Ten state agencies spent more than $5M on spot bonuses over two years

The Indiana Economic Development Corp. doesn’t have the largest employee headcount, but the relatively small state agency, which has 114 employees, spent an outsized amount of taxpayer dollars on spot bonuses totaling $1.2 million over two years.

For comparison, the state’s largest agency—the Indiana Department of Correction—has 5,149 employees and spent a total of $1.7 million over the two years analyzed. Combined, 10 of the state’s largest agencies spent more than $5 million in bonuses, with average payouts ranging from an IEDC high of $2,973 to a low of $231 at the Department of Environmental Management.

Out of the 10 agencies analyzed by the Indiana Capital Chronicle, the IEDC stood out for its hefty, repeated bonuses, including a total of $52,700 over two years to David Rosenberg, formerly the chief operating officer and chief of staff and now the head of the agency.

Gov. Eric Holcomb defended agency spot bonuses overall, which were revamped as part of his 2022 approach to address low state employee retention, and praised the IEDC for superseding its goals. The IEDC is a quasi-governmental agency, which means it has greater autonomy and less public transparency.

“The IEDC, being a quasi, has a somewhat different mission in the sense that they’re out trying to bring in jobs and capital investment and they have certain goals that we go over in the beginning of every single year and track every single day,” Holcomb said during a media scrum on Wednesday. “… Specifically with the IEDC, we set a goal to break records every single year in terms of wages, in terms of new jobs, in terms of capital investment.

“We set a record (in 2021) at $8.7 billion,” Holcomb continued. “Last year, they did $22.2 billion in capital investment. So not only did they surpass … they far exceeded it.”

IEDC bonuses

Through a spokesperson, the IEDC shared its 12-page compensation plan and detailed how spot bonus data obtained from the Comptroller’s Office actually included three different categories of bonuses: traditional spot bonuses recognizing job performance, incentive compensation bonuses tied to biannual performance reviews and sign-on bonuses used to “recruit top talent.”

According to Erin Sweitzer, the agency’s vice president of external communications, spot bonuses for 2022 totaled $10,175 and $131,850 for 2023. Sign-on bonuses totaled $6,000 and $11,500, respectively, while the bulk of the bonuses fall under incentive compensation — $619,250 for 2022 and $422,177 for 2023 so far.

Bonuses are tied to the agency’s performance, Sweitzer said.

“In conjunction with the IEDC board, our executive team sets aggressive annual goals for our agency to achieve. In 2022 and so far in 2023, our team has greatly exceeded these goals, which have generally been related to committed capital investment, average committed wages, as well as targets related to community investment, entrepreneurship and external engagement,” Sweitzer said.

Data showed bonuses from the agency generally went out in waves, including $292,250 in June 2022, $327,250 in early November 2022 and $418,177 in July 2023. Sweitzer said the second biannual bonus for 2022 went out in November, instead of December, because the agency hit its goals early.

The shared compensation guide included the agency’s calculation for determining bonuses, which considered a hiring date, whether that goal was exceeded and weighed the goal based on its strategic importance.

“Based on the unprecedented success of the IEDC–record levels of new committed capital investment; growing new future-focused industries like energy, semiconductors and electric vehicles; investing $1 billion in quality of place initiatives across the state through READI; and creating countless new job opportunities for Hoosiers with record-high average wages that are above the national average wage – these agency goals have been exceeded, and employees have received standard performance-based bonuses as set by the agency guidelines,” Sweitzer continued.

She noted that spot bonuses alone “generally adhere” to guidelines from the State Personnel Department, or SPD, which caps such awards at $1,000 and doesn’t include multiple perks per year.

Sweitzer said such bonuses were at the discretion of the department’s executive team and employees received multiple awards at times when they had “earned a promotion and/or pay increase” but salaries couldn’t be adjusted at the same time due to “financial and administrative constraints.”

“We occasionally use spot bonuses (sometimes multiple in a year) as a tool to make those employees’ compensation ‘whole’ until their pay increase can take effect,” Sweitzer concluded.

Big bucks at state agencies

The ICC’s analysis of 10 key state agencies’ spot bonuses covered 69% of all state employees, not including 2% of state employees from a previous investigation into spot bonuses at offices led by elected officials.

In terms of average bonus, IEDC led the pack with an average award of $2,973 over 404 bonuses followed by the Department of Education, which averaged $2,625 across just four bonuses.

The IEDC also had the highest maximum bonus at $11,700, again followed by the Department of Education, which doled out one $5,000 bonus.

Though the Bureau of Motor Vehicles has just 1,449 employees, the agency gave out 5,990 bonuses—spending a total of $997,009 but averaging just $167 per bonus.

Similar to the IEDC, the BMV clarified that it had several bonus programs all lumped under the ‘spot bonus’ designation at the Comptroller’s Office. Totals for each category included: $67,208 in traditional spot bonuses; $528,438 in branch operations quarterly bonuses; $400,863 for kiosk bonuses; and $500 in referral bonuses.

Melissa Hook, the BMV communications and media relations director, said the branch operations quarterly bonus program specifically helped recognize “outstanding performance” for two of the department’s most challenging roles: customer service representatives and team leaders. Kiosk bonuses include branch team members and regional managers and is based on the percentage of transactions processed at a BMV Connect kiosk.

Of the 10 agencies analyzed, just two adhered to the SPD suggested maximum of $1,000—the Department of Health and the Department of Environmental Management.

Two agencies with long-standing recruitment challenges, the Department of Child Services and the Department of Correction, both stood out for having higher maximum awards ($2,289 and $3,098, respectively) and high overall spending.

DCS, in a statement, said it awarded bonuses bigger than $1,000 to offset withheld taxes and as part of a SPD-approved recruitment initiative for family case managers.

Party heads weigh in

The awarding of bonuses was left largely up to agencies, Holcomb said.

“It’s really left up to the individual agency head to recognize staff that (go) above and beyond the normal call of duty and we have approached it that way,” the governor said.

Holcomb acknowledged that his own office abided by guidelines from the SPD, which caps bonuses at $1,000, but not all departments fell under its purview — including his own and others led by elected officials.

“Other agencies that may be outside or maybe quasi have their own kind of measurement of who’s excelling (and) what have they brought in, in terms of the mission or the goals that were set at the beginning of the year and how they got to them or, in come cases, below by them,” Holcomb said. “I would recommend everyone, unless you’re a quasi, but everyone to follow the SPD guideline because they’ve worked for us.”

But the Indiana Democratic Party observed that the embattled IEDC had much of its activity obscured from public scrutiny and spent “millions of taxpayer dollars in the dark.”

“Hoosiers play by the rules everyday, and they expect their government to do so as well,” said Indiana Democratic Party Chair Mike Schmuhl. “This is another example of big government bureaucracy … It’s clear Hoosiers cannot trust the excessive Republican supermajority to provide the critical oversight needed to ensure agencies stay within the rules. We can bring more balance back to our state government by ending the total one-party control at the Statehouse.”