State report blasts compensation practices of GCEDC
The Genesee County Economic Development Center should recover more than $344,000 in bonus payments to employees made from 2005 through 2009, according to a report issued Wednesday by New York Authorities Budget Office.
The ABO is responsible for fiscal oversight of certain local agencies, including industrial development agencies.
In a scathing report (pdf), ABO officials say that GCEDC made bonus payments that do not comply either with state law or guidelines.
In the case of one bonus payment, the report recommends the matter be referred to a local law enforcement agency for further review.
"GCIDA (aka, GCEDC) officials justified its bonus practices as proper and comparable to bonus incentive plans in use by private industry," the report reads. "GCIDA officials continue to show a lack of understanding that the GCIDA is a public entity and not a private industry."
The report is also critical of the $153,000 annual salary for Executive Directory Steve Hyde. Hyde's base salary is the highest in the state for any IDA, the report states, and significantly higher than any IDA director in Western New York, and higher by far than any other public employee in Genesee County.
In 2009, GCEDC paid out $91,000 in bonuses, with $60,000 going to Hyde.
The report is critical of how the board of directors arrived at its bonus structure, not using an individual's performance goals set at the beginning of a calendar year, but instead basing bonuses on available funds at the end of the year and whether overall group goals were met.
The report says that criteria violates a state comptroller's advisory opinion issued more than 10 years ago, though the state law governing IDA's does not specifically address bonus compensation.
According to the report, up until 2010, an informal subcommittee of the GCEDC board would meet and determine the bonus amount and structure for the agency's employees. Generally, the decision would be made in December with bonuses paid at the beginning of January. But in January 2007, more than $54,000 in bonus payments were disbursed even though the bonuses were not approved by the board until a month later.
While officials told ABO investigators that bonuses were paid based on agency performance, the report states that in 2008 the GCEDC did not meet its job creation goals, yet $91,000 in bonus payments were approved; and, for 2005, $55,000 in bonus payments were approved, even though GCEDC met neither goals for job creation nor capital investment.
For 2008 a $500 bonus was paid to a consultant even though there was no provision in the $60,000 contract for a bonus.
"Although we make no judgment as to whether such an expenditure of public funds is legal," the report reads, "we are referring this to local law enforcement officials for further review."
The report recommends that the $500 be recovered from the consultant. The consultant is not named in the report.
The report notes that Hyde's salary has increased from $82,950 in 2004 to $153,000 in 2009. In comparison, the IDA director in Orleans County earned $58,000 in 2009 and the Erie County director received $133,911. Among other Genesee County public employees, the District Attorney has the highest salary after Hyde at $118,187.
The report reads:
The GCIDA justified its practices, both in regard to bonus payments and salary structure, by referring to private industry standards and principals, and pointing out that GCIDA has its own private revenue source, and that payments are made with private funds. We are disheartened by this attitude and perspective.
The GCIDA relies extensively on Genesee County for financial support. For the five-year period 2004 through 2009, the GCIDA received more than $1.3 million in operating funds from Genesee County, almost 20 percent of its total operating revenues. Salary and compensation are part of the GCIDA's operating budget. So, directly or indirectly, the taxpayers of Genesee County contribute to the cost of supporting the GCIDA.
According to the GCEDC's 2011 program budget, anticipated revenue is $1.5 million with $266,217 coming from Genesee County. The remaining revenue is comprised of fees, grants -- including $475,000 from National Grid and $750,000 from the Town of Pembroke (over three years) -- and other unspecified sources.
The budget statement says that through August 2010, GCEDC supported 16 economic development projects, generated commitments for 50 new jobs over the next three years and $18.5 million in capital investment.
Among its ongoing projects: Gateway II, Buffalo East Technology Park, Med & Tech Park, Apple Tree Acres, Genesee Valley Agri-Business Park and WNY Stamp.