On a summer day in 2015, 16 high-level managers at the Board of Equalization received special pay raises that the department still can’t explain.
They ranged in value from 1.9 percent to 10 percent. In each case, they followed standard wage increases that went to all state employees that year, swelling pay for certain executives by as much as 17.5 percent.
“There were no performance reviews,” said board Chairwoman Fiona Ma, whose staff documented the pay raises after hearing rumors of pay disparities among the agency’s executive staff.
Almost two years later, that batch of raises is driving a crackdown on executive compensation at the tax-collecting agency and prompting some of its elected leaders to demand more tools to check the decisions of their staff. One of the six ongoing state audits investigating the Board of Equalization is looking at its personnel practices.
The raises were distributed by former BOE Executive Director Cynthia Bridges, who was ousted in March 2016 and subsequently hired to join the BOE staff of board member Jerome Horton. Bridges and Horton declined to comment.
Bridges may have been attempting to reward performance or to ensure that executives earned more money than their highest-paid subordinates, both of which are reasons that state agencies sometimes give extra raises to top employees, administrators said. Without records, the department could not explain them.
“It appears Ms. Bridges was making adjustments,” said Deputy Director Brenda Fleming.
The raises went to a group of executives in a classification of the state workforce that mimics the private sector in some ways.
Employees with so-called career executive assignments have a special expertise, are supposed to carry out policymaking responsibilities, can be dismissed more easily than rank-and-file workers and sometimes receive raises outside of the normal wage increases offered to civil servants.
There are no limits on wage increases for career executives, although the state Human Resources Department has encouraged departments to limit raises for those employees to 5 percent a year. Until 2014, departments had to receive explicit approval from Cal HR to award career executives raises greater than 5 percent.
Thirteen people in those assignments at the Board of Equalization received raises greater than 5 percent in 2015.
One of them was the department’s current Executive Director David Gau. He received a 20.6 percent pay raise in June 2015 that followed a previous promotion. It brought his salary closer to what other senior executives earned at the time.
Of 26 career executives on Bridges’ staff that year, Ma’s report showed that 16 received raises on July 31, 2015, that were not tied to promotions or the general wage increases Gov. Jerry Brown awarded that year.
“There has to a be transparent process when it comes to raises, and employees need to feel like they’re getting raises because of the work they do. It has to be justified,” Ma said.
Sandra Mayorga, the department’s human resources director, confirmed the numbers in Ma’s research.
Ma said the raises her staff uncovered contrasted with an alarming briefing she received in January 2015, when the department’s staff reported that it would limit raises to 2.5 percent, decline overtime requests and let go of part-time employees.
“We were concerned about, quite frankly, potential favoritism,” said board member George Runner, who has allied with Ma on some BOE reform proposals.
Bridges’ successor, Gau, has adopted a new internal policy for executive compensation. In the future, he plans to tell the agency’s elected board if raises are warranted for top-level staff.
Gau also intends to document the reasoning behind decisions to award above-and-beyond pay raises for career executives.
“You do want to give a reason,” Fleming said. “We want to be transparent. We want to be fair.”
The Board of Equalization has an unusual governing structure, with five elected members who set policy and hire executive staff. Although the elected members confirm appointments and select their executive director, they traditionally have not set goals or regularly reviewed the performance of the leaders they hire.
As a result, some elected board members have complained that they lack tools to hold executives accountable for their performance.
“We assumed, I guess wrongly, that under previous leadership that there was some evaluation, something going on. I had asked for (a board evaluation of the organization’s executive director) a couple times and was not getting any kind of response,” said Runner, who was elected to the board in 2010.
Gau is expected to present the board with a new process it can use to review the position of executive director in the future.
The Board of Equalization is under scrutiny by six separate audits from four different state departments this winter.
The main ones include:
▪ A Department of Finance review of an audit by State Controller Betty Yee, which showed that the Board of Equalization misallocated tens of millions of dollars in retail tax revenue in the 2013-14 budget year.
▪ An examination from the State Personnel Board on the Board of Equalization’s hiring and promotion practices.
▪ A review of Board of Equalization procurement practices, which is being conducted by the Department of General Services.
Big raises at Board of Equalization
Career executives at the Board of Equalization received standard raises of 2.5 percent in 2015. Some of them received much higher raises for unclear reasons.
Chief deputy director
Chief of board proceedings
Chief of human resources
Chief of county-assessed properties
Deputy director of property taxes
Chief of special taxes policy
Deputy director of administration
Chief of research
Deputy director of field operations
Chief of internal audits
Chief legal counsel
Chief of administrative services
Chief of special taxes
Source: Office of Board of Equalization Chairwoman Fiona Ma