N.J. Comptroller Audit Questions Bonuses Paid to County Improvement Authority Management

The upper management of the Middlesex County Improvement Authority (MCIA) is under fire after a state audit released today revealed the four top officials at the MCIA were paid more than $100,000 in annual management incentives.

The audit, released by the Office of the State Comptroller (OSC), found that top MCIA officials received bonuses that were not stipulated in their employment contracts, in addition to a contractual 2.5 percent salary increase received by three of the top four officials. The OSC report stated that the employment contracts do not mention a management incentive bonus program and the payouts were only discovered through a review of individual MCIA payroll records.

“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 audit stated that MCIA Executive Director and Mayor of Monroe Township Richard Pucci, whose base salary is $185,384, received a total compensation of $249,366 in 2010, including a $55,617 incentive bonus, a $4,800 car allowance and a $3,565 in unused sick pay.

The MCIA's administrator, chief financial officer and the director of administration also received bonuses that ranged from $11,600 to $20,500 in both 2009 and 2010, according to the audit.

During the audit process, MCIA officials told the OSC that the incentive bonuses were based in part on performance evaluations, the report said. While Pucci did not receive any written performance evaluations, MCIA officials said "verbal evaluations were conducted."

The other three officials sited in the audit who were paid incentive bonuses did receive written performance evaluations, but the OSC said the evaluations did not reflect measurable performance criteria tied to the MCIA’s goals.

“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.

MCIA Chairman Leonard Roseman released a statement saying the bonuses paid to authority executives were appropriate given their experience and performance record. He pointed to achievements such as the management of the Roosevelt Care Center, which provided property tax savings of $10.5 million annually, according to the MCIA; the preservation of over 7,200 acres of open space; recycling programs and other initiatives. He said those programs provide residents with valuable services and millions of dollars in cost savings.

"The salaries and benefits received by MCIA executives are merited given their experience, high level of expertise, and excellent records of performance, particularly with the outstanding success of the MCIA programs," Roseman said. "The Executive Director is responsible, more than anyone, for building the MCIA from one employee and a $37,000 balance sheet to 21 years later, an authority of over 600 employees and a balance sheet of $651 million with net assets of $25 million.

"(Pucci's) performance, including the millions of dollars his leadership has saved county taxpayers, more than justifies the compensation he receives."

Local elected officials said the bonuses were appalling and called for Pucci to resign.

“While taxpayers are worrying about losing their jobs and struggling to pay their mortgages and put food on their tables, MCIA was doling out bonuses in addition to salary increases to its top officials," said Assemblywoman Donna Simon (R-16), who represents parts of Hunterdon, Mercer, Middlesex and Somerset counties. "That is unconscionable and infuriating. A nearly $186,000 annual salary should be incentive enough to work for the people. Those responsible for such arrogant behavior and abuse of taxpayer money need to be held accountable and should step down in the interest of taxpayers.”

Assembly Deputy Republican Leader Amy Handlin called the audit an insult to county residents.

"The Middlesex County Democrat machine continues to think there is an unlimited supply of cash to reward those in positions of power,” Handlin said. “Uncovering this type of malfeasance in the private sector would have severe repercussions, and I believe there should be no exception in this instance, particularly since this practice dates back as far as 2007.”

The audit also stated the MCIA was in violation of state law when it failed to solicit price quotations from prospective vendors. A review of nine professional service contracts revealed that eight of the nine contracts did not use appropriate criteria for selecting vendors.

The audit alleged that the MCIA failed to include cost among the selection criteria, but did include "an easily manipulated requirement that vendors possess knowledge of the Authority and its operations.”

The audit found that all nine of the contracts were awarded to vendors that previously worked with the MCIA and that in six of the nine contracts, the previously used vendor was the only respondent to the request for qualifications.

On the other three contracts, one additional vendor responded and two of those vendors were disqualified by the MCIA based on a “lack of knowledge of the Authority.”

The MCIA received more than $8 million in county government subsidies in 2010 to provide financing assistance to county municipalities through the issuance of bonds. The OSC audit noted that there were no significant problems with the MCIA’s financing practices.

Roseman said the audit report's findings and comments are misleading and had been resolved prior to the audit. He added that all MCIA policies and practices are permitted under state law.