RALEIGH, N.C. (AP) - The North Carolina Department of Transportation misinterpreted a 2018 state law on employee salaries, leading to $39 million in overspending for worker raises, auditors said Wednesday.
State Auditor Beth Wood’s office reviewed DOT’s use of a pilot program approved by the General Assembly. It was designed to recruit and retain agency employees through flexible salaries. The department disagrees with the performance audit’s findings, saying the rules were followed.
The audit’s authors declared that the department wrongly calculated the amount of money that could be used for the salaries, news outlets reported.
The result was that DOT paid an extra $58.5 million in cumulative pay to nearly 7,400 employees for the year ending June 30, 2019, the audit found. More than 5,400 of the workers got raises of at least 10%, and about 200 workers with the supplemental raises had active disciplinary actions against them at the time, according to the audit.
DOT also failed to force workers who accepted the higher pay to give up other favorable employment benefits, including longevity pay and position security, the auditors wrote.
DOT “gave its employees an unfair advantage over other state employees who were compensated in accordance with state compensation rules,” the audit says. “The department also demonstrated to all other state agencies that noncompliance with state laws, whether intentionally or through lack of appropriate due diligence, has no consequences for the agency or management.”
In a written response attached to the audit, new DOT Secretary Eric Boyette said the department reads the laws differently than the auditors.
First, the department believed it could spend an amount equal to 2% of its annual appropriation for two major road-building funds for the salaries, not just 2% of its payroll expenses, according to Boyette. And giving up longevity pay and other protections were not a condition of someone receiving the raise, he said.
Some legislators said they learned about DOT’s actions in early 2019, and tried unsuccessfully to rework the provision.
If the interpretation or implementation “was inconsistent with the law or the intent of the legislature, the legislature has had numerous opportunities to change the law or otherwise direct the Department to take corrective action,” Boyette wrote.
This marks the second recent audit from Wood that is critical of DOT, which has been bailed out financially twice since last fall. The earlier audit found the agency overall had overspent by $740 million during the 2018-19 year. Boyette became secretary in February. New fiscal and governance controls became law this week.
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