DHHS Salaries rise

by Lynn Bonner and David Raynor, Charlotte Observer, August 24, 2013.

The state Department of Health and Human Services has created new high-salaried positions in its central office this year and is paying some top executives more than their predecessors even as the agency’s full-time payroll and average salary have declined.

The department hired its first chief financial officer, Rod Davis in June, at a salary of $169,148. About six weeks earlier, the agency’s budget director, Jim Slate, received a $30,660 raise, to $144,000.

Joe Cooper, the information technology chief hired this year to be in charge of the agency’s computer systems, makes $175,000, about $20,000 more than Chris Estes, the information technology chief for the state.

High-level administrators, including the state Medicaid director and the department’s internal auditor, make more than the people they replaced.

The department is being reorganized to resemble a corporate structure, DHHS spokesman Ricky Diaz said, adding that the new positions help establish clear lines of oversight and accountability. The agency filled the new executive positions with people who could make much more in private business, he said.

“The emphasis is implementing a reorganization of the department of this size to reflect what you’d find in the private sector,” Diaz said. The state agency has a 16,000-member full-time workforce.

Public focus has been on DHHS after news reports revealed that Diaz and another 24-year-old staffer, chief policy officer Matt McKillip, received hefty raises this past spring that brought their salaries to $85,000 and $87,500, respectively.

House Minority Leader Larry Hall, a Durham Democrat, is calling for a legislative committee meeting Sept. 3 so lawmakers can discuss the pay increases and promotions. Legislators are returning to Raleigh that day to consider overriding Gov. Pat McCrory’s two vetoes.

“The Republicans just passed a budget that fired thousands of educators and provided no pay raises to teachers or rank-and-file state employees,” Hall said in a statement. “At the same time, Governor McCrory’s administration is passing out huge pay raises to former campaign staffers with little to no experience in the jobs they’ve been given. The public is outraged, and they should be. The General Assembly has a responsibility to hold a public committee meeting and ask the governor’s administration for a public explanation of hiring processes and their use of taxpayer money.”

In an interview, Hall said McCrory set the trend for high salaries when he gave his Cabinet members raises in January with no idea what kind of job they’d do.

“Are we getting what we’re paying for?” Hall asked. “It seems in this administration, there’s no articulable standard,” he said – not the market rate or what the state has to pay to be competitive.

“People are hiring people they know or have some type of political relationship with that now get put in positions at higher salaries,” Hall said.

Breaking new salary ground

DHHS under McCrory has been breaking new ground on salaries throughout the agency under the leadership of Dr. Aldona Wos, the agency’s secretary. (McCrory frequently mentions that Wos is working for $1 a year.)

Medicaid director Carol Steckel was hired at a $210,000 salary this year, though the state’s new salary plan caps pay for that job at $136,900. Agencies are allowed to pay employees more than the salary plan allows for the job if they have extra credentials such as medical or law degrees, according to the state Office of Human Resources.

Steckel is not a doctor or lawyer and makes about $48,000 more than her immediate predecessor, Michael Watson, who was in the job for about a year. The state Medicaid director from 2009-2012, Dr. Craigan Gray, had medical, law and business degrees and made $270,000 a year.

Diaz said the agency received permission from the Office of State Personnel to pay Steckel more than state maximum for the job, based on her experience.

Wos said in an interview earlier this year she recruited Steckel because she wanted the best person to lead the office and found in Steckel someone with a national reputation. Steckel worked for the Louisiana Department of Health and Hospitals, helping to coordinate the state’s response to the Affordable Care Act. She also spent six years as the Commissioner of the Alabama Medicaid Agency, and is a former president of the National Association of Medicaid Directors. She is spearheading the department’s plan to transform the health insurance plan for the poor, elderly and disabled to a managed care plan.

The new internal auditor, Chet Spruill is being paid $155,000 a year, about $44,000 more than his predecessor and more than State Auditor Beth Wood, whose salary is set by state law, or any of Wood’s top deputies.

The state pay plan for auditors and financial investigators sets a top salary at $140,382 for the deputy state auditor. The current deputy state auditor makes less than that.

Diaz said Spruill is being paid as a “fiscal executive,” which has a maximum salary of $169,148. DHHS announced this month that its internal office staff would grow from eight to 40 people, with the department using unfilled jobs in other areas to beef up auditing staff.

Need for effective leaders

High salaries at DHHS are a concern for some lawmakers who worry about spiraling increases.

“I have a question about public servants getting paid that much,” said Rep. Duane Hall, a Raleigh Democrat. “I hate to see these exorbitant salaries when there are huge cuts to all sorts of social services.”

The DHHS payroll is about $21.9 million less than it was a year ago, Diaz said.

“We are driving efficiency,” he said.

Most of the agency’s employees work in psychiatric hospitals, centers for developmentally disabled people or alcohol and drug treatment centers throughout the state. The agency has 50 fewer full-time employees than it did in September, and the average full-time salary has dropped from $41,685 to $41,612, according to data from the state Office of Human Resources.

Rep. Nelson Dollar, a Cary Republican and a chief budget writer, said making sure the agency has effective leaders that will untangle problems at the agency is a bigger concern than their salaries.

“The greater concern is going to be, can these people produce, can they solve some of the very serious, chronic long-term problems we’ve had with the agency,” Dollar said. “If they can do that, I’m sure they’ll be worth their keep.”

Legislators for years have been frustrated trying to find the people responsible for specific problems, Dollar said. Increased accountability at the agency may be put to the test next month, when a legislative health and human services oversight committee convenes. No date has been set for a meeting, but Dollar expects legislators will ask how the agency is carrying out a host of new laws and about problems with new computer systems that pay Medicaid claims to health care companies and provide food assistance for needy people.