Maryland lawmakers are considering a long list of changes to the Maryland Environmental Service, a low-profile independent state agency thrust into the spotlight after its director received a six-figure payout when he left to work for the governor.
The bill would restrict future payouts, restructure the board and add new requirements, such as ethics training.
“The public trust has been violated,” said Sen. Sarah Elfreth, an Anne Arundel County Democrat. “It deserves a quick and swift and thorough and thoughtful response.”
The Maryland Environmental Service came under scrutiny after The Baltimore Sun reported in August that the ex-director, Roy McGrath, had been paid more than $238,000 when he departed to become Republican Gov. Larry Hogan’s chief of staff. McGrath called it “severance” pay, though he voluntarily left the agency to join the governor’s team at the same salary.
Subsequent reporting by The Sun and a legislative investigation revealed that McGrath and agency executives routinely earned five-figure bonuses, that he was paid more than $55,000 in expense reimbursements after he left the agency, and that he tried to influence how his former agency responded to The Sun’s report.
Members of the board of directors previously testified that they felt pressured to approve the payout to McGrath after he insinuated that it was endorsed by Hogan. The governor has said McGrath told him he had financial matters to work out as he changed jobs. But Hogan said he didn’t know about or endorse a payout.
Sen. Cory McCray, one of the bill’s lead sponsors, said during a video hearing on Wednesday that the environmental agency is due for a “course correction” following the revelations of financial issues under McGrath’s leadership.
MES provides environmental and public works services such as operating landfills and dredging waterways, primarily for local and state government agencies. It gets 95% of its revenues from other government agencies.
“MES serves a very good purpose. It does great good with local and state government,” said McCray, a Baltimore Democrat.
Sen. Adelaide Eckart, an Eastern Shore Republican, said MES operates several water and sewage plants in her district.
“Whenever there’s an incident, it’s always an opportunity to look at the organizational structure and see what wasn’t working,” she said.
The bill proposes a series of changes, among them: prohibiting the type of severance payout for executives that McGrath benefited from; shrinking the board of directors to a seven-member board, who would be mostly appointed by the governor and confirmed by the state Senate; prohibiting the service’s executive director from serving on the board; requiring ethics, diversity and harassment training for board members; requiring the board to set policies on compensation, severance, travel and other expenses; and requiring extra layers of approval for certain high-dollar contracts.
The bill also changes the title for the environmental service’s top employee from “director” to “executive director.” McGrath had fashioned himself as a “CEO,” saying that he thought the title of “director” was confusing.
A companion version of the bill has been introduced in the House of Delegates, with a public hearing scheduled for Feb. 3.
The current acting director at the Maryland Environmental Service, Charles Glass, said he agrees with the goals of the legislation and many of the details. But he cautioned against moving too quickly on making detailed changes that would affect the agency’s nuts-and-bolts operations.
“Reforms are warranted, but we want to get them right,” Glass said.
Hogan appointed a committee to review MES and other state agencies, with a report due in December. It may make sense to wait for that report before going too far with changes at MES, Glass said.
Hogan, meanwhile, proposed his own set of less-extensive changes to the environmental service this week.
Hogan’s bill reconstitutes the MES board of directors, setting the service’s executive director as a non-voting member and limiting board members to serving two, four-year terms. One member of the board must have “experience or expertise in matters related to business ethics.”
The board would be required to develop a conflict of interest policy, conduct an annual financial audit and hire an independent consultant to review the board’s operations every three years.
In a statement, Hogan said his proposal is part of his effort to “restore integrity and accountability to our state government.”