By Nyamekye Daniel
(The Center Square) – The N.C. Department of Transportation spent $39 million more than it should have on pay raises in 2018, a newly released state audit found.
State Auditor Beth Wood said NCDOT did not follow state law that directs the agency to issue certain salary adjustments to employees as long as they forfeited lump sum payments based on seniority and do not exceed payroll expenses by 2%, or $11.7 million.
Wood said NCDOT issued $58.5 million in salary adjustments to more than 7,000 employees for the fiscal year that started July 1, 2018. As a result, Wood said NCDOT “gave its employees an unfair advantage.”
NCDOT Secretary Eric Boyette said the auditor misinterpreted the law, which launched a pilot program that helps retain state employees.
Boyette said employees were not required to relinquish their career status or longevity pay to get the pay raises. Longevity pay is annual 1.5% to 4.5% bonuses given to employers with at least 10 years of service.
Boyette said the law allowed employees to be exempt from State Human Resources Commission rules that dictate compensation for hours worked, paid time off, sick leave, promotions, transfers and incentive pay.
The pay increases that are meant to make the salaries competitive with the private sector would be “superfluous” if they were “contingent” on employees giving up the longevity pay or their status as a permanent employee, Boyette said.
Boyette contends the pilot program, which ended June 30, allowed NCDOT to use 2% of its funding and reserves to issue the pay raises, according to the agency’s interpretation of the law. He said NCDOT confirmed with lawmakers before and after the legislation was approved. Raises that consist of 2% of the agency’s payroll would not have allowed the salaries to be competitive with the private sector, Boyette said.
The law states: “For the 2018 2019 fiscal year and the 2019 2020 fiscal year, the sum equal to 2 percent of the total Highway Fund and Highway Trust Fund appropriation for the applicable fiscal year for the payroll expenses of the Department may be used.”
The state auditor’s office confirmed the intent of law with the Joint Legislative Transportation Oversight Committee and the General Assembly’s Fiscal Research Division. It also was published in the Joint House and Senate Committee on Appropriations Conference Report in 2018.
It states NCDOT has the “flexibility for a period of two years in setting salaries for DOT employees who voluntarily relinquish longevity and career status. It also enables DOT to use up to 2% or $11.7 million per payroll for the purpose of salary adjustments, reallocation of positions, retention and recruitment programs.”
Wood said the legislative oversight committee should review the process and the agency needs to correct the mistake.
The audit, which was released July 8, is the second critical state audit of NCDOT this year.
Wood reported in May the agency spent $742 million over its $5.9 billion spending limit for fiscal year 2019 and maxed out its cash balances. The General Assembly passed a bill last month that increases financial oversight of NCDOT.