CHICAGO — The Wisconsin Health and Educational Facilities Authority has maintained a sound financial position but has bypassed state law to over-compensate its longtime executive director, Lawrence Nines, according to a legislative audit bureau review.
The audit, released by state auditor Janice Mueller on Friday, reviewed the agency’s fiscal position and its executive compensation.
The authority’s financial position is sound with an accumulated surplus of $3.1 million, an amount sufficient to cover four times its annual operating expenses, although the audit does recommend that “WHEFA continue to carefully monitor its surplus balance for appropriateness.”
The agency has reduced its borrowers’ fees six times over the last two decades, moderating its fund balance and operating expenses have exceeded revenues in three of the past five years, prompting WHEFA to subsidize operations with its surplus.
The audit raised concerns over Nines’ level of compensation, saying total benefits exceeded the statutory limit established for his position by an average of $16,200 annually, for a total of $200,000 since 1991.
Since 2005, the WHEFA Board has provided Nines — who has led the agency for the last 28 years — with 40 days of vacation annually and paid him for unused leave, including vacation and sick leave, by making annual deposits into the Wisconsin deferred compensation program.
The maximum statutory salary for his position was $116,000 in 2008.
The report said the auditor’s office was “concerned that the WHEFA board’s actions to increase compensation for the executive director have had the effect of circumventing a statutory salary limit on the executive director’s salary.”
The audit also raised concerns that the authority is incorrectly reporting some unused leave as earnings that will increase its employees’ pension benefits under the Wisconsin Retirement System.
“We include recommendations for the Legislature to take steps to address these concerns and for WHEFA to work with the Department of Employee Trust Funds to correctly report future earnings,” the audit read.
WHEFA issued a statement saying it respected the bureau’s recommendations and would work with lawmakers to resolve any issues involving compensation.
“We want to ensure our compensation policies follow all applicable legal and statutory requirements,” the statement read. The authority has previously attempted to reclassify Nines’ position to achieve a higher grade pay and had set the overall compensation at a level designed to reward and retain Nines.
WHEFA is among the top issuers in the Midwest, ranking seventh last year with nearly $1.3 billion of bonds sold in 20 deals on behalf of health care and education borrowers last year. It sold $1.4 billion in 28 deals a year earlier, according to Thomson Reuters.
The authority — which has four full-time employees and is governed by a seven member board — has sold $14.5 billion in 603 deals since its inception in 1979 through last June, according to the audit.
