Pay rises lined up at state agencies
1% more sought for two directors
A legislative panel on Tuesday signed off on the Department of Human Services’ proposal to hire a consultant to be the Medicaid program’s deputy chief financial officer at a salary of $157,100 a year.
David McMahon — who is a managing consultant with Navigant Consulting Inc. of Chicago with an annual salary of $142,500 — would begin work for the department at this “exceptionally well-qualified” salary rate, starting July 1, under the department’s proposal. The entry-level annual salary for the Medicaid program’s deputy chief financial officer post is $120,543, said Kay Barnhill, the state’s personnel administrator.
The Legislative Council’s personnel subcommittee also approved 1 percent raises for Human Services Department Director Cindy Gillespie and Commissioner of Education Johnny Key, starting July 1. The raises will boost Gillespie’s salary from $280,000 to $282,800 and Key’s from $233,488 to $235,824.
The Legislative Council’s
approval is required for these raises because Gillespie and Key both make more than the maximum salary of $201,700 for senior executives under the state’s new pay plan, said Tony Robinson, the Bureau of Legislative Research’s personnel review administrator. The plan is for state employees who don’t work for public two- and four-year colleges.
McMahon has been working as a consultant for the Department of Human Services under its contract with Navigant Consulting for about $549,000. The contract started Nov. 18 and expires at the end of this month, said Gillespie.
“From Nov. 18 through May 31, we’ve spent $206,000 for his services through this contract. We’ll spend another $30,000 roughly this month,” she told lawmakers.
“What we are proposing to do instead is to bring him on board as an employee and have him be basically the head of all Medicaid finance in our organization,” Gillespie said.
McMahon currently lives in North Carolina, “so he and his wife and children will be moving to Arkansas and setting up their residence here,” she said.
“Financially, this is great for us,” Gillespie said. “But quite truthfully, it is also an incredible opportunity to get somebody with this level of qualification and experience on Medicaid. He is overseeing a $7.5 billion budget, and it is one of the most complicated funding streams.”
McMahon’s experience includes 23 years of assisting various Medicaid agencies, auditing, accounting and addressing reimbursement concerns, Barnhill said in a letter to the personnel subcommittee. McMahon is familiar with government agencies, and he has conducted training sessions and implemented audit protocols within various states, she said.
McMahon has worked stints for Navigant Consulting, Myers & Stauffer, Clifton Larsen Allen, Clifton Gunderson LLP, the University of North Carolina hospitals, and Palmetto Government Benefits Administrators, according to his resume. He received his bachelor’s degree in business administration from Winthrop University in Rock Hill, S.C., in 1994.
“The position was vacated unexpectedly due to a death and has been difficult to recruit,” Barnhill wrote in her letter, referring to Mark Story, the previous deputy chief financial officer, who died in November. Story’s salary was $131,693 a year, she said. The department then contracted with Navigant Consulting.
Gillespie said McMahon, who is the “primary on-theground person,” and a few other people work for Navigant Consulting under its contract with the department. The department doesn’t plan to renew the contract when it expires at the end of this month.
Gillespie said McMahon will be doing “a little bit more” than Story did because McMahon will oversee all of Medicaid finance, and “under him we’re also putting all of the Medicaid reporting.”
During the personnel subcommittee’s meeting, Sen. Linda Chesterfield, D-Little Rock, questioned whether Gillespie and Key are paid considerably more than other state agency directors because they are highly qualified based on their education and experience.
Their salaries are in the range authorized by state law in the current fiscal year,
Robinson said.
Barnhill said the salary levels for these two positions are based on “the labor market that was out there for these positions” — not necessarily based on their qualifications.
Gov. Asa Hutchinson determined that it was necessary to pay a $280,000 salary when he hired Gillespie to be the Human Services director, starting in March 2016, after a nationwide search, and the Legislature approved that salary level, Barnhill said.
Before working in Arkansas, Gillespie was a principal in Denton’s public-policy and regulation practice in Washington, D.C., where she led the health-policy team with a focus on federal and state regulations. She also is former aide to then-Massachusetts Gov. Mitt Romney, a Republican who was his party’s unsuccessful nominee for president in 2012.
Gillespie’s Human Services predecessor, Jon Selig, was paid about $162,000 a year.
The education commissioner’s salary was significantly increased several years ago “when they were trying to find someone to fill that particular position,” Barnhill said. Sen. Joyce Elliott, D-Little Rock, said the education chief was paid with both state and private dollars briefly before the Legislature decided to have the state pay the entire cost.
When Lexington, Ky., superintendent of schools and Arkansas native Ken James was hired as director of the state Department of Education in 2004, his state salary was $119,700 a year, supplemented by $81,000 a year in private funds from the state Board of Higher Education Foundation so he could earn what he made in Kentucky. But the 2005 Legislature decided to have the state pay for all of James’ salary.
Key is a former Republican state senator from Mountain Home and a former associate vice president for university relations at the University of Arkansas System.
Hutchinson nominated him for the job, and the state Board of Education confirmed him in March 2015. State law was changed in 2015 to allow either the education commissioner or deputy education commissioner to meet the minimum requirements for education, experience and licensure for the job. Key doesn’t meet that standard; his deputy, Mark Gotcher, does.
“All we are trying to do … is to provide those two directors with the same [at least] 1 percent increase that all other state employees will receive in July,” Barnhill told the personnel subcommittee before it approved raising the salaries of Gillespie and Key.
The state’s overhaul of the pay plan for about 25,000 employees has been projected to cost about $57 million in fiscal 2018, which starts July 1. The current pay plan was adopted by the Legislature in 2009, and the labor market has changed significantly since then.
About 54 percent of fulltime employees will receive pay raises of more than 1 percent to enable them to reach the new minimum salaries for their positions, and the rest will get 1 percent raises, Barnhill has said.
These employees aren’t getting cost-of-living raises in fiscal 2017, which ends June 30, but they are eligible for up to 3 percent merit bonuses to be paid later this month. State employees haven’t received cost-of-living raises in four of the past seven fiscal years, according to finance department records. They received a 1 percent cost-of living raise in fiscal 2016 and 2 percent costof-living raises in fiscal 2011 and 2014, the records show.