One of the thornier issues state House budget writers expect to take up as they pull together a proposed spending plan by the end of the month is what they and Office of State Human Resources officials see as runaway pay raises in the state Department of Transportation.
Last month, The News & Observer reported the NCDOT interpreted a provision in last year’s budget bill as meaning it could use roughly $150 million to boost the pay of thousands of employees over a two-year period. The budget writers say NCDOT should have spent roughly $35 million on what the provision described as a “pilot” program.
The dispute centers on whether the NCDOT was allowed to use 2 percent of the funds that cover most transportation expenses, as transportation officials say they saw it, or 2 percent of what NCDOT typically allocates for payroll expenses, which state legislative budget writers say was their intent.
“I think it got out of hand before anybody realized what was going on,” said Rep. Donny Lambeth, a chief budget writer.
As of late last year, the NCDOT had handed out raises to 7,000 employees that carry a $55 million annual price tag. Nearly 5,300 of those employees received increases of 10 percent or more. The highest were in the 60 percent range.
Discipline no obstacle to raises
NCDOT officials say the raises were justified after a national consultant looked at the employee pay for much of the department’s work force and found many positions well below the market for the public and private sectors. The low pay is contributing to a 20 percent vacancy rate, they said.
From Aug. 1 through the end of last week, 1,069 people left NCDOT, spokeswoman Greer Beaty said, with only 31 of them taking jobs in other state agencies.
But an Office of State Human Resources report given to legislative staff in February said the pay raises went beyond what was needed to correct market-based inequities. It found:
▪ Increases went to employees who had poor performance evaluations or received disciplinary actions.
▪ 584 probationary employees, who had yet to work a year to achieve permanent status, received pay increases averaging 16 percent. “This is unusual, since employees usually do not get raises until made permanent,” the report said.
▪ The increases went beyond the “mission critical classes” of engineers and engineer technicians. Three times as many employees in other areas of the department received pay hikes.
Overall, the report said the NCDOT employees received raises that were on average three times higher than raises for employees in any other state agency led by a member of Gov. Roy Cooper’s cabinet. The report said the market survey NCDOT used cited national compensation data, which skewed pay upward and in some cases set midpoints for pay above the state’s maximum salary range.
“Allowing one agency access to additional funding creates an imbalance across state government, with lower pay and morale at other agencies,” the report said.
Not just engineers who are ‘mission critical?’
Beaty said probationary and low-performing workers received the raises because the goal was to increase pay for below-market positions, not people.
She also said while the budget provision evolved out of discussions with lawmakers about the difficulty in hiring engineering positions, many other jobs in the operations and trade areas are “mission critical” too.
“They are the ones in the trucks pushing the snow; they are the ones cutting the trees that fall down on the highway,” Beaty said.
She said since the N&O story no lawmaker has reached out to NCDOT staff to question the raises or suggest changes were coming.
“If they do ask and they want information and want somebody to talk to them, then absolutely we will provide that information,” she said.
“This was a pilot project that the legislature created, really, for the purpose of addressing the high vacancy rate,” Beaty added. “And it’s a pilot project so lessons can be learned and folks can evaluate it and see what works.”
If the legislature and governor take no action on the pay raise provision, another set of NCDOT employees could see their pay go up. The Division of Motor Vehicles was not included in the market study, and the NCDOT has another one underway for them.
The DMV has a unique circumstance. Its headquarters in Raleigh is moving to Rocky Mount, which will create financial pressures on those employees who may be forced to move or drive long distances.
Lambeth, a Forsyth County Republican, said lawmakers are aware of the DMV employees’ plight, and it makes a decision on the pay raise issue even more difficult.
He said the options available to lawmakers include rolling back the increases and telling NCDOT to start over again at the terms budget writers originally intended, allowing some raises to go through while preventing additional raises, or doing nothing at all.
“You try to step back and say, ‘What’s a fair way to handle this?’” Lambeth said.