SCRA Board OKs Pay Hike, Not Transparency

September 30, 2010

Investigative Reports

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The NerveAn ongoing disagreement over operations at the S.C. Research Authority between Chairman Bill Masters and the rest of the state-controlled agency’s board dominated Thursday’s Executive Committee meeting of the SCRA.

Masters voiced disagreement with two key issues approved during the session: a plan to substantially raise salaries of SCRA employees and executives, and a resolution that Masters says dilutes the chairman’s role as the principle liaison between the governor, General Assembly and citizens of South Carolina.

On each issue, Masters stood alone.

Masters, Gov. Mark Sanford’s appointee to the SCRA board, said afterward that he couldn’t discuss either the pay raise, which he considered ill timed given the economy, or assertions that the Executive Committee was seeking to restrict his rights and responsibilities, and curtail his ability to interact with management.

“I think you have to go to the CEO for that,” he said repeatedly, before leaving the meeting at the new SCRA Innovation Center off Assembly Street in Columbia just moments after the session’s conclusion.

Chief Executive Bill Mahoney said the second resolution in question, which gives him official authority to take a more active role as a visible face for the SCRA, was not designed to censor Masters and did not prevent him from speaking publicly.

He added that Masters’ attempt to block the resolution was the result of a “personal vendetta.”

Masters was appointed to the SCRA board by Sanford in April 2009. As the governor’s appointee, he automatically became chairman.

The Legislature then promptly passed a proviso to change the way the SCRA chairman is selected. The proviso would have required that the chairman be elected by the board instead of appointed by the governor.

Sanford vetoed the proviso because he believed the Legislature didn’t want Masters asking questions about what was going on at the Research Authority.

On Thursday, Masters handed out a letter sent to him by Sanford that said Masters had his full support in efforts to improve transparency and accountability at the SCRA.

“I’d simply ask that you always err on the side of greater transparency and getting the right answers to share with your board and taxpayers,” says Sanford’s letter, dated Sept. 29.

Earlier in the Executive Committee session, the board voted to approve pay raises for SCRA employees, a move recommended by management consulting firm the Hay Group.

The Hay Group undertook a study of SCRA’s salaries and, according to a report discussed during Thursday’s meeting, the Research Authority ranks in the 25th percentile among peers in terms of what it pays.

The Hay Group came back with a recommendation that in order to remain competitive, SCRA should raise its compensation so that it’s much closer to the 50th percentile, board member Albert Baciocco said.

With the understanding that the bump in pay would represent a significant increase, the board proposed to implement the boost over three years, and would vote on approving a portion of the increase separately each year.

Therefore, only a pay raise for the upcoming year was approved. It will go into effect in November and will range from no increase for some employees to as much as 6.5 percent for others, depending on performance. The raises will total about $300,000 in all for the coming year.

While SCRA employees are among the best paid in South Carolina state government, as The Nerve has reported, board members argued the salary increase is needed to retain staff.

“SCRA is the largest tech company in South Carolina, with $150 million in revenue,” board member Larry Wilson said. “Its people are the only real asset SCRA has. We have to rely on experts like Hay to tell us what the market place is and we have to be competitive.

“Any other view is very short sighted,” Wilson added.

Sanford said the move raises serious questions and offers yet another exhibit in the case for government restructuring.

“Only in state government can raises of almost $300,000 be dished out with seemingly no recognition of the fact that state government is facing a billion-dollar shortfall next year,” Sanford spokesman Ben Fox said. “Providing these lavish raises in the midst of the most difficult economic stretch in a generation is an affront to taxpayers, and we’d commend the SCRA chairman for speaking up on this issue and looking out for the taxpayer.”

Of approximately 240 individuals SCRA employs, almost half earn $50,000 or more annually; fully 90 make $60,000 or more; 36 bring home $100,000 or more; and 10 earn in excess of $150,000, according to the State Salary Database.

Mahoney said the salary increases are also warranted by the explosive growth SCRA has experienced in recent years. In the past five years, revenues have grown from $74.9 million to $172 million, he said.

SCRA was created in 1983 by the General Assembly, which gave the entity $500,000 and about 1,400 acres of undeveloped state land, estimated at that time to be worth $10.7 million. Of that, it has since sold at least 480 acres for more than $12.7 million.

It gets no direct appropriations, but under the Industry Partners Act South Carolina taxpayers can receive a 100 percent credit against state income taxes, insurance premium taxes and certain license fees for contributions. Last year, $6 million was contributed to affiliate SC Launch through this means.

Masters was the only board member who did not support the salary increases, which could be as much as $15,400 for Mahoney in the next year alone if the CEO gets the full 6.5 percent bump.

“Given that the state is going through financial duress, I cannot support this,” he said.

Masters was referring to the fact that state funding for core government functions such as education and law enforcement has been reduced an unprecedented amount – some $2 billion – amid the Great Recession.

In addition, South Carolina’s federal stimulus funding from the American Recovery and Reinvestment Act of 2009 is running out this year. Largely because of that, state officials are projecting a $1 billion gap in the 2011-12 spending plan before legislators even start drafting it.

But when Masters tried to call for an on-the-record vote on the pay hikes by each board member, he was met with resistance. In the end, the board approved the pay-raise plan by a voice vote.

Reach Dietrich at (803) 779-5022, ext. 110, or kevin@thenerve.org