A new audit by the Office of the State Comptroller (OSC) found that the Middlesex County Improvement Authority (MCIA) paid questionable bonuses to top management and failed to comply with state procurement law.

The Middlesex County Improvement Authority (MCIA) paid substantial annual bonuses to its upper management that were not provided for in their employment contracts, including a payment of more  than $55,000 to MCIA’s executive director that raised his stated salary by 30 percent in 2010, an Office of the State Comptroller (OSC) audit has found.

In total, the audit found MCIA paid its top four officials more than $100,000 annually in such “management incentive” bonuses, in addition to the contractual 2.5 percent salary increase received by three of those officials. In addition to the bonuses not being referenced in the officials’ employment contracts, the MCIA personnel manual makes no mention of a management incentive bonus program.

OSC discovered the bonuses only through a review of individual MCIA payroll records.
Similar bonuses have been handed out to the same four MCIA officials going back at least as far as 2007 and through 2011. No other MCIA employee received such a bonus payment.

“Even at the height of the economic recession, the MCIA awarded its top officials not only their contractual salary increase but additional unsubstantiated bonuses worth 10, 15, even 30 percent of their salary,” said State Comptroller Matthew Boxer.

The MCIA’s executive director - whose base salary of $185,384 is higher than the base salary of the Governor of New Jersey - ultimately received $249,366 in total compensation from MCIA in 2010, including the $55,617 incentive bonus, a $4,800 car allowance and a $3,565 payment for unused sick time. In comparison, the compensation paid to the Middlesex County Administrator in 2010 totaled $153,400.

The other three MCIA officials - an administrator, the chief financial officer and the director of administration - received bonuses that ranged from $11,600 to $20,500 in both 2009 and 2010.

MCIA officials told OSC that the specific amounts of the incentive bonuses were based, in part, on performance evaluations. MCIA’s executive director did not receive any written performance evaluations, though MCIA officials said verbal evaluations were conducted.  The evaluations consisted of basic criteria such as “understands and follows instructions,” “maintains a proper appearance” and “interacts well with others.”

“Criteria like ‘interacts well with others’ and ‘understands and follows instructions’ are not sufficient justification for the payment of more than $100,000 in yearly bonuses to the upper management of a government agency,” Boxer said.

In addition to the employee compensation issues, the OSC audit found MCIA’s contracting practices did not comply with state law because MCIA failed to solicit price quotations from prospective vendors as required.

The OSC audit also determined MCIA’s outside legal counsel has been improperly receiving MCIA-funded health benefits. In addition, OSC referred the attorney, who is a partner in a law firm, to the state Division of Pensions and Benefits for a review of pension credits received through the MCIA.

MCIA received more than $8 million in county government subsidies in 2010. Among its various responsibilities, MCIA provides financing assistance to Middlesex County and its municipalities through the issuance of bonds. The OSC audit found no significant exceptions related to MCIA’s financing practices.