Top lawmakers, union leader criticize governor's bonuses as excessive, say program needs review

BISMARCK – Top North Dakota lawmakers from both parties say nearly $100,000 in retention bonuses awarded by Republican Gov. Jack Dalrymple to five members of his staff were excessive and will spur the Legislature to review the recruitment and retention bonus program in 2017.

State employees also are bristling at the bonuses, feeling that their work is just as important as that done by the governor's office and that the bonus system is "badly warped," a union official said Friday.

"This is something that's going to stick with them, and they're not particularly happy about it," North Dakota United President Nick Archuleta said.

McFeely: Governor's bonuses tone-deaf at best, cronyism at worst

House Majority Leader Al Carlson of Fargo said the program, which allows agencies to use existing dollars in their salary budgets to offer bonuses that entice workers to accept or remain in hard-to-fill positions, is sound.

But the $99,824 in bonuses paid to the governor's chief of staff, communications director, two senior policy advisers and his scheduler/assistant in June raised eyebrows on both sides of the aisle. Chief of Staff Ron Rauschenberger received the largest bonus in the office, at $31,960, on top of his annual salary of more than $153,400.

"I just think the reaction of the Legislature is that those were a little excessive," Carlson said.

Rep. Jeff Delzer, chairman of the House Appropriations Committee that with its Senate counterpart molds the budgets of state agencies after they're proposed by the governor, predicted the 2017 Legislature will discuss possible changes to the bonus program created in 1999, which he said "maybe went further than what we expected it to."

"I doubt the bonus program will go away, but I would guess there'll be some tightening of it," said Delzer, R-Underwood.

Senate Minority Leader Mac Schneider, D-Grand Forks, said there "absolutely has to be another look at this." He said the sentiment among Democrats and Republicans alike is that the bonus program was intended for positions such as oil and gas regulators, nurses and highway patrol officers.

"Never did any of us discuss or even contemplate that tens of thousands of dollars would be going to political appointees," he said, adding, "Near as I can tell, there is no indication that any of these employees was ready to leave, particularly Mr. Rauschenberger, who has been chief of staff for two governors. That's a pretty coveted position."

Dalrymple, who announced in August that he won't seek re-election next year and is the first governor to use the program, said in an interview Friday that the bonuses went to people "that I absolutely know have been pursued by other employers." Rauschenberger said he has been offered some "very nice" job opportunities, including one with an employee stock ownership plan.

"When people say, 'Oh, these people weren't going anywhere,' I really take exception to that," said Dalrymple, who also gave two of his cabinet members, Office of Management and Budget Director Pam Sharp and Department of Human Services Director Maggie Anderson, retention bonuses of $30,518 and $27,692, respectively, at the end of the biennium June 30.

An open records request revealed that Department of Commerce Commissioner Al Anderson also received a $25,450 retention bonus, but it was paid out Sept. 1 and so it wasn't included on the 2013-15 bonuses list provided to a legislative committee last week.

Under what authority?

Schneider, an attorney, said he's still not satisfied with answers he has received to questions about whether the governor met the legal requirements under state law to award the bonuses.

Rules for the bonus program are laid out in Chapter 54 of the North Dakota Century Code, which says that to utilize the program, the agency must have a written policy in place identifying eligible positions or occupations, and provisions for providing and receiving bonuses. The agency also must file a copy of that written policy with the state's Human Resource Management Services.

But it's unclear when, or if, the governor's office ever did that.

It adopted the state Office of Management and Budget's human resources policy manual, which allows for retention bonuses, around 2008, HRMS Director Ken Purdy said.

"I can't point to a specific document that says" when that happened, he said, adding, "Their policy is our policy, so yes, it's on file with us."

Schneider noted that if it was filed in 2008, it was done under the administration of then-Gov. John Hoeven, whose election to the U.S. Senate in 2010 elevated Dalrymple from lieutenant governor to the top spot.

"I'm not sure if that even counts," he said.

What makes a job hard to fill?

As for what constitutes a "hard-to-fill occupation," the law's language is broad, including positions where there's a risk of losing an incumbent with rare skills, where special qualifications are required and where the "position is filled by a highly skilled employee who is in high demand in the marketplace."

Schneider said the language, if read in good faith, is probably tight enough for those who are going to use funds for hard-to-fill positions.

"If you're willing to work in bad faith, there's nothing stopping you," he said. "I think the trust-but-verify approach requires us to do something in the law that prevents these kinds of excesses from happening in the future."

Dalrymple said his staffers who received bonuses possess expertise and will play key roles in crafting the 2017-19 budget proposal and working on education initiatives, water policy and other objectives.

"If you think you can run the state of North Dakota with any old person who applies, I would say no, that's not the case," he said.

Where does the money come from?

Under the law, agencies must fund bonus programs from within their salaries and wages budget. That includes any money the Legislature approved for raises, benefits and temporary employee salaries, as well as dollars freed up through attrition.

In the governor's office, the bonuses came from roll-up dollars available because of various vacancies during the 2013-15 biennium, spokesman Jeff Zent said. The governor's office had 18 employees and a salary budget of $3.6 million, including health benefits and retirement contributions, he said.

"Even after the bonuses were paid, we still turned back just over $100,000 in that salary line funding," he said. "That went back to the general fund."

Staffers who received the bonuses had to sign a letter stating that the expectation is they will stay through 2016. If they resign before Nov. 1, 2016, the bonus will be prorated and they must pay back the remaining amount.

"So it is not a gift," Dalrymple said. "It is in essence a contract to retain a key employee."

Archuleta said Dalrymple has been "excellent" in terms of supporting raises for public employees. But he said the bonuses of roughly 20 percent provided to Dalrymple's staff have alarmed other public employees, who feel there's "a palpable unfairness" to the bonus system and that the solution is to increase salaries so they're on par with the private sector.

"They feel, frankly, a little disrespected," he said.

Why don't all agencies use it?

A dozen state agencies or offices gave out 289 retention bonuses this past biennium, with the greatest number going to the state Industrial Commission, which includes the Department of Mineral Resources. Twenty-two of the 289 bonuses exceeded $10,000.

Ten agencies also gave out $687,362 in recruitment bonuses and three agencies awarded $44,913 in referral bonuses.

Purdy said there are more agencies that haven't used the program than those that have.

"I suppose there's some risks anytime with a bonus that some people feel left out, so there are agencies that just don't want to deal with that kind of thing," he said. "And some may feel their employment situation is stable enough they don't need to bother with it."

Legislative Council Director Jim Smith said he's never used the bonus program. The office, which is approved for up to 37 attorneys, accountants, researchers and auxiliary staffers who serve the Legislature, has focused on increasing salaries to the level necessary to retain employees, "and we've had the support of the Legislature to do that," he said.

He said he's also avoided the bonus program "in part because of the controversy surrounding it" and concerns about employees feeling left out.

"It's a question of fairness, and that's kind of where it's at now, and we'll see what we do down the road," he said.

Are bonuses working?

Purdy said HRMS doesn't track how long employees stay after receiving retention bonuses.

Some agencies provide retention bonuses retrospectively - for example, if the employee agreed to stay on through a project's completion or milestone, he said. Others provide bonuses prospectively, as the governor's office did, in exchange for a time commitment.

"Either way, there's some assurance that they're going to stay," he said.

An analysis by Forum News Service found that of the 289 retention bonuses given out during the 2013-15 biennium, all of them went to employees who are still with their respective agencies.

Looking back to the 2011-13 biennium, 17 of the 173 retention bonuses were awarded to employees who are no longer with their respective agencies.

Senate Majority Leader Rich Wardner, R-Dickinson, said he believes the program has helped reduce the loss of public employees being lured away by the private sector. As for the governor's bonuses, "It seems like they were a little high," he said.

Wardner said he's sure the Legislature will revisit the program in 2017.

"We'll take a good look at it and see if there's something that needs to be corrected or changed. What it would be, right now I couldn't tell you," he said.