Members of the Maryland Environmental Service board of directors told a legislative committee Tuesday that the agency’s director, as he left to become Gov. Larry Hogan’s chief of staff, assured them that the governor was on board with a proposal to give him a year’s salary as severance.
Three members of the service’s nine-member board told legislators they feel misled by Roy McGrath about his severance. They testified at an oversight hearing that McGrath assured them Hogan supported the plan to pay McGrath about $238,000 earlier this summer.
The Republican governor said in a statement that he had no role in the board’s decisions involving McGrath as he prepared to join his team.
“To be clear, I did not approve, recommend, or have any involvement whatsoever in any of these decisions made by the board of directors of MES with respect to the former director Roy McGrath or any other individual,” Hogan said.
The conflicting statements concerned legislators gathered Tuesday for the hearing by the General Assembly’s Joint Committee on Fair Practices and Personnel Oversight, which is investigating MES’ practices.
“It is concerning that the options are either Mr. McGrath misled the entire board, or the statement that was released by the governor earlier this afternoon was inaccurate,” said Sen. Clarence Lam, a Howard County Democrat who is the committee’s co-chair. “These are very serious allegations.”
Del. Erek Barron, the committee’s other co-chairman, said the statements from the governor and the testimony of board members raised more questions.
“Both can’t be true,” said Barron, a Prince George’s County Democrat.
McGrath did not respond Tuesday to an email requesting comment. He has sought to justify the payout, as well as expenses and bonuses he received, as deserved and customary at the agency.
The Maryland Environmental Service and McGrath have been under scrutiny since The Baltimore Sun reported Aug. 13 that McGrath received the payout when he left MES on June 1 to head the governor’s staff. Four days after The Sun first reported the payment, McGrath resigned from the governor’s staff.
The Sun also reported that McGrath routinely earned tens of thousands of dollars in bonuses as part of an executive bonus plan, and that the week after he left the agency, he was reimbursed for nearly $56,000 in expenses.
The various payments have raised questions among lawmakers as to whether they are appropriate for an independent state agency that receives 95% of its revenue from local and state governments.
The Maryland Environmental Service carries out environmental and public works projects for clients such as operating landfills and sewage plants and dredging waterways.
William B.C. Addison Jr., one of the board members who spoke at the hearing, said members were between a rock and a hard place: They were reluctant to pay out such a large sum of money during the coronavirus pandemic and resulting economic crisis, but they didn’t want to risk alienating the governor and his new top aide.
“I’m very upset about this, as Mr. McGrath put the board in a horrible situation with no good outcome,” Addison said.
Joseph Snee Jr., an attorney in Harford County who has been on the board for 26 years, said he was approached by McGrath about the severance. Snee brought McGrath’s request to members of the board’s human resources committee, which he chairs. He said they agreed “the severance payment would not be made unless it was approved by the governor.”
Snee said that in deciding to vote for the severance, he relied on McGrath’s “representations” that he had the governor’s support.
“Had he not assured us that the second floor approved this, we would not have made the severance payment,” said Snee, referring to the location of Hogan’s office on the second floor of the State House.
Dr. Richard Streett Jr., a Harford County veterinarian and board member until last week, said he had “questions and concerns” about the severance. But with what he thought was the governor’s blessing, he also supported the payout.
Now, he thinks the board was misled.
“I do not think that the governor knew anything about Mr. McGrath’s departure proposal,” Streett said.
Addison, who retired last year as the secretary of the state Senate, suggested that board members were worried they might receive blowback from the governor’s office if they didn’t support the payment to McGrath.
“It’s pretty simple,” he said. “You’ve got somebody who is going to a position working for the governor that really is going to control a lot of what the state does. It’s a very powerful position that’s going to have an impact on MES.”
The governor appoints the MES director and five other members of the board, subject to the approval of the state Senate. The director appoints the three other board members.
Before board members voted on McGrath’s severance, the agency’s deputy director emailed Snee about the governor’s support of the plan, according to documents MES provided to the committee.
”Roy says that the ‘Governor anticipates’ a severance equal to one year’s salary,” Beth Wojton, the deputy director, emailed Snee on May 27.
Earlier that day, Wojton asked McGrath over text about the governor’s approval of the severance, according to the documents.
“It’s anticipated, yes,” McGrath responded.
The exchanges took place the day Snee’s committee met. The next day, the full board approved the payout, according to its minutes.
McGrath has defended the agency’s spending practices as being in line with how businesses operate, and described himself as a CEO. He has expressed his point of view in social media posts and in a letter sent to The Sun.
His replacement at the Maryland Environmental Service, Charles Glass, took a different tack at Tuesday’s hearing — both from McGrath’s statements and a MES news release on Aug. 15 that sought to justify the payments and emphasize the organization’s “business” status and “private sector like pay structure.” Glass acknowledged during the hearing that McGrath asked Glass to send out that news release.
“I do not consider myself a chief executive officer ... I am a state employee and I am not leading a private business,” Glass told the committee.
Glass said he was made aware of concerns about McGrath’s spending after he joined the environmental service on June 22 from the Maryland Department of Natural Resources.
He said he’s made changes, such as no longer having the service’s finance director also serve on the board of directors as treasurer. He also ordered an audit of all “discretionary expenditures” made by top employees over the last year.
Hogan and MES were complimentary of McGrath before Tuesday.
Glass praised McGrath’s “tremendous leadership” in his Aug. 15 statement. “We view this payment as compensation for exceptional growth during his tenure,” he said.
And on Aug. 17, when McGrath resigned, Hogan said he accepted his decision with regret.
“Roy has been a deeply valued member of our administration, and our state is better for his dedicated service. I recognize that this was a difficult decision for Roy, but I understand and respect his reasons for making this decision,” Hogan said. “I have always known Roy to be someone of the highest character.”
Hogan said Tuesday that he had ordered the Department of Budget and Management to audit the environmental service.
“It has recently come to light that the Maryland Environmental Service has a longstanding practice of paying large bonuses, expense reimbursements, and severance packages to its top executives,” Hogan wrote. “This is something no normal state-operated agency should or would grant.”
The hearing was intense at times, as Lam and Barron, as well as Del. Marc Korman, engaged in focused questioning of Glass and other officials.
At one point, Korman, a Montgomery County Democrat, instructed Glass to read sections of emails and other documents aloud to underscore his arguments, including that everyone involved in McGrath’s severance should have known the state was in a precarious financial situation due to the pandemic.
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All three Democratic legislators came to the video meeting with slides prepared from the documents MES and the governor’s office supplied Monday to the committee.
One of the Republican committee members, Del. Jefferson Ghrist of the Eastern Shore, raised concerns, too.
Ghrist said board members gave the impression that they “are rubber-stamping anything that is proposed.”
“If I sit on that board, I would most definitely want from Mr. McGrath something conclusive from the governor’s office that they were OK with it,” he said.
Committee members indicated they are weighing whether to draft legislation that would change how the environmental service is structured. The governor said he would work with state lawmakers on bipartisan legislation “to reform the governance and operations” of MES.
The lawmakers also pledged to keep digging into the service’s operations.
“There’s a lot more questions that need to be answered,” Barron said.