Maryland agency, Gov. Hogan’s new chief of staff defend payout he received from previous state job

Maryland Gov. Larry Hogan’s new chief of staff and the Maryland Environmental Service are for the first time publicly defending the six-figure payout he received when he left the independent state agency, after he and agency officials had refused since Wednesday to comment on the severance.

Amid the backdrop of General Assembly plans for an oversight hearing, Roy McGrath is calling the severance “a standard business practice” and the agency said such payments fit “a private sector like pay structure.”

In a post on his Facebook page on Friday, McGrath said no tax dollars were used in his severance and that his predecessor received “an exit package far larger than mine.”

[ New Hogan chief of staff got six-figure payout as he left Maryland Environmental Service to work for governor ]

Some state lawmakers on Saturday rejected McGrath’s arguments, saying that the agency is not a business but instead is almost completely funded by state, county and local taxpayers.

Before joining the Republican governor’s State House team June 1, McGrath led the Maryland Environmental Service, an independent state agency that carries out environmental and public works projects, such as operating sewage plants and dredging waterways.

The Maryland Environmental Service does not receive any subsidies from general state tax dollars. It is required to operate from its own revenues, which mainly come from local and county governments, as well as the state government.

As first reported by The Baltimore Sun Thursday, when McGrath voluntarily left his position at MES, the agency’s board voted to give him a severance package of one year’s salary plus $5,250 in tuition reimbursements. He also was allowed to keep his work-issued cellphone and laptop. According to state budget records, McGrath’s salary was $233,647 at the MES. He’s now making about the same salary in his new position as Hogan’s chief of staff, state officials acknowledge.

“We’ll put the other facts out soon enough, but I say thanks to my friends who didn’t jump on the fact-less bandwagon today,” McGrath wrote in his Facebook post. “I remain focused on my public service job and will not be drawn into the distraction of other’s toxic, partisan politics.”

McGrath called The Baltimore Sun’s reporting a “rush-to-judgement news story.” He has not responded to requests for comment, and the governor’s office has not made him available for interviews. The governor’s office also has declined to comment.

When Hogan hired McGrath as his chief of staff, the governor praised him as “an experienced public and private sector leader with a proven track record of managing at every level of government and a passionate commitment to public service.”

The Democratic leaders of the Maryland General Assembly on Friday deemed the payout “shocking” and announced that an oversight hearing would be held.

House of Delegates Speaker Adrienne A. Jones said McGrath should return the money, while Senate President Bill Ferguson said keeping or returning the money is “a personal decision” for McGrath.

[ House speaker says Gov. Hogan’s new chief of staff should return six-figure severance to Maryland Environmental Service ]

In another Facebook post Saturday, McGrath wrote that “with all due respect to Speaker Jones, I’ll gladly return my well-earned, non-taxpayer funded severance when every other executive who has ever received one does too.”

State lawmakers pushed back at the notion that the Maryland Environmental Service is more akin to a private business than a state agency.

Del. Marc Korman, who chairs a subcommittee that reviews the MES budget, noted that 95% of the agency’s money comes from state, county and local tax dollars.

“I think his portrayal of where he was working is completely at odds with how MES is structured and funded,” said Korman, a Montgomery County Democrat. “It’s not a Fortune 500 company. It is an instrumentality of the state of Maryland.”

The General Assembly’s Joint Committee on Fair Practices and State Personnel Oversight is planning a hearing into the matter in the coming weeks.

“It doesn’t pass the sniff test to say this is completely a private, nonprofit entity when almost all of their funding is coming from contracts that occur with state and local governments,” said Sen. Clarence Lam, who is co-chairman of that committee.

Lam, a Democrat who represents Howard and Baltimore counties, questioned why the MES board agreed to give a payout at a time when state employees are being asked to give up raises and are facing the prospect of furloughs.

Del. Erek Barron, co-chairman of the committee, said the agency should operate “according to best practices and not political patronage.”

“Citizens have a right to expect that the governor’s appointees will exercise their fiduciary duties responsibly and transparently,” said Barron, a Prince George’s County Democrat.

MES issued a statement Saturday morning defending the severance package, after multiple days of not responding to requests for comment.

“While the full severance payment to Mr. McGrath was not contractually required, it was offered as a well-earned compensation package for having led the organization to its best financial and operational year in our history,” the statement read.

The statement praised McGrath for an employee incentive program that paid bonuses to workers and expanded training opportunities, and the creation of a diversity and inclusion program.

The statement also noted that as an independent agency, MES does not receive direct state tax dollars and “operates in a manner equivalent to a private sector organization.”

Severances are “customary” for MES directors and acting directors, according to the statement, which also said McGrath’s predecessor, Jim Harkins, received $256,746 when he retired in 2016.

Current MES Director Charles Glass said in the statement, “MES is grateful for the tremendous leadership provided by Mr. McGrath and wish to reiterate that we view this payment as compensation for exceptional growth during his tenure.”

Baltimore Sun reporter Jeff Barker contributed to this article.