Rural Center refuses $242,000 severance payment to former president

acurliss@newsobserver.comNovember 21, 2013 

  • Keeping its investment gains

    The Rural Center has been getting money from lawmakers before it was needed for projects on the ground, allowing the agency to earn and keep $20 million in investment income in five years, a state audit says.

    Taxpayer money has been given to the Rural Center “long before those funds were needed to fund Rural Center grants,” the audit says. “These early disbursements allowed the Rural Center to accumulate significant interest income while waiting for projects to be completed.”

    One example is a Clean Water Partners program run by the Rural Center that received $145.5 million in state funds in fiscal years 2008 and 2009. By June 2012, the audit says, approximately $55.9 million still had not been spent.

    The center received $145.3 million in infrastructure grant funds from 2005 through mid-2012 but had distributed only $86.9 million of it, the audit says.

    The audit says state law does not require that the Rural Center share the investment earnings with the state, but said the state should consider a different approach and the General Assembly should clarify its intentions.

    -- J. Andrew Curliss

Leaders of the nonprofit N.C. Rural Economic Development Center, largely funded with taxpayer money for almost three decades, voted Thursday to deny the agency’s former president a special severance worth almost a quarter-million dollars.

Billy Ray Hall, who resigned this summer amid questions about handling of grants at the agency, will not get an expected payment of $242,000 from a fund created for him 10 years ago, according to a statement released by the board. The decision was made behind closed doors.

The decision was made after “a thorough and thoughtful discussion” that lasted about an hour, Bill Gibson, acting chairman of the board, said in a statement. He described the account as a “severance pay plan award previously recommended” for Hall.

The Rural Center, charged with helping the poorest areas of the state, had made periodic contributions of $10,000 to $40,000 to the account, according to center officials and a state audit that first disclosed it.

The severance account payments were on top of regular retirement contributions, a car allowance and salary for Hall, who led the center since its creation in 1987. His salary of $221,000, much of it paid with state funds, had been flagged this year by state auditors as “unreasonable.”

Once the severance was disclosed, it was immediately criticized as a wasteful “golden parachute” by some lawmakers, including Senate leader Phil Berger. Its existence was a factor in moves by state lawmakers to end taxpayer funding of the center this year; a new rural agency within the state Commerce Department has since been created.

Amid that crisis, the Rural Center’s full board of about 50 members voted to delay the severance payment to allow further study. Some said they were unaware of the account, which was authorized by a smaller “executive committee” of the board.

Valeria Lee, a former Rural Center board leader who had helped establish the fund, has said it was created to show “appreciation” for Hall’s years of service to rural areas in the state and to keep him at the agency.

Hall, through a lawyer, had sought the payment after his resignation July 18.

The Rural Center board met Thursday with a lawyer who specializes in nonprofit matters and who was hired to study the issue.

Patrick Woodie, the center’s president, and Keith Crisco, a former state commerce secretary who is on the board, both said the vote to deny the severance was nearly unanimous. Brian Crutchfield, a longtime leader on the center’s board, said it did not appear that the severance payment would be allowed under IRS laws or rules and that it was not set up correctly.

It was unclear whether Hall would take further legal action. A lawyer who represents him, Gerry Hancock, said he had not received notice of the decision and could not comment.

The Rural Center and the state officially broke their grant-making ties last month, with tens of millions in state money held by the center reverting to the state. The center will continue in a diminished form, focusing on leadership training and fostering small businesses.

On Thursday, the board said that it would also form a special committee to honor Hall’s “contributions to the center and rural North Carolina as a whole.”

“We believe this is the best path forward for everyone involved,” Gibson said in the statement.

Curliss: 919-829-4840; Twitter: @acurliss

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