The Charlotte Observer

October 10, 2007

Audit: N.C. official overpaid
Mental health agency director's contract totaled $319,000; assistant made more than governor

by Mark Johnson

RALEIGH -- A state audit concluded that the $319,000 compensation package paid to the director of a northeastern N.C. mental health agency was excessive, and the agency improperly used state and federal money to pay him.

The staff of State Auditor Les Merritt, a Republican, examined Albemarle Mental Health Center, which covers 10 counties in the state's northeastern corner, at the request of one of its constituent counties. The auditor's report concluded:

• Director Charlie Franklin's contract, which has since been voided, was overly favorable to him and paid him twice for the use of his car in both a $1,000-a-month allowance and mileage reimbursement.

• Franklin's assistant is overpaid at $143,000-a-year, given her lack of training, her duties and comparison with similar jobs in other agencies. The salary is higher than the governor and any of his Cabinet secretaries.

• Expenses by the center's board are excessive, including attending conferences unrelated to their duties at the state's finest resorts. One meal for 24 people, including board members and spouses, cost $96 each, totaling about $2,300.

• The agency was paying employees' share of their Social Security and Medicare, to the tune of $1.5 million just in the past three years.

The center's board responded by saying, among other points, that Franklin's salary was set by following appropriate board policy and his assistant's 34 years of service and experience in the agency justified her pay.

Albemarle serves 10 counties in northeastern North Carolina, including some of the poorest in the state. The agency effectively doesn't answer to anyone in Raleigh. Its director is hired by its board, whose members are appointed by county commissioners from the 10 counties.

The salary for Franklin and his assistant drew attention and rebukes by legislators and Gov. Mike Easley, a Democrat, after an article published by the Observer last June. An administrative law judge threw out Franklin's contract, and he continues working as an employee with his pay reduced to $225,000.

The auditor's office concluded that a statewide system of fiscal management is needed for all of the state's 25 mental health agencies, and the state Department of Health and Human Services needs to require more detailed accountability from the agencies.

The department is in the process of hiring for seven new jobs to oversee mental health agencies' finances, spokeswoman Debbie Crane said Tuesday. She said the department also is outlining clearer performance expectations and imposing tougher reporting requirements on the agencies.

Albemarle's board itself came under the auditor's scrutiny, as the audit showed at least $48,000 in expenses on conferences in fiscal 2005-2006. Board members spent $28,000 attending the N.C. Finance and Reimbursement Officers conference in Asheville.

Board members rang up a tab of $17,000, staying at the Inn on Biltmore Estate instead of the conference hotel downtown, the Crowne Plaza. They stayed until Sept. 22, though the conference ended at noon the day before.

"Part of the board's strategy for obtaining, retaining, educating and insuring actively participating board members," the board said in a prepared response, "is to provide access to high-quality training in settings conducive to learning, team building and attendance."

The board also said the agency risks losing valuable employees if it effectively cuts their pay by discontinuing paying the employees' share of Social Security and Medicare.

The General Assembly, prompted by Franklin's situation, approved a provision in the current state budget that requires mental health agencies to follow a state-mandated pay scale for the director. The regulation also restricts pay increases to 10 percent above a salary range set by the State Personnel Committee.

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