Time: 06-07-2011 21:29

User: mmatherly

PubDate: 06-08-2011 Zone: KY

Edition: 1 Page Name: A 5

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KY-

FROM PAGE ONE |

courier-journal.com

THE COURIER-JOURNAL | WEDNESDAY, JUNE 8, 2011

| A5

MSD | Fischer seeks audit of agency after stories
Continued from A1
itor Crit Luallen would help MSD find an independent company to conduct the audit. Luallen confirmed in a call that she would help define the scope of the audit and assist MSD and Fischer. Poynter said MSD would pay for the audit, with the report going to MSD and the mayor. The MSD board will need to authorize the audit. Late Tuesday, Schardein sent a message to MSD employees, telling them they could reach their own conclusions about the newspaper’s coverage. “The stories have created public interest and Mayor Fischer has talked with me and MSD Board Chairman, Arnold Celentano, about the merits of an independent management review. We should all approach this review with a positive and cooperative attitude,” the message said. formance review by former MSD board member Beverly Wheatley, Schardein got a 5 percent merit pay raise in March 2009, and a $4,785 performance award in May, effectively bringing his hourly rate at that time to within 1.8 percent of what it was before the cut. Schardein received another merit raise and a bonus this year, amid the board shakeup orchestrated by Fischer. His salary increased 4 percent to $181,147 on March 5, and he received a $6,967 bonus on April 29. “In all levels of leadership, Bud exhibited a high level of self-confidence and continues to be well respected by the MSD board, the MSD workforce, elected officials, regulatory officials and his peers,” according to his most recent performance review, signed by Celentano on April 18. Schardein gave Johnson a 5 percent raise in February 2009, after completing his first six months on the job, and a 2.9 percent merit raise that March. Factoring in a $4,009 bonus in April, Johnson’s effective hourly rate for most of the year was 1 percent higher than before the cut. Edward Queen, who directs the D. Abbott Turner Program in Ethics and Servant Leadership and coordinates undergraduate studies at Emory University’s Center for Ethics, said he is more troubled by Schardein’s salary increase in 2009, because he was in charge. “At bare minimum, it comes across as almost a bait and switch,” Queen said. MSD has been under financial stress since its 2005 agreement with the U.S. Environmental Protection Agency and Kentucky En-

WHAT TOP MSD EMPLOYEES MADE
Employee Seigle, Bruce R. Schardein Jr., Herbert J. “Bud” Hunt, James J. Gee, Marion M. Bingham, Wayne B. Melisizwe, Loyiso Braun, John W. Muller, Julia B. Schaftlein, David M. Assef, Saeed Coombs, Victoria K. Kirk, Pat C. Purifoy, Paula Middleton Johnson, Mark J. Akridge, Angela L. Novak, Alex E. Holsclaw, Gordon R. Thomasson, Dennis Total bonuses Current 2008-May 2011 salary $25,579 $142,105 25,201 181,147 23,434 130,187 23,187 155,209 19,895 142,105 18,621 109,532 18,106 100,588 17,033 100,588 16,015 109,532 15,853 138,153 15,011 100,588 13,623 100,588 12,978 142,105 12,481 148,740 11,777 109,532 11,384 123,406 10,983 100,380 7,984 122,782 Source: MSD records
their pay frozen at 10 percent less than what they had been making before. At the Louisville Water Co., which is owned by the city, salaries for executives and top managers were frozen for18 months in 2009 and 2010, with no raises or bonuses, spokeswoman Kelly Dearing Smith said. Purifoy, in her email, noted deep cuts MSD made in staffing starting in the late 1990s. MSD cut staff 28 percent between 1996 and 2004, going from 846 full-time positions to 607, according to MSD documents. The agency, she wrote, “has over the past decade and the last three years taken measurable steps to contain salary and benefit costs while retaining a valued and experienced workforce necessary to carry out all regulatory requirements and to protect our community from flooding.”
Reporter James Bruggers can be reached at (502) 582-4645.

RATE INCREASE COMMENTS
MSD has proposed a 6.5 percent increase in sewer fees. The public can inspect the new fee schedule until June 15 at MSD headquarters, 700 W. Liberty St., or online at www.msdlouky.org. Written comments must be addressed to the MSD board and mailed to P.O. Box 740011, Louisville, Ky. 40201. The board is scheduled to take a final vote on the rate increase July 11
ergy and Environment Cabinet to spend $850 million on infrastructure improvements to stop sewage leaks into waterways. The agency is carrying about $2.6 billion in debt.

Concern on council
The fact that MSD continued to pay out bonuses and merit increases prompted concern among some members of the Louisville Metro Council. “It would be good if MSD would share in some of the effects of the recession, just like all the other public employees are,” said Metro Council President Jim King, a Democrat. “The (MSD) board should take a close look at its compensation policies.” King said he’s confident that, “over time,” Fischer, who appoints the MSD board and hires its executive director and chief engineer, will address what he described as problems with board oversight of MSD. King noted Fischer recently persuaded three board members to resign –— the chairman, vice chairman and former chairwoman –— because companies they

Bonuses continued
The Courier-Journal has found that MSD paid out almost $300,000 in performance bonuses to its 18 highest-paid employees — those making more than $100,000 — since 2008, according to payroll data obtained through the Kentucky Open Records Act. All 18 received lump-sum bonuses ranging from $1,076 to $7,105 per year between Jan. 1, 2008, and May 1, 2011, a Courier-Journal analysis shows. Half also got merit pay raises in 2009 and 2010. While total yearly pay remained essentially flat for eight of the 18, 10 have seen their pay increase between 6 percent and 25 percent since 2008, the newspaper found. And while Schardein who makes $181,147, has blocked cost-of-living increases for the agency’s nonunion employees since 2009, he and its chief engineer received merit pay raises and bonuses that essentially made up the 10 percent pay cuts they had pledged to take, the newspaper found. Schardein announced the pay cuts in December 2008 for himself and newly hired chief engineer Mark Johnson along with the curb on costof-living increases, as a way to show the agency was sensitive to the staggering economy. But records provided to the newspaper by MSD show their wages were actually cut 9.1 percent –— and that Schardein’s pay had nearly fully rebounded by May 2009. Johnson had made up his pay by that March. Steven Koven — director of the University of Louisville master in public administration program and an expert on government ethics — said giving raises and bonuses so quickly after public pledges of pay cuts “undermines the sincerity of the pledge.” “If leadership wishes to set an example by accepting less pay, they should live with the consequences of the lower pay,” Koven said. “Making up pay reductions through other means appears duplicitous. Such practices can further undermine the already negative perceptions that the public holds of their leaders.” In an email Tuesday, MSD staff attorney Paula Purifoy, whose salary has increased 18 percent from $120,515 to $142,105 since March 2008, acknowledged the agency’s human-resources department erred by cutting pay for Schardein and Johnson only 9.1 percent.

owned did business with MSD. The resignations came after a Courier-Journal story that detailed how companies those board members owned received business from MSD. Kelly Downard, a Republican Metro Council member and former mayoral candidate, said, “There needs to be a whole sweep of the compensation system. … What you (have) is a payroll system out of control.” Downard said questions raised about MSD spending suggest that the agency could get by with a smaller rate increase. MSD’s approximately 300 workers with the National Association of Government Employees have been compensated under terms of a contract that took effect in 2007, before the national recession, and provide for 3 percent wage increases through Feb. 18, 2012. Roderick Harris, president of one of two locals of the union with MSD employees, said MSD management has not asked for any wage give-backs during the recession. “But the contract coming up — we are not going to get as much,” he said. Nonunion workers for metro government, who total about 1,500, took three furlough days two years ago, and the city is making plans to impose a new week of furloughs for employees who make more than $70,000, said Kellie Watson, director of human resources. The Fischer administration is also asking other city employees to take voluntary furloughs. Unlike their MSD counterparts, nonunion metro government employees don’t ever get any lump-sum performance bonuses or merit

pay raises, Watson said. They received 2 percent pay increases in 2008 and 2010, but no increase in 2009, Spalding said. Watson said 21 percent of the metro government union employees had their wages frozen in 2009, and 2.9 percent in 2010. She said 7 percent participated in the furlough program two years ago. State workers have also felt financial pain. The approximately 32,000 people who work for the state saw their pay frozen in the current fiscal year and six furlough days, which was the equivalent of a 2.3 percent pay cut, said John Hicks, the deputy state budget director. They won’t get any pay increases in the coming fiscal year, he said. Last fiscal year, the state employees got a1percent pay raise, and bonus programs have stopped, he said. Since 2009, the governor, members of his staff and cabinet secretaries have had

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Pay cut falls short
Schardein made his pledge to reduce his and his top engineer’s pay and freeze cost-of-living increases in a December 2008 email to MSD’s employees in which he said “many of our fellow citizens are out of work or working greatly reduced hours. “Locally, that means many of our MSD customers are having a harder time making ends meet. Utility bills must be balanced with the cost of prescription drugs, home heating, groceries and other basic necessities.” But after a glowing per-

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