By Todd Cohen
RALEIGH, N.C. — The North Carolina Museum of Art Foundation supplemented the salaries of state employees at the N.C. Museum of Art in violation of state law, the Office of the State Auditor says.
In a report, the auditor’s office also says that while it is a state agency that receives funding from a private foundation, the museum operates much like a private organization that receives state funding.
The operations of the foundation and the museum “are so integrated that a hybrid organization now exists,” and the foundation has “extensive control” over the museum’s daily operations, the report says.
But it says the museum “is in fact a state museum and should be operated as such.”
In 2004, the report says, the foundation spent $373,000 to supplement salaries of 33 of 79 employees of the museum, which is a division of the state Department of Cultural Resources.
“The employees were not required to perform duties outside their normal job responsibilities to receive these supplements,” the report says.
It says the supplements violate a policy of the Office of State Personnel that bars employees, even while on paid leave, from being “paid additionally for services performed for the employee’s parent agency.”
The report says reviews by the cultural resources department and museum foundation of the job duties for those positions receiving supplements “indicated that the employees had no additional duties and were not performing additional work to justify the additional pay.”
The report says the foundation spent another $260,420 for Larry Wheeler, the museum’s director, to boost his $97,621 state pay with a salary supplement of $111,192, consulting fees of $135,642, and expenses of $13,586 to cover the lease of an automobile, plus its fuel and insurance.
And he was reimbursed another $57,140 for travel and entertainment expenses, the report says.
The foundation also paid the salaries of two foundation employees who serve as the museum’s chief operating officer and chief financial officer, and supplemented the salary of the assistant director of marketing, the auditor’s office says.
For its report, which was triggered by a complaint through its hotline, the auditor’s office says, Wheeler told the auditor’s office the salary supplements and other compensation boosts were needed so the museum could attract and keep the best staff.
Wheeler, for example, “indicated that while his current compensation package is in line with those of his counterparts at other museums, it would probably be on the low side of the total compensation packages of his counterparts,” the report says.
That conclusion was based on a 2004 salary survey by the Association of Art Museums.
But while 80 percent of 238 museums responded to the survey, the auditor’s office says, 74 percent of those responding were private, nonprofit entities.
Setting compensation for a government museum director based on data mainly from private museums is “unrealistic,” the state auditor’s report says.
When it asked Wheeler how he decided who would get a supplement and much they would get, the auditor’s office says, he “indicated that the process was initiated by the employees.”
The auditor’s report also says Wheeler “indicated that he may have gone around state policy, but that he was doing what was best for the museum.”
Wheeler also indicated he had asked the State Personnel Office several times to upgrade museum positions “to be more in line with the same positions within other agencies, but time and time again, he was denied any change,” the auditor’s report says.
It says Wheeler also indicated that the State Personnel Office did agree once to upgrade a set of positions, but that state lawmakers did not approve additional funds to pay for the upgrades.
In response, Wheeler “indicated he thought by offering a supplement equal to what the employee may get in an upgrade, he may jumpstart the process and get the General Assembly to agree and include the funding in the next budget. The additional funding never came and the supplements continued.”
The auditor’s report says the state Department of Cultural Resources should work with state lawmakers, the Office of State Personnel and state Attorney General’s Office “to review the operational aspects of the museum to ensure that the museum is operated as a state entity.”
The museum “is at a crucial stage in its existence as it looks forward to possible expansion,” the report says. “The department should ensure that the operational structure of the museum allows it to operate within state rules and regulations for the citizens of North Carolina.”