The effects of Public Corruption
Anthony Foxx: Bonuses need discussion
Charlotte Mayor-elect Anthony Foxx says the new City Council should discuss whether it should award bonuses next year to the city manager and city attorney, though Foxx declined to say his position on the issue.
In the last month, council members have voted to give Charlotte City Manager Curt Walton and Charlotte City Attorney Mac McCarley bonuses for work done in the past year, decisions made after Walton cut merit-based bonuses and raises for city employees due to the recession.Walton's decision affected bonus payments and raises for the current fiscal year, which started July 1.
Some council members have said Walton and McCarley are exempt from that decision because the bonuses they received were for work done in fiscal year 2008-09, which ended June 30. Their formal evaluations - which took place in the last month - were done several months late.
But a number of council members are undecided on whether Walton and McCarley should receive bonuses next year, or share the financial pain felt by other employees.
"I don't know yet," said Republican council member Warren Cooksey, who voted to give bonuses to Walton and McCarley. He said the council should decide quickly whether it will award bonuses next year.
Both Walton and McCarley did good work for the city, council members said.
Walton will receive a base salary of $200,312 in the current year, plus the $16,000 bonus for last fiscal year. McCarley will receive a salary of $175,781 for the current year and a $15,000 bonus for last fiscal year. Their total pay - salary and bonus - for 2008-09 was the same as it was for the previous fiscal year..
Foxx, a Democrat and currently a council member, will be sworn in as mayor Dec. 7. Democrat Patrick Cannon will also become a council member that day, replacing Republican John Lassiter.
Walton and McCarley have said it's too early to speculate on whether they would accept a bonus for 2009-2010.
The city's Human Resources director, Tim Mayes, for the fiscal year ending June 30 received a $14,955 bonus in addition to his salary of $149,555. He won't be receiving a raise or a bonus this year .
He said in an e-mail last week to the Observer that council members and the city manager and city attorney have had an informal agreement that the bonus payments are a "standard part" of their compensation package. Cutting the payments would be "inappropriate," he said.
Republican Mayor Pat McCrory and Democrat Michael Barnes voted against both packages. Democrats Foxx, James Mitchell and Warren Turner voted against McCarley's package Monday.
Turner was absent for the vote on Walton's compensation.
Foxx said he voted against McCarley's compensation package not because he objected in principle to awarding the bonus. He said instead he didn't feel McCarley had done as good of a job as Walton.
"It's my expectation that we will have some early dialogue with our management about bonuses," Foxx said. "I understand the perception issues and realities of the revenue issues."
Republican Edwin Peacock said he doesn't like that the council has made it appear as though the city manager and city attorney will almost automatically receive a bonus. Any bonus should be more discretionary, he said.
Peacock said he voted for the bonuses because "you can't give a guy high marks and take it away. What signal does that send?" When asked about other employees who likely received high marks but won't receive a bonus, Peacock said that was a difficult situation.
Cannon said the new council should talk soon about its pay plans for the city manager and city attorney for 2009-2010. He said the city "should be conscious that people are treated equally across the board."
Last year, about 2 percent of the city's 6,700 employees received one-time payments in addition to their salaries.
After debate, Mecklenburg County Manager Harry Jones received a $38,400 bonus from county commissioners Nov. 4. Charlotte-Mecklenburg Schools Supt. Peter Gorman turned down a pay raise this year due to the economy.
Charlotte City manager gets $16,000 bonus
Charlotte City Manager Curt Walton this summer cut pay raises and merit-based bonuses for city employees due to the recession.
On Monday night, the Charlotte City Council awarded Walton a $16,000 bonus, and the city manager accepted.
Council members said they were pleased with how Walton has navigated the city through the economic downturn. But Democrat Michael Barnes and Republican Mayor Pat McCrory voted against the pay package because of the bonus.
"I thought he did a very good job - I told him that," said Barnes. "But I didn't think it was right to pay out bonuses. My concern is that there are a lot of people struggling. It would be beneficial for us to show restraint."
McCrory, who is allowed to vote in personnel matters, said Walton did a good job.
"But I was opposed to the bonus because of the economic circumstances in the public and private sector," McCrory said.
Walton, whose evaluation was approved Monday for work in the previous 12 months, will see his total pay remain the same as a year ago. He will receive a salary of $200,312 and the $16,000 bonus, based on his 2008-09 performance.
But a number of city employees whose evaluations also came after July are seeing their pay decrease. The city awarded 314 bonuses, or merit payments, between July 2008 and May 2009 for a total of nearly $400,000. As the financial crisis deepened last year, the city froze positions and cut back on travel and other expenses. The city decided against stopping merit bonus payments in the middle of the fiscal year to avoid punishing employees who had later review dates.
Typically, most city employees can receive up to 8 percent of their salary as a merit-based raise, a bonus, or a combination of the two. When the new fiscal year began in July, Walton said he would recommend stopping the bonuses due to the downturn.
Human Resources Director Tim Mayes, for instance, was paid a salary of $149,555 for 2008-09 as well as a merit bonus of $14,955. For this fiscal year, Mayes will receive only his base salary.
He said Walton was given a bonus by council members because of an "understanding" that's been in place for five years.
"(Council members and the city manager) liken the one-time payment as the first cousin to base pay," Mayes said. "It's not contractually based, but there is a good faith understanding between them."
Mayes said in an e-mail that cutting the bonus would reduce the manager's pay, which would be "inappropriate."
Walton was out of town Tuesday and couldn't be reached for comment. A city spokesperson, Kim McMillan, said Walton declined to talk about his evaluation because state law allows those discussions to take place in private.
In a June Observer story, Walton said he wanted to cut all the city's bonuses temporarily except for a program that allows employees to share in savings when their department or division is a low bidder on a contract. The story didn't address whether Walton planned to not accept any bonus council members might approve.
City attorney Mac McCarley is also paid by the council and is eligible for a bonus.
Mayor-elect Anthony Foxx, a Democrat, voted for Walton's pay package.
"There was a lot of discussion about that issue," Foxx said. "The decision was that as part of the package that the city manager has, if certain targets are met, that's part of the compensation. It wasn't done without debate."
Mecklenburg County Manager Harry Jones accepted a $38,400 bonus earlier this month. His total compensation of $254,055 remains the same as last year.
Charlotte-Mecklenburg Schools Superintendent Peter Gorman turned down his bonus this summer, and eliminated bonuses for principals and teachers. CMS said the reductions saved $1million.
Council member Patsy Kinsey, a Democrat who voted for Walton's bonus, said she believes Walton received it because it was based on his performance for fiscal year 2008-09 - making it unrelated, she believed, to one-time payments that have been "frozen" for the fiscal year 2009-2010.
That isn't correct, according to the timeline outlined by Mayes. All city employees whose evaluations fell after July 1 of this year are ineligible for pay increases except Walton and McCarley.
Harry Jones gets Bonus but total pay is same
Mecklenburg County Manager Harry Jones will receive a $38,400 performance bonus, but his total compensation remains the same as last year, under a deal unanimously approved Wednesday by county commissioners.
Commissioners praised Jones for, among other things, leading the county during a difficult economic time.
The "pay-at-risk" money - which commissioners have in previous years called a performance bonus - is part of an overall $302,854 compensation package. It also includes $215,655 in base salary.
The pay plan keeps Jones' compensation the same as in 2008-09, though a board committee determined he actually would have been due more money this year, said commissioner Dumont Clarke.
Jones, however, asked that his pay be kept level. "That was his request," said commissioners' Chairman Jennifer Roberts. He "wants to be treated like all the other county employees." The county didn't award any merit raises this year.
Jones' evaluation has been in the works for weeks, with talks largely being kept private initially as allowed by state law.
But some commissioners acknowledged last month that paying the money could raise questions in light of steep budget cuts across the county. Two other local public officials - Charlotte City Manager Curt Walton and Charlotte-Mecklenburg Schools Superintendent Peter Gorman - declined merit raises or bonuses for themselves and staff to help save money.
Jones is eligible for a higher bonus than Gorman or Walton, up to 30 percent of his base salary.
Commissioners Chair Jennifer Roberts said the board had a "difficult conversation" about the pay plan because of the economic conditions.
Still, commissioners also have said they wanted to reward Jones for meeting goals previously outlined by the board.
Clarke said Jones told commissioners earlier Tuesday evening that 2008-09 was both his most challenging and best year as manager.
Roberts said Jones "has done a very, very good job, an excellent job as manager in a very difficult year." She cited Jones' work addressing budget cuts because of falling tax revenues and his work on the Critical Needs Task Force to help address social services needs in the community.
But the county also faced questions about inadequate accounting at the Department of Social Services, including an investigation into possible misused money in a charity program for foster children. The county announced steps to help shore up practices within DSS, including putting its finances under control of the main county finance department.
Mecklenburg has offered bonuses to the manager for years, but decided five years ago to restructure the pay system to reflect a CEO-style package of a base salary with another piece of pay tied to performance.
Under the plan, Jones is eligible for a bonus of up to 30 percent of his annual salary based on a series of criteria, including how well the county performs on annual goals and a management plan approved by commissioners. Based on his current salary, he could have received a bonus up to about $65,000 this year.
Jones has not received the full bonus since commissioners approved the new pay structure in 2004.
Clarke said Jones' performance in the past year earned him more money. He said he's being paid about 10 percent less than what his performance score called for.
Cuts in Mental Health
Also on Tuesday, commissioners approved about $2.76million worth of service cuts to the county's Area Mental Health department because of reduced money from the state. The state cuts were actually larger, but county staff has promised $3.7 million to help make up the gap.
Jones said he hasn't yet identified where the money would come from.
Fire Harry Jones, Tomorrow
Over the years I’ve defended County Manager Harry Jones in public and private as a competent manager who seems to have the right goals and standards in place for Mecklenburg County. But his handling of the DSS mess is a firing offense, specifically his move to quiet a critic of DSS by calling the man’s employer to silence him.
Jones has not said why he contacted Bank of America after a local BAC employee complained that he felt “duped” by giving money to DSS’ charitable efforts for kids. That is no doubt because the tone of the email exchange is unmistakable — and chilling.
“There seems to be a need for a wholesale cleanup of many county agencies, and I think that starts from the top down,” BofA employee Harry Lomax wrote to county officials. A week later, Jones sent the email on to a BofA VP with an ominous “Do you know Harry Lomax” addition.
The response was immediate from BofA government liaison Betty Turner. Lomax’s email was deemed “embarassing” and Jones was assured that BofA execs were on to Lomax: “I am tracking it down. I don’t know him – I have alerted charles. Will be back to you.” Question: Who the hell is “charles?” The Uptown paper of record account leaves this out.
Anyone with even a glancing understanding of Charlotte’s history is probably flashing back to the time when uppity mill hands who questioned local leaders were met with, “What’s your name again? I know your pastor.” The threat was clear — shut up and know your place.
Harry Jones clearly has no problem pulling the same power levers as boss men of years past. And no doubt Jones has done this sort of thing before to be so comfortable as to put such a smoking gun in email form, and on such a high profile matter as DSS’s continued money and management woes. For that reason, the “isolated incident” defense we are sure to get this week does not wash.
Harry Jones has proven he does not have the temperament required of highly compensated public employees, particularly at a time when revenues are tight and citizens are concerned about spending. Criticism from engaged citizens — Harry Lomax was concerned that a county Christmas charity was misusing funds — must be welcomed and encouraged, not kick off corporate retaliation efforts among the lock-step Uptown crowd.
A unanimous vote by the Mecklenburg County commission to remove Jones from his position is the only thing which can restore confidence in the notion that local government works for local citizens rather than actively conspires against them.
Update: Betty Turner is a registered lobbyist for BAC in both North Carolina and Virginia.
Harry Jones: No Thought of Resigning
Charlotte-Mecklenburg County Manager Harry Jones has faced intense criticism from some residents on a variety of issues this year, including reported accounting problems in the Department of Social Services and a $38,400 performance bonus given to him earlier this month. Some have even called for his job.
Jones addressed the issues in an interview Thursday on "Charlotte's Morning News with Al Gardner & Stacey Simms" on WBT-AM.
Here are some snippets from the interview:
Q. Have you thought about resigning?
Jones: "No, I have not given any thought to that Al. This has been a good year. You know along the way you are going to make some mistakes. I did make a mistake in forwarding an email. Harry Lomax and I have subsequently talked and I'm taking his position that it was blown way out of proportion. He and I have had lunch together with each other. No, I have not given any thought to it. But I will say, Al, it's been a tough year. It's been a really tough year. But I think it's also been my best year and I told the board of county commissioners that and I'm going to continue to stay where I am unless they decide they don't want me any longer."
Q. As Al was mentioning, though, other county employees didn't get bonuses at all. And it seems to me that with the email as you said you’ve apologized, you've had lunch with the gentleman, but (it was) big blow to public trust there, and with the DSS situation being what it is, why not say, well, I'll accept the bonus if such and so bears out, an ethics investigation, something like that? Because I think a lot of people would question whether this was the best year for county government.
Jones: "I’m going to say this: I earned that bonus. I think the other issues "My board of Charlotte-Mecklenburg County Commissioners" factored all of those things in when they considered my compensation. And the position that I will take is that, yes, the email does raise some questions about people's confidence in government. But Al and Stacey, I will say to you that there was no malicious intent, as I have indicated publicly, on my forwarding that particular email. And in that there was no malicious intent, for those people who want to call for my scalp on that one particular action, (they) don’t know Harry Jones and don't know what Harry Jones has done through his career to try to open up government, to encourage more participation. If you want to judge me on this one action, then I would say you're judging me contrary to the real Harry Jones."
The Charlotte-Mecklenburg DSS Fraud mystery: Where did money go?
Internal e-mails reveal new allegations of misspending at the Charlotte-Mecklenburg County Department of Social Services, raising more unanswered questions about what happened to money intended to help needy children.
Some of the more than 1,000 e-mails the Charlotte Observer obtained through a Public Records Request provide the most detailed account to date about the agency's accounting fiasco.
E-mails show:
Officials suspected an employee wrote $80,000 in checks to herself from donations.
An administrator questioned why other donations were used to buy $340 diamond earrings, leather coats and a $300 DVD player.
A top executive complained that a senior fiscal administrator frustrated co-workers with her "inability to explain the simplest concepts of revenue and expenses."
After nearly a year, officials have never said who was at fault for $162,000 that disappeared or whether anyone was disciplined.
No one has been charged in an ongoing police investigation and a county report says officials cannot be certain where the money went.
Meanwhile, donors are left to wonder whether their generosity ever helped buy Christmas gifts for those in need.
In one e-mail, a woman describes calling the county in 2007 to give $900 for single mothers at Christmas. The person who answered the phone told her to make a check payable to the worker's sister.
The donor said she grew suspicious and made the check out to the county, but the idea that it may still have been misused is "like a kick in the stomach."
In another e-mail, a founder of Second String Santa said he was concerned whether kids received the more than 50,000 toys his group had donated since 1989.
Will Miller said he believes some of the toys reached children, but he's not sure about the rest.
"Will we ever know? Probably not," he said.
Two Charlotte-Mecklenburg County Commissioners said they have asked County Administrators for a full accounting of what went wrong at DSS but have yet to receive answers. County officials have never explained who was responsible, they said.
"To fix it, you have to admit all the stuff that is messed up," Commissioner Bill James said. "They don't want to do too much digging."
County administrators declined interview requests. Instead, a county spokesman released a prepared statement saying appropriate fiscal controls have been installed in response to an outside audit and an internal investigation.
"Our review of the e-mails we provided and your follow up questions did not reveal any new information that would suggest any change in the audit findings or in management's response to those findings," the statement said.
Some commissioners said they have been told that the employees involved have either left county government or been placed in new positions.
Unusual spending patterns
DSS spends $176 million annually and employs 1,200 workers to assist Mecklenburg's poor and neglected. The agency administers everything from food stamps to foster care and child protection services.
Last spring, DSS Director Mary Wilson ordered financial audits following reports of suspicious spending.
Auditors looked at multiple spending programs and financial practices in the agency. They found a $10,000 check made out to an employee, missing and altered receipts and money for kids spent on office supplies.
County leaders responded by suspending the programs, putting DSS finance under direct county control, training workers on accounting procedures and ordering a review of financial procedures in each county agency.
The Observer reviewed e-mails dating from December 2008 to July 2009 for seven current and former county administrators, including Wilson, County Manager Harry Jones, County Finance Director Dena Diorio and Internal Auditor Cornita Spears.
E-mails show county officials noticed unusual spending patterns as early as last December but did not disclose problems to the public until March.
On New Year's Eve, Wilson told staff she had suspended a voucher program the agency used to purchase clothes and other items for clients at local stores. She wrote that officials were worried about a lack of oversight and a spike in spending.
One monthly retail bill leapt from between $5,000 and $6,000 to more than $20,000 in October 2008, the e-mail says. Employees turned in receipts only 30 to 35 percent of the time, she wrote.
At one time or another, workers possessed or had access to numerous credit cards and gift cards, including some to Bath & Body Works, Bass Pro Shops, Macy's, the Cheesecake Factory and Outback Steakhouse.
Outside auditors verified for county administrators that DSS workers possessed county-issued credit cards, including 10 credit cards for Sam's Club, three for Harris Teeter and an online charge account with Amazon.com
In February, county officials asked internal auditors to look into questionable spending, including purchases of diamond earrings, leather coats and a DVD player.
An e-mail to one of the auditors from a human resources consultant said the purchases raise "many questions and concerns."
According to the county's statement, most gifts were typical children's items such as toys, clothes and books. More expensive items such as diamond earrings and leather coats were approved purchases for foster children who reached special milestones like high school graduation, the statement says.
"Receiving a gift of some significant value was viewed as an incentive for other children who were in foster care to set goals and accomplish them," the statement said.
Commissioner Harold Cogdell said he spent part of his early childhood in foster care and believes the gifts are a good idea.
"It makes sense to me to show the kids some love," Cogdell said.
A new Accountant
DSS has endured multiple management shakeups in recent years. The latest came when Wilson reorganized the agency after she was hired in July 2008.
She laid out the reasons to hire a new finance director in a February e-mail.
Wilson wrote that the senior fiscal administrator who managed DSS finances failed to provide reports about oversight, alienated staff and lacked the ability to conduct productive discussions with senior county executives. The e-mail does not name the senior fiscal administrator.
DSS later hired accountant Angela Hurlburt to oversee its finances.
James, the commissioner, said he has asked for the names and background information on Hurlburt's predecessors. He wants them to answer questions from the Board of Commissioners' Audit Review Committee, which investigated accounting lapses at DSS.
He said administrators have failed to respond to his requests and complained that officials "keep us in the dark."
Other Charlotte-Mecklenburg Commissioners disagreed.
Chairman Jennifer Roberts and Commissioner Dumont Clarke said county leaders have already put in place reforms that will protect taxpayer and donor money.
"The highest priority" is implementing new financial controls, Clarke said.
Shifting the Finances
Auditors from Cherry, Bekaert & Holland reviewed DSS and found that Mecklenburg officials responded appropriately. The county's Audit Review Committee came to the same conclusion.
But DSS Director Wilson bristled at one of the major reforms.
Leaders put DSS finance under the direct control of the county's main finance department after allegations of misspending surfaced.
In April, Wilson sent an e-mail to County General Manager Michelle Lancaster to complain. Calling the decision "premature" and "shortsighted," Wilson said there are emergencies when DSS workers must write checks immediately, including occasions when the agency takes children in custody who need clothes, toiletries and school supplies.
"I understand the urgency at the time, but there was a reason DSS had check writing capability and I think we threw the baby out with the bathwater instead of fixing the underlying issue, which is documentation and accountability," Wilson wrote.
Donors left with questions
Past supporters of the DSS Christmas charity include Young Lawyers, employees of Wachovia and Bank of America, and Project Joy, the holiday fund drive initiated by Observer columnist Tommy Tomlinson. The Christmas charity, known as the Giving Tree, is now run by the Salvation Army.
The donor who gave $900 e-mailed the county in July after learning about accounting failures from news accounts. She attached a picture of the check copy she made around Christmas in 2007.
She wrote that she did not remember the name of the woman she spoke with on the phone.
The donor said she and her family all pitched in to raise the money so she could assist women like her who had struggled as single mothers.
When she heard there were allegations of misspending in a DSS charity program, "It's like your stomach just drops."
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Sources: McClatchy Newspapers, Charlotte Observer, WBT, The Meck Deck Blog, John Locke Foundation, Charmeck.org, Youtube, Amazon.com, Google Maps
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