BISMARCK-The North Dakota Senate's chief budget writer said this week the $400,000 in severance paid to employees of the state's now-defunct tobacco prevention agency "continued a pattern of abuse" that helped justify its elimination.
State lawmakers voted to repeal the Center for Tobacco Prevention and Control Policy, known as BreatheND, earlier this year. Nine employees received severance for six months of pay and for the cost of six months of health insurance, totaling $400,739, said Pam Sharp, the Office of Management and Budget director.
Neither state law nor OMB policy sets a maximum for severance pay, Sharp said.
Although the packages were legal, Republican Sen. Ray Holmberg, the Appropriations Committee chairman, said it was an example of BreatheND's excessive spending. The agency was appropriated $16.5 million from the Tobacco Prevention and Control Trust Fund for the 2015-17 budget cycle.
"They gamed the system, paid themselves way too much," Holmberg said Wednesday, Oct. 25.
Holmberg's counterpart in the House, Republican Rep. Jeff Delzer, agreed that the severances were "very excessive."
BreatheND's funding came from tobacco settlement dollars, Sharp said. And even after paying the severance packages, the agency still had more than $700,000 leftover that went into the tobacco fund, which totaled about $57.4 million at the end of the biennium, she said.
Still, Bismarck Republican Rep. George Keiser, a member of the agency's executive committee and advisory board, said he opposed the size of the severances.
"When we terminate programs, we do give some kind of severance package," he said. "But I thought the amount was improper."
Dr. Eric Johnson, who served on BreatheND's advisory board and executive committee, said they consulted with OMB and an attorney who said they were "well within the parameters of the state law regarding such packages." He said the agency was a good steward of its funds, noting that North Dakota was one of two states to fund anti-tobacco programs at levels recommended by the Centers for Disease Control and Prevention.
"These employees were a little bit different because they weren't offered voluntary retirements," Johnson said. "We just looked at the guidelines and we gave them what we were able to."
The elimination of BreatheND was one of the more visible budget battles during this year's legislative session as lawmakers looked to tighten belts across state government. The agency was created in 2008 through an initiated measure, and supporters cited a drop in smoking rates in arguing against its elimination.
Ultimately, the Legislature repealed BreatheND, following recommendations from former Gov. Jack Dalrymple and his successor Doug Burgum, and combined tobacco efforts with the state Department of Health.
The severances appeared to be more generous than the buyouts offered at other state agencies this year. Through that "voluntary separation incentive program," employees had the choice of receiving a lump sum equal to three months' salary and health insurance, remaining on the payroll for three months and receiving salary and benefits as if they were still working or receiving health insurance for a year after the buyout date.
Sharp said in June that 158 people were accepted for the program, which was expected to cost $3 million. But Johnson said he understood the BreatheND packages were, in at least some cases, in line with or worth less than voluntary buyouts elsewhere, like in the university system.
The BreatheND severances were approved at a June 14 executive committee meeting. Johnson and fellow committee member Jay Taylor "both expressed that the three months of pay and health insurance offered through" the buyout program "was not sufficient for the involuntary separations at this agency," according to meeting minutes.
Rep. Jon Nelson, R-Rugby, who opposed abolishing BreatheND, said he didn't have a problem with the severances.
"Being they were just eliminated from the budget ... I suppose they took every advantage they could to reward their staff," he said. "It is what it is."