Roy McGrath: Severance from Maryland Environmental Service earned through ‘exceptional performance’ | COMMENTARY
By Roy McGrath
For The Baltimore Sun|
Aug 21, 2020 at 4:31 PM
Having made the difficult, recent decision to step out of public service as chief of staff, despite the full support of the team to remain, there are a few points I have not previously had the opportunity to express relative to The Sun’s coverage of the severance package I received after leaving the Maryland Environmental Service (MES) to take the position in the governor’s office.
The decision to award my non-taxpayer funded severance was made nearly three months ago by the MES board of directors, in mid-May, when the fiscal circumstances were certainly not the same as today. It was not long into the pandemic, and the full impact was only beginning to unfold. If the same decision were being made today, with the knowledge we now have, it may have been handled differently, such as better calling it an earned, performance bonus, which is what it effectively was, not severance.
Some have incorrectly described both of my recent jobs — as chief of staff for the state of Maryland and CEO at MES — as state jobs. They were not. MES, where I worked for 3 1/2 years, is a not-for-profit, public corporation — it is a unique organization, even among the small number of independent state agencies. It was purposefully designed to be different to serve its specific mission. While it is owned by the state of Maryland, it receives zero dollars in direct, state operations funding. No taxpayer dollars are used in any payments made by MES. Banking, checks and other financial instruments belong to MES, not the state of Maryland. When a state payment for services is made to MES, the funds belong to MES, no longer the state, and those former tax dollars are no longer held by the Maryland Treasury.
MES operations are 100% self-sufficient and not much different from a private-sector entity. Again, it is not a “state job.” MES was my employer, not the state of Maryland. In fact, the state of Maryland has an entirely separate personnel system with different benefits, policies and procedures. Unlike state employees, MES staff are contractual and at-will. This structure is not a trivial distinction between the jobs. It is fundamental to the reason why departing executives — both before and after me — received similar severance packages from MES, but would not be eligible for such in a state job. I understand and respect that some may see it differently, reasonable people can disagree, but what matters in this situation, retrospectively, is how I and the MES board viewed the difference.
My severance amount of $238,250 followed that of my predecessor, Jim Harkins, who received a $256,000 severance in 2016. My short-term, acting successor, Beth Wojton, recently received $150,000 in severance just a few weeks after me, according to MES. Other executives have received severance packages, as well, over many years. For example, a severance package of about $79,000 was awarded to former acting CEO John O’Neill in 2017, after less than a year in the job. In other words, this was a standard business practice for certain executives who had earned it, typically through performance. Had this not been the practice, I would neither have expected nor accepted the payment. Severance — voluntary or involuntary — is reportedly not a unique practice in other settings: academia and at other independent agencies, for example.
The MES financial practices were routinely audited — independently and by the state — with no related, adverse findings or criticism of its severance practices. MES, as it is constructed today, is essentially a business. It serves hundreds of predominantly public, but also private sector business partners. Operational decisions, such as staffing priorities, partnership development and marketing strategy are the responsibility of the CEO, chief operating officer and other respective executives. Some may not agree with my, or our, decisions on a range of topics, but making them was our job, and the record-setting financial results, driven by our decisions, speak for themselves.
In May, with counsel present, the MES board properly considered and unanimously voted on these payments without my participation. The board has the authority to take such action, and they acted properly. The award I received this year was made openly, transparently and, as has been stated by MES, was for performance, not for severing from MES, regardless of what the payment was called. A CEO’s primary job is to provide strategic vision. Other executives, from the chief operating officer down, execute that vision. As CEO, much of my time was spent developing strategy, networking for business and partnership building, with record-setting financial results.
I purposefully created new business units, including significantly enhancing our communications and marketing. I developed a first-of-its-kind new group that focused on building new business partnerships and engaged MES with over a dozen new external, business and industry organizations, including the Greater Baltimore Committee, the Maryland Economic Development Association, BWI Partnership, and the U.S. Chamber of Commerce, to name just a few. These were fruitful, outside-the-box relationships, and they helped to significantly elevate awareness of MES, part of the strategic plan developed during my time there to increase the reach of our environmental mission.
Surprisingly, before I arrived, there was no formal strategic plan for this massive, $178.7 million enterprise, and some policies hadn’t been updated in decades. While I was there, in some areas, we spent money to make money. We also cut many expenses, including saving nearly $400,000 a year by eliminating the personal use of MES vehicles. We created over 70 new jobs, filled hundreds of vacant positions, grew our projects and new clients substantially, including a historic water operations partnership in Garrett County, and achieved record revenues with an increase of nearly $16 million in the past year alone. As MES officials have said, this exceptional performance earned my “severance” package.
When coronavirus struck, I was asked by the administration to shift my attention and help support the state’s response (paid for with reimbursement through FEMA, not the state). From March onward, I spent over 100 grueling hours each week on strategic planning and implementation. Maryland’s results — record low positivity rates — speak to the wisdom of the administration’s approach and our tireless efforts.
Finally, I want to reiterate why I offered to leave the administration. I accepted this chief of staff role, in the first place, to continue my public service work, particularly at such a critical time in our nation’s history. Had my unique skill set not been wanted, and had our state not been facing the greatest health pandemic in modern history, I would have likely remained at MES, through the remainder of the current administration.
Leaving MES to work for the state meant I would lose around $120,000 in anticipated, future, bonus earnings. The severance helped to offset this expected loss and provided an additional, well-earned performance award. MES is a large and varied enterprise — 850 employees, both blue collar and white collar. We made record investments in our team, including good raises and record employee payout bonuses, with $2 million distributed to employees in April. We offered record employee education and training investments (well into the six-figures annually), new recognition awards, increased retiree health benefits, telework enhancements (pre-COVID), and new mentoring, diversity, equity and inclusion programs.
This week, as I stepped away from public service, countless people who know me and my character, have reached out to say this is the state’s loss, not mine. The underlying tone of The Sun’s coverage is grossly unfair. I say MES has done well as a result of my leadership and team building, but both the State of Maryland and I have now lost an important opportunity to continue best serving the people.