’s chairman, Mike Lallier, also cited compensation analyses done by the Hay Group and the American Public Power Association that show Blanchard’s salary was in line with similarly sized privately and publicly owned utilities. They said the private-sector companies should be included because the commission competes for the same pool of utility leaders. Observer reporter Steve Harrison contributed.

Tuesday: A big pension play

Kane: 919-829-4861
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