County: Bonus money needs to be investigated

Okaloosa County Tax Collector Chris Hughes' method of providing employee bonuses could be investigated.

However, the county's "legal eagles" first must figure out who's supposed to be doing the investigating.

On Wednesday, Okaloosa County residents and officials were shocked to learn that Hughes gave out $692,000 in bonuses to key employees over the last three years.

County Administrator Jim Curry and County Commission Chairman Bill Roberts learned Thursday that Hughes had never "identified" or requested permission to award bonuses in annual budgets he presented to the state Department of Revenue.

Had Hughes made such a request, Curry said, the Department of Revenue would have turned him down, citing its own policy and an Attorney General's opinion.

Attorney General Opinion 91-51 states that bonuses only will be accepted as budget items after a county adopts formal guidelines for providing them. Curry said something such as a "longevity bonus" that provides incentive pay for reaching particular tenure milestones would qualify under the opinion.

Hughes' budget for fiscal 2008, when he handed out $176,000 in bonuses ranging from $1,000 and $15,000, simply called for a 2 percent market adjustment (cost of living) raise for his employees.

Curry said after the county officials learned that Hughes' bonuses aren't authorized bonuses, they asked what measures the state might take.

"They advised us they would not be proceeding with an investigation, that they did not have an enforcement component," Curry said.

Curry said he asked County Attorney John Dowd to determine whether an investigation is warranted and into whose jurisdiction Hughes' case might fall.

"That's something the legal eagles will have to look at," he said.

"We're not saying there's been a violation of law," Curry added. "There is a question that needs to be investigated and some sort of determination about appropriateness needs to be made."

Department of Revenue spokeswoman Renee Watters said the state's role in the budgeting process for constitutional officers such as tax collectors and property appraisers is to "approve prospective spending authority."

She said audits and investigations of spending practices are left to local authorities.

Hughes, who was not available for comment Thursday, defended his bonuses as a successful business model.

He said Wednesday the bonuses are taken from funds saved by not filling vacant employee positions or by holding on to money not spent when an employee leaves.

The bonuses have "gotten our people to perform on a higher level," he said.

In an e-mail sent Wednesday, he said "extra compensation pay is never budgeted in advance."

"It is solely determined by the productivity and efficiency of the office and it is awarded, according to our written policy, based on the availability of unused budgeted personnel funds and on superior accomplishments and suggestions that benefit the organization that are adopted by me," he said.

Hughes said "extra compensation is a different type of pay and is not addressed in salary increases because it is not a permanent increase in salary, and retirement is not paid for extra compensation payments."

Hughes said Wednesday that bonuses inspire employees to stay with his office, which saves him money.

"That extra compensation pay saves us about 25 percent. It's cheaper than hiring new people, not having to pay the related expenses," he said.

The bonuses are provided out of the personnel services line item in his budget, Hughes said.