Thursday, October 22, 2009

Utah State Lawmakers Outraged Over Windfall Double Bonuses Paid To Senior SITLA Administrators; SITLA Defends Them As A Necessary Incentive

On October 21st, 2009, both the Salt Lake Tribune and the Deseret News reported that several Utah lawmakers reacted with outrage when they learned that the Utah School and Institutional Trust Lands Administration (SITLA) shelled out five-figure megabonuses, in some cases double bonuses, to six senior SITLA officials.

Senate President Mike Waddoups (R-Taylorsville) reacted: "I just find this totally inappropriate. This sort of thing gives government a black eye." Sen. Majority Leader Sheldon Killpack chimed in: "In my opinion it's inexcusable and reprehensible." And House Speaker Dave Clark also sounded off in a press release: "Every agency in state government is taking budget cuts. Part of SITLA's budget cut was the quarter-million dollars in bonuses they get each year. To have them accelerate the payment by two months to avoid our policy direction is inexcusable. They are supposed to be managing state resources in the best interest of school children."

Here's the situation. In February 2009, when the Utah State Legislature was cutting agency budgets across the board, they also reduced SITLA's budget and prohibited the payment of bonuses during the 2010 fiscal year. This means that the payment of any bonuses for 2009, which would normally be disbursed in 2010, could not be disbursed then. So, to get around the prohibition, SITLA decided to pay both the 2008 AND 2009 bonuses on June 30th, 2009. Primarily an accounting dodge, according to SITLA spokesman Dave Hebertson, while Lisa Schneider, the administration's assistant director of finance, said it is just a matter of timing. "Both payments hit in the same fiscal year. That is why it looks so big," she said.

The Salt Lake Tribune identified two of the bonus recipients; Kevin Carter, SITLA administrator, who received awards of $35,000 and $36,000, and Asst. Director Tom Faddies, who received awards of $23,460 and $20,200. However, I wanted to see if I could identify all six of the recipients. So I visited the Utah Transparency website, and in the upper right hand corner, I selected "Expense" for Transaction Type, "2009 (07/01/08-06/30/09)" for Fiscal Period, clicked "Start", which led me to State of Utah Expense 2009, where I selected School & Institutional Trust Lands Admin.

Listed under TLA Director:

-- Kevin Carter: Listed as an Incentive Award, Entity Transaction ID 20091013-122653. $36,000 bonus, normal salary $64.66 hourly rate. Because this hourly rate is higher, this must be the bonus for 2009 (which would ordinarily have been awarded in June 2010, except payment of bonuses during 2010 is prohibited.
-- Kevin Carter: Listed as an Incentive Award, Entity Transaction ID 20091013-159336. $35,000 bonus, normal salary $59.86 hourly rate. Because this hourly rate is lower, this must be the bonus for 2008.
-- John Andrews, Associate Director: Listed as an Incentive Award, Entity Transaction ID 20091013-23886. $52,360.00 bonus, normal salary $52.99 hourly rate.

Listed under TLA Surface:

-- Kim Christy, Assistant Director: Listed as an Incentive Award, Entity Transaction ID 20091013-102534. $43,660.00 bonus, normal salary $48.85 hourly rate.

Listed under TLA Development:

-- Douglas Buchi, Assistant Director: Listed as an Incentive Award, Entity Transaction ID 20091013-166441. $36,660.00 bonus, normal salary $51.57 hourly rate.

Listed under TLA Mines:

-- Thomas Faddies, Assistant Director: Listed as an Incentive Award, Entity Transaction ID 20091013-103079. $23,460.00 bonus, normal salary $48.85 hourly rate.

Listed under TLA Oil & Gas:

-- Thomas Faddies, Assistant Director: Listed as an Incentive Award, Entity Transaction ID 20091013-60155. $20,200 bonus, normal salary $48.85 hourly rate.
-- Lavonne Garrison, Assistant Director: Listed as an Incentive Award, Entity Transaction ID 20091013-92041. $46,660.00 bonus, normal salary $51.57 hourly rate.

While I did indeed find two bonus payments to Carter and Faddies, I could only find one bonus payment record on Andrews, Christy, Buchi, and Garrison. The size of the payments to the latter four lead me to believe they could be a combined payment for both 2008 and 2009. The records also show a number of other incentive payments to ordinary worker bees, but they were only in the range of $400 to $1,800 to $2,200, so they are of little concern. It's these windfall bonuses paid to the six senior administrators which are outrageous.

Senator Waddoups sounded off some more: "We have a quasi-governmental agency that would do something like that when there's such a struggle in the economy, leaving people without jobs and trying to pay bills ... I just find this totally inappropriate in the timing it's coming forward".

Lisa Schneider said revenue and performance goals are established for six top managers — the executive director, assistant director and four other division leaders. The goals are set at the beginning of each fiscal year, July, and reviewed at the end of the fiscal year, June, to see if they were met. And according to John Ferry, chairman of SITLA's board of trustees, they met those goals. "The board is sensitized to the economic conditions and we agonized but felt we needed to honor them and give them that. … If we were a money loser, failing, like so many out there, it would be different. We consider ourselves a lonely bright spot in the economy because we are doing well," explained Ferry.

Governor Gary Herbert may intervene. The bonuses also are expected to be discussed when Gov. Herbert meets with the agency next week as he prepares his new state budget. "The governor's office is aware of the concerns expressed today by legislative leadership and has discussed the matter with agency officials. The initial response we received indicates that bonuses were not improperly awarded," Herbert spokeswoman Angie Welling said. "However, it is an issue the governor will discuss in greater detail."

SITLA is an independent state agency which manages 3.4 million acres of trust lands for the financial benefit of Utah public schools. At the end of fiscal year 2009, the fund stood at $970.5 million. The fund itself it is not tapped, but interest earnings and dividends are distributed to schools. It has an operating budget of $9.9 million and a separate budget of $10.6 million for capital projects

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