With an annual budget of $705 million, Raleigh’s city manager oversees 6,600 employees who police the streets, pick up the garbage and make sure homes and office buildings are properly sited and built.
Wake’s county manager administers a $982 million budget with 3,600 employees who help the poor receive food stamps and other public assistance, perform restaurant inspections, and operate parks and libraries.
But last year, those administrators made roughly the same pay as an official whose sole responsibility is providing housing to the city’s poorest citizens. During the past 17 years, Raleigh Housing Authority Executive Director Steve Beam’s annual compensation has grown as high as $280,690 in 2011. He leads a staff of about 150 with a $50 million budget.
Beam belongs to a select group of public officials across North Carolina who receive big pay and benefits running authorities, commissions or institutions that are overseen by political appointees and draw little scrutiny from the public. This class of public officials emerged in a News & Observer analysis of pay data for more than 435,000 employees from 1,216 state and local agencies; the officials with surprisingly high pay run housing authorities, community colleges, municipal and county utilities, and even a local tennis complex.
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In many of these cases, the boards that oversee these executives say the pay is well-deserved. They say the institutions are well-run, with clean audits and few public complaints. They also cite pay surveys that show their executives’ pay is in line with pay of leaders at similar institutions.
“You can pay people less (in) salaries, but you end up with more turnover, and that’s more costly,” said Kyle Dilday, the Raleigh Housing Authority board chairman who has repeatedly supported raises for Beam and credits him with running a tight, clean operation.
The pay deals are often done behind closed doors, with little explanation afterward. That’s because the state’s personnel law considers evaluations private. In Beam’s case, board minutes for several years – recorded by Beam – merely noted a closed session about “personnel matters.” No pay details were provided.
The information on public pay is collected by the state treasurer’s office, which needs it to administer the pensions of 254,000 retirees. That’s because the pay rates determine the size of an employee’s pension.
State law requires taxpayers to cover the difference if the pension system ever falls behind in its obligations. So far, North Carolina has maintained one of the most well-funded pension systems in the nation.
For Beam and others in the state pension system, the bonuses and longevity pay can be factored into their pensions if earned during their four highest consecutive years of pay.
Board members who approved the salaries and benefits often cite compensation studies that suggest these officials have been or continue to be underpaid, or they point out that many of these officials are long-serving and that letting them go would be a great loss to the organization.
‘Out of whack’
But Beam makes tens of thousands more in compensation than Congress and federal housing officials wanted. After reports of high pay for public housing directors in other cities, Congress voted in 2012 to limit the federal government’s share for a director’s salary to no more than $155,500.
The federal Department of Housing and Urban Development primarily funds local public housing authorities. It accounts for three-quarters of the Raleigh Housing Authority’s budget.
The cap did not result in a pay reduction for Beam. The agency uses funds not controlled by HUD to keep the pay up, and its minutes make no mention of the salary cap at all.
U.S. Sen. Chuck Grassley, an Iowa Republican who drew attention to housing authority salaries, said housing authorities that continue to pay directors more than $155,500 “violate the intention of the caps.”
“The caps are meant to focus housing authorities’ spending on their essential purpose of providing safe, affordable housing to people in need,” Grassley said in an email. “And housing authorities that expend a lot of effort to circumvent salary caps have their priorities out of whack.”
Beam disagrees. “You’ve got to look at the longevity of the executive director,” he said. “You’ve got to look at what the agency has accomplished in that time.”
Beam said the pay cap doesn’t apply to him because his salary doesn’t come from federal funds. “RHA has a diversified portfolio, and the federal funding is one of several sources,” he said.
Pay beyond his peers
Beam, 55, rose through the ranks of the Raleigh Housing Authority, starting in finance and becoming director in 1996. Board members credit him with turning around a troubled agency in the wake of two residents’ deaths from carbon monoxide poisoning about 20 years ago.
Beam will be paid a salary of $240,000 this year. He routinely receives bonuses, the highest being $42,000, plus longevity payments and a car allowance that have brought his total compensation as high as $280,690. It dipped to $271,812 last year after the board gave him a smaller bonus.
Raleigh City Manager Russell Allen was earning a $232,800 annual salary when he was fired this year, plus $37,248 in deferred compensation and an $8,400 annual car allowance. He has received annual longevity payments equaling 4.2 percent of his salary, or roughly $9,800. All told, Allen’s pay reached as high as $288,248.
Wake County Manager David Cooke makes about $20,000 less than Beam. County records show Cooke receives $239,121 in annual salary, plus a $6,000 car allowance and $4,000 annually in a special retirement account. He has been county manager since 2000 and will retire at the end of the month.
Beam’s 2010 compensation puts him among the 30 highest-paid public housing directors in the country, according to a HUD survey. He made more than the housing directors in Chicago, Boston and Charlotte, which all have bigger budgets and staffs.
The Raleigh Housing Authority board, which is appointed by the mayor, has given Beam a raise every year since he was hired in 1996. The biggest has been $18,000.
“He’s sort of on the upper end of the pay scales, but we think he deserves that,” said Dilday, a retirement community administrator who serves as the authority’s board chairman.
Dilday points to Beam’s record at the agency. He has overseen the demolition of 1,000 of the city’s worst public housing apartments while building several new complexes, for a net gain of 2,000 units. The agency’s last 26 audits have come back clean. And he has worked to restore credibility after the 1992 deaths of two Walnut Terrace residents from carbon monoxide poisoning.
“I cannot fathom trying to replace Mr. Beam,” Dilday said. “Raleigh would lose a tremendous asset because of what he has been able to do.”
Dilday said the board sets Beam’s pay after reviewing surveys of compensation at similar agencies. The most recent study, in 2011, looked at 100 other housing authorities across the country and found seven that paid their directors more than Beam. Three of those managed at least 20,000 more public housing units than Raleigh, which had 5,417 at the time.
The study didn’t factor in directors’ non-salary pay, which for Beam totaled $46,760 that year. The study also compared Beam to leaders of other government and private agencies in North Carolina, including college presidents, hospital executives and city managers.
Beam’s pay came in only slightly above the study’s average for other agency leaders – but only because it included the CEO of WakeMed, whose pay of $767,477 raised the average by $13,000.
Waits for public housing
The Raleigh Housing Authority board rarely questions Beam’s leadership. Nearly all of its votes in recent years have been unanimous; one board member has served for 18 years, while most others have served for at least eight.
Because the terms are so long, Mayor Nancy McFarlane has yet to make a new appointment – even though she’s nearing the end of her first two-year term in office.
Beam has seen his pay increase during hard times, while his agency has had to turn away thousands seeking housing.
In Raleigh earlier this fall, 5,884 people were waiting for a public housing apartment, and 4,659 others were waiting to join the Section 8 voucher program, which provides subsidized rent at privately owned homes. Section 8 applicants can expect to spend up to five years on a waiting list. With the cost of vouchers averaging $11,000 a year, the housing authority could provide rent subsidies for 10 more families if Beam’s pay were capped at the federal limit.
Octavia Rainey, a Southeast Raleigh community activist, said she had not been aware of Beam’s salary. She said the housing authority’s operations are secretive.
“He should not be making that kind of money,” she said. “It is unacceptable when you have people suffering in the city of Raleigh.”