Mary Easley's pension soars with N.C. State settlement

N.C. State settlement allows credit for high-salary years not worked

acurliss@newsobserver.comNovember 30, 2012 

  • Effect of a settlement Here’s how the state’s pension plan treatment of former First Lady Mary Easley changed as a result of an out-of-court settlement agreement that went into effect in September. Easley, who had worked as a state prosecutor and at N.C. Central University before her hiring at N.C. State in 2005, has seen her pension increased by more than $43,000 a year because of the agreement she reached over her termination at N.C. State as of July 2009. Before deal: Monthly retirement benefit of $3,097.63
    YearSalaryEmployment
    2009$84,113Retired July 1, 2009
    2008$130,150N.C. State
    2007$88,150N.C. State
    2006$83,000N.C. State
    2005$40,000N.C. State
    2005$55,879N.C. Central
    After Deal: Monthly retirement benefit of $6,716.48
    YearSalaryEmployment
    2012$113,333Retired Sept. 6, 2012
    2011$170,000N.C. State
    2010$170,000N.C. State
    2009$169,113N.C. State
    2008$130,150N.C. State
    2007$88,150N.C. State
    2006$83,000N.C. State
    2005$95,879N.C. State/N.C. Central
    Sources: State Treasurer’s Office, N&O research

N.C. State University has reached an out-of-court settlement with former First Lady Mary Easley over her abrupt firing three years ago in a deal that more than doubled her state pension payment, according to interviews and documents.

The effect of the agreement: The retirement plan now treats Easley as if she had been working at a salary of $170,000 during the past three years.

She was dismissed in 2009 amid controversy and budget cutting. Easley, 62, then retired early and began receiving an annual state pension of $37,171 with credit for more than two decades of work in state government.

The new settlement, which was signed in late August but has not previously been disclosed, gives Easley a pension benefit of $80,597 per year based on more years of employment at a much higher salary.

The increase is $43,426 more a year for Easley from the pension plan – and would be $1 million in extra pension pay for Easley over the next 23 years, her current life expectancy.

NCSU Chancellor Randy Woodson approved the deal, records show. He said the agreement had the full support of university trustees and the UNC system Board of Governors, though the authority to settle was his. The cost to N.C. State: about $90,000, paid from a fund of private donations.

“We felt like this was in the best interest of the university given the potential litigation,” Woodson said.

Woodson said Easley’s possible legal case against the university focused on “breach of contract” because the university terminated its written contract with her one year into a five-year term.

Easley was first hired to work at N.C. State in 2005 to run a speaker’s series. She had taught law at N.C. Central in Durham and before that she was a prosecutor in southeastern North Carolina.

In 2008, her N.C. State job was expanded with a controversial 88 percent pay raise as part of a five-year contract.

That contract would have paid Easley $170,000 a year as an “executive in residence.” Her duties were to create and direct a public safety center; continue running the speakers series; coordinate law-related academic programming; and teach half a class each semester.

A series of disclosures in 2009 about how she was first hired with the direct help of former Gov. Mike Easley, along with budget cutting in state government that took away many of her duties, led to prominent calls for her resignation, which she refused. Mike Easley was governor from 2001 to 2009.

The episode led to the forced resignation of Chancellor James Oblinger on the same day that university trustees terminated Easley’s contract, effective July 1, 2009. The university said her duties no longer existed and “it is in the best interests” of N.C. State.

She did not receive a contract buyout. Easley tried to get her job back through the university’s grievance process, but was unsuccessful.

Avoiding litigation

Grayson Kelley, the chief deputy at the state Attorney General’s office, said in an interview that legal negotiations had gone on for months. He said he was authorized to discuss the negotiations but was not directly involved in them because he had previously worked closely with Mike Easley, a Democrat who served both as attorney general and governor.

The negotiation was led by Tom Ziko, a senior deputy who oversees education cases.

Kelley said that Mary Easley, who was represented by Fayetteville lawyer Wade Byrd, had sought an initial demand in the “high six figures” or as much as $1 million as a settlement for a wrongful termination claim. N.C. State denies any breach of contract.

Kelley said state attorneys analyzed the cost of a trial and other factors, including that the attorney general’s office had not been consulted at the time the contract was ended. He said the AG’s office gave advice to N.C. State that he could not disclose, but said the university made the final decision to settle.

Attempts to reach Easley or her lawyer were unsuccessful.

Under the settlement agreement, the university made no payments related to salary Easley would have received had she continued to work, a total of $595,000 had she finished the contract.

Instead, the settlement is focused on Easley’s pension.

How to ‘unretire’

The settlement deal allowed Easley to “unretire” and get credit, for state retirement purposes, as if she had worked for the three years since she was fired, according to the documents and interviews.

The state’s pension plan now treats Easley as if she had been working at a salary of $170,000 over the past three years – from July 1, 2009, to September of this year.

As a result, both N.C. State and Easley had to make payments to the state’s retirement and health plans as if she had been at work. Under various laws, rules and regulations and according to the State Employees Association of North Carolina, payments were necessary to reimburse for pension payments Easley had already received; to cover health insurance premiums that would have been made in those years; and to pay both employee and employer contributions that would have gone to the retirement plan as well as interest that would have accrued over the three years.

Annual contributions from taxpayers and employees fund the pension plan.

Officials would not disclose the total amount needed to “unretire” Easley.

N.C. State paid $75,000 into the retirement system on her behalf, documents show. The university paid another $15,308 to the state health plan related to insurance premiums for Easley. That brought N.C. State’s total settlement cost to $90,308.

The funds came from unrestricted private donations made to the university, Woodson said.

The amount that N.C. State paid is more than what the university would have paid in contributions to the retirement plan for Easley had she been working. A university spokesman said the $75,000 was a negotiated amount.

A ‘great deal’

The exact amount Easley paid into the retirement plan is not public information, officials said.

Based on retirement system rules and regulations and interviews, The News & Observer estimates that Easley would have paid roughly $150,000 – much of it related to reimbursing the state for pension checks she received since 2009. That’s because, under the settlement, she was not retired in those years and could not have received pension pay, which totaled about $117,000.

Ardis Watkins, lobbyist for the State Employees Association of North Carolina, said Easley negotiated a “great deal.”

She said the outcome is ironic because the association believes Mike Easley harmed the state pension plan as governor, by diverting appropriations from it and by not funding it at required amounts. Under Easley, the state did not add a contribution in one year. In others, it was a quarter of one percent of salaries. Employees pay 6 percent of their salary into the system.

“This settlement will cost the retirement system far more than it will the university,” Watkins said. “As governor, Mike Easley neglected the retirement system and even diverted money from it for other purposes, showing no respect for the system or those state employees working to fund it.”

The settlement now gives Mary Easley a bigger pension than her husband. The former governor, convicted in 2010 of a felony that ended state and federal investigations, receives an annual pension of $71,088 for his 23 years as a prosecutor, state Attorney General and two terms as governor.

Curliss: (919) 829-4840

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