RALEIGH — State Commerce Secretary Sharon Decker confirmed this week that the pending move of the Commerce Departments business recruiting and marketing functions to a private nonprofit is expected to affect 61 state workers, and could cost the state as much as $1.8 million in severance payments.
Its unclear how many workers will be laid off, as some could find other jobs in state government or could go to work for the Economic Development Partnership of North Carolina, the agency that is expected to take over a handful of current Commerce divisions beginning in the first half of 2014.
I have not delineated the plan for the private side, Decker said. We dont know how many (state employees) will go to the private side.
Decker said those decisions would be made when a chief executive officer is in place. She said she has a final candidate and plans to hire that person by the end of the year. She declined to give a name.
Republican and Democratic lawmakers recently expressed concern that the transition is moving forward too quickly and without full approval of the legislature. Commerce officials say they are moving forward under the guidance of a Senate bill that was debated last session, although the bill never passed. The plan still must be approved by state Budget Director Art Pope.
Although five divisions are expected to be moved to the nonprofit starting in early 2014, the number of affected employees represents a small percentage of the roughly 2,000 Commerce employees in state government. The divisions are: Business Development; Marketing; Small Business and Entrepreneurship; International Trade and Investment; Travel & Tourism (not including Welcome Center operations), Film and Sports Development. Business Development and Marketing would be the first areas to move to the private side.
Nine other divisions would remain in the public sector, including Employment Services, the Rural Division, Communications, Legislative Affairs and General Counsel, among others.
Economic developers and other experts have warned that the transition could affect the states ability to attract new companies. But Decker told the Charlotte Observer recently that the transition process isnt hurting the state.
In any business thats going through organizational change, youve got to keep the train running while youre making that change, she said.
Severance for leaving
Decker also confirmed in a phone interview that current state employees who move over to the nonprofit could get severance payments from the state when they leave their government jobs, even if theyre hired by the private entity. That process, Decker said, is still being discussed with the Office of State Budget and Management, which must approve the departments reorganization plan.
A proposal for the Commerce Department reorganization obtained by The News & Observer late last week states that the affected state employees would be subject to a reduction in force process, and all who meet requirements would be entitled to severance. The documents show that state officials are proposing to give as much as $1.8 million worth of severance, Social Security and health premium payments to those employees. Decker said thats the maximum amount that could be paid out.
The payments average about $28,000, but at least one employee could see a payout as high as $66,000, according to the Commerce reorganization proposal. Severance payments depend on an employees years of service to the state, salary and other factors.
The positions include economic developers, administrative and office assistants, the director of film industry development, the director of tourism development, travel relations specialists and business development managers.
Tom Harris, general counsel for the State Employees Association of North Carolina, said the Commerce Department would appear to be operating under standard procedures whenever a reduction in force takes place.
Although the fact that some employees will quickly gain employment with the private nonprofit is unusual, Harris said the severance payments would make up for what the employees lose.
This is a big transition for anybody to leave state government to lose all those benefits, Harris said.
Decker picks 5 for board
Decker also said:
• She handpicked five members of the existing N.C. Economic Development Board to serve on an interim board for the Economic Development Partnership of North Carolina. They are: John Lassiter of Charlotte, president of Carolina Legal Staffing; Pat Corso, executive director of Moore County Partners in Progress and a former president of Pinehurst Resort; Tom Looney, vice president and general manager for Lenovo North America in Morrisville; Jim Whitehurst, CEO of Raleigh-based Red Hat; and John Kane, the developer behind the North Hills shopping center in Raleigh. All have contributed to Gov. Pat McCrorys election campaigns.
• She has been in discussions about locations for the new nonprofit but that no decisions have been made. Asked whether it would be headquartered in Raleigh, Decker said: That would make some sense, but I dont think it has to be.
The McCrory administration has touted the partnership as a way to provide a more coordinated, more nimble approach to recruiting new businesses and aiding existing businesses looking to expand, as well as helping boost the states exports. Critics say the public-private partnership approach has a mixed record in other states, and that the structure has led to abuses, including misuse of taxpayer money, conflicts of interest, excessive executive pay and little public accountability.