The Charlotte Observer
Editorial - October 12, 2007

Agencies run amok

Auditor's watchdogs must keep close eye on regional agencies

A couple of state auditor's reports focusing on the northeastern region of North Carolina raise this question: Is government decentralization all that great an idea?

Last spring, State Auditor Les Merritt's office released an audit critical of financial operations and working relationships in the 16-county Northeast Partnership, one of seven regional economic development agencies that handles job creation programs once administered by the N.C. Department of Commerce.

This week the auditor issued another critical report, this time concluding that the 10-county Albemarle Mental Health Center had grossly overpaid its director and had improperly used state and federal funds for a $319,000 compensation package.

The audit essentially confirmed the findings of Observer reporter Mark Johnson, who first brought director Charlie Franklin's excessive pay package to light last summer. He reported how Mr. Franklin had retired from his post at a lower salary, then signed a consultant's contract for $282,663 -- the highest of any similar mental health agency in the state and more than twice the average -- plus benefits worth $36,000, including a $1,000-a-month car allowance. After the Observer report in June his salary was lowered to $225,000, still the highest director's salary in the state.

There's even more troubling information about the mental health agency. An assistant with no college degree was paid $143,000 a year -- more than the governor makes -- and the agencies' expenses were out of sight. Board members lived high and wide at conference resorts, running up a $2,300 tab at one dinner for members and their spouses. And the agency hired former legislative lobbyist Don Beason and his son for $76,000.

This is more than simply excessive. It demonstrates a lack of prudent management, a waste of taxpayer resources and a contempt for the public interest. Mr. Merritt is right in concluding that a statewide system of fiscal management is need for all 25 regional mental health agencies. And the Department of Health and Human Services should require more accountability from area agencies, which it is moving to do..

In addition, the legislature put more controls on regional economic development commissions. And it reined in the regional mental health management agencies, capping director's salaries at no more than 10 percent higher than a range determined by the state. It also gave DHHS seven more staffers to monitor the agencies and make sure they comply with stronger reporting requirements.

This is a long overdue beginning on reining in regional agencies that have granted directors too much leeway and too much compensation and board members too many perks. Auditor Merritt should continue to keep a close watch.