BCB Renews Bonus Pay Program for Commerce Employees

December 11, 2013

Investigative Reports

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Money GiftChristmas came a little early Tuesday for some S.C. Department of Commerce employees.

The five-member S.C. Budget and Control Board, chaired by Gov. Nikki Haley, unanimously approved – without any debate – a Commerce proposal to extend a pilot program dubbed the “Sales Incentive Pay Plan” for three years starting next month.

Under the program, 10 employees in Commerce’s “Global Business Development Department” are eligible to receive bonuses that are projected this year to total $40,000 to $60,000, or an average of $4,000 to $6,000 for each eligible worker.

A total of $49,677 in bonuses was paid out to all nine eligible employees, or an average of $5,519 per worker, last year; in 2011, the collective amount paid out to all 11 eligible employees was $96,048, or $8,731 on average per employee, according to a Commerce document provided for Tuesday’s meeting.

“This really is so much of why we are getting jobs in rural South Carolina,” Haley said after the quick vote.

The other BCB members are S.C. Treasurer Curtis Loftis; state Comptroller General Richard Eckstrom; Senate Finance Committee Chairman Hugh Leatherman, R-Florence; and Rep. Brian White, R-Anderson and the House Ways and Means Committee chairman.

A state law (Section 8-1-190 of the S.C. Code of Laws) allows the BCB to “enter into pilot programs with individual agencies or groups of agencies in order to create innovations in State Government.”

Commerce Secretary Bobby Hitt didn’t make a presentation before Tuesday’s vote and left immediately afterward.

“The Department has used the incentive plan to help recruit, retain and motivate staff members with direct responsibility for recruiting industry to South Carolina,” Hitt said in an Oct. 21 letter to Sam Wilkins, director of the BCB’s Office of Human Resources, which was included in Tuesday’s meeting materials. “Our agency believes the Sales Incentive Pay Plan is meeting its objectives and is directly related to the success our State has seen in capital investment and job recruitment.”

In its accountability report for the fiscal year that ended June 30, Commerce said it “recruited investment from 46 international firms, which produced $2.6 billion announced investment and 4,730 recruited new jobs” in 2012. Germany led all countries in both categories that year, accounting for 47 percent of the total international capital investment and 44 percent of the recruited jobs, the report said.

The bonus plan “provides monetary awards when the department reaches its annual goals for capital investment, total job creation and rural job creation,” according to an agency document provided for Tuesday’s meeting.

The bonuses are not part of an employee’s base salary and are not used to determine retirement contributions, according to another agency document.

The base salaries of employees in the global business division were not immediately known Tuesday. Jennifer Noel, the division director, earns $117,000 annually, the BCB’s state salary database shows, though she and the division’s deputy director are not eligible to participate in the bonus program, according to Commerce.

Ford Graham is listed on Commerce’s website as the agency’s director of international investment and managing director of its European office, though he is not included in the state salary database.

The agency has three foreign offices – Munich, Germany; Shanghai, China; and Tokyo, Japan – each of which was staffed last fiscal year with one contract employee, according to the department’s annual accountability report.

Contract and temporary employees, as well as project and senior project managers, are eligible to participate in the project, according to a Commerce document provided for Tuesday’s meeting.

The bonus program started as a pilot project in 1998 and has been extended five times since then, including Tuesday’s vote, Commerce records show. The Nerve on Tuesday sent an email request to agency attorney Karen Manning and spokeswoman Allison Skipper for a list of the eligible employees, their base salaries and bonuses since the last program extension in November 2011; Skipper said the inquiry would be treated as a state Freedom of Information Act request.

The Nerve also asked whether a proposed $1 million increase in Commerce’s “closing” fund for next fiscal year, which starts July 1, would be tapped to cover bonuses. The fund, which is used to assist businesses locating or expanding in South Carolina, was set by the Legislature at $16 million for this fiscal year, state budget documents show.

The “closing” fund offers “greater flexibility than other incentive resources,” according to Commerce’s fiscal 2014-15 budget proposal, which noted that the proposed $17 million amount for next fiscal year was “based off of discussions” with Hitt and the directors of the agency’s global business division and the state Coordinating Council for Economic Development.

In her written response to The Nerve, Skipper said the “sales incentive program” for the global business division is funded from the department’s “operating budget appropriated by the General Assembly,” and not with the “closing” fund.

A Commerce document provided for Tuesday’s meeting said funding for the bonus program is provided through “state appropriations, carry forward funds, federal funds or other sources of revenue.” The Nerve in September reported that Commerce carried over more than $9.2 million into this fiscal year, which represented nearly a third of the agency’s fiscal 2013 general-fund expenditures of approximately $29 million, according to the comptroller general’s year-end report.

The agency’s general-fund surpluses typically pale in comparison to its “other” fund reserves. The Nerve in March reported, for example, that Commerce had more than $130 million in “other” fund reserves as of July 1, 2012, according to an annual Office of State Budget report.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.