N.C. pension system’s executive director receives $105,464 salary boost

The executive director of North Carolina’s $87.6 billion pension system received a $105,464 boost in salary – an 81 percent increase – earlier this year when the state Treasurer’s office adopted a new compensation plan designed to bring salaries more in-line with their counterparts in other states.

The executive director, Steve Toole, whose salary was $236,000 after receiving the increase, was one of four employees in the state Treasurer’s office who received salary boosts that went into effect in April. The salary boosts for the other employees amounted to $6,500, $20,824 and $58,142.

The raises were authorized by state legislation that gave Treasurer Janet Cowell and the board of trustees for the state’s Supplemental Retirement Plans the power to establish “market oriented compensation plans” for key employees of the supplemental plans in order to retain them and “to promote achievement of long term investment objectives.” The bill passed was unanimously approved by both the House and the Senate in 2015.

The supplemental plans encompass the 401(k), 457 and 403(b) retirement plans with more than $9 billion in assets for more than 250,000 current and former public employees. Toole administers those supplemental plans as well as the $87.6 billion pension system that covers more than 900,000 state employees, teacher and other public workers.

The state Treasurer’s office “worked with legislators to address the fact that staff for the supplemental retirement plans were being paid well below their counterparts at other states’ public retirement plans,” department spokesman Brad Young wrote in an email. Treasurer Janet Cowell wasn’t available for comment.

The new salaries come with a trade-off: these employees are now exempt from the State Personnel Act, which means they can be terminated for any reason.

That’s especially significant this year because state Treasurer Janet Cowell, a Democrat, isn’t running for a third term. Consequently either of her would-be successors, Republican Dale Folwell or Democrat Dan Blue III, would be free to replace them.

Last year more than two dozen investment professionals in the Treasurer’s Office received pay increases averaging more than $49,000 as the result of a separate market-based compensation plan authorized by different legislation passed in 2014. Those workers also became exempt employees.

The latest salary increases were based on a $52,891 compensation study conducted by Mercer Consulting, which identified what positions were eligible for market-based compensation under the law and compared those salaries with public employees with similar positions nationwide. The philosophy behind the increases was to get employees to the midpoint among their peers “if they have appropriate skill sets and are performing well,” Young said.

Mitch Kokai, senior political analyst at the John Locke Foundation, a conservative think tank in Raleigh, said that “market compensation makes sense when you can measure the success rate ... Where it is difficult is where there is no good way to tell how effective the person is in the job.”

Kokai added that making the employees at-will employees “gives then an incentive to do the job really well.”

Allan Freyer, director of the Workers’ Right Project at the liberal N.C. Justice Center, said that “while it’s good news that state employees are getting a much-needed raise, state agencies should make sure that the lowest-paid workers are also getting a raise and not just those at the top. There’s no excuse for any state employee earning less than what it takes to make ends meet.”

Freyer also said in an e-mail that it is “troubling” that the legislation exposes the employees to possibly being fired for political reasons.

Senate Leader Phil Berger, House Speaker Tim Moore and the four primary sponsors of the House bill that became the 2015 law – two Republicans and two Democrats – couldn’t be reached for comment Monday.

Besides Toole, the supplemental plan employees whose salaries were boosted are: Rekha Krishnan, operations analyst, whose salary rose from $46,500 to $53,000; Maja Moseley, compliance officer, whose salary was boosted from $48,676 to $69,500; and Mary Buonfiglio, the deputy director, whose salary rose from $99,858 to $158,000.

Since the pay increases went into effect, these employees subsequently received the 1.5 percent raise granted to all state employees this year.

Also, the salary for an assistant general counsel position that was vacant when the study was conducted was boosted from $86,000 to $124,000, Young said.

The salaries for the supplemental plan employees, and a portion of Toole’s salary, are paid out of the fees paid by members of the plans. Those fees amount to 2.5 cents for every $100 a member has in the plans.

This story was originally published September 26, 2016 at 4:57 PM with the headline "N.C. pension system’s executive director receives $105,464 salary boost."