Bonuses violate state law, legal opinion states
New Secretary of State Linda McCulloch would have broken state law if she had issued bonus checks of nearly $58,000 authorized by former Secretary of State Brad Johnson to nine of his former top appointees, a legal opinion concluded Thursday.

HELENA - New Secretary of State Linda McCulloch would have broken state law if she had issued bonus checks of nearly $58,000 authorized by former Secretary of State Brad Johnson to nine of his former top appointees, a legal opinion concluded Thursday.

"Based on the available information, the awards, if paid, would violate the Legislature's intent as expressed" in state law, concluded the legal opinion by Mike Manion, chief lawyer for the Department of Administration. "The awards do not appear to be authorized by another law, including the (state) Employee Incentive Program."

Unless a court rules otherwise, the legal opinion stops issuance of the bonus checks that the nine former Johnson appointees would have received.

McCulloch, a Democrat who took office Jan. 5, learned last week that Johnson, a Republican whom she defeated in the November election, in late November authorized nearly $58,000 in bonuses. However, the checks were to be issued Jan. 14, after McCulloch took office.

She questioned their legality last week, saying: "This is walking-out-the-door money. I've never heard of people getting performance bonuses when they walk out the door."

McCulloch halted the checks and sought a legal opinion from the Department of Administration.

On Friday, McCulloch said the opinion clears up the issue.

"I feel good that we made a decision that protected taxpayers' money and that we took it to a conclusion under state government that found that in fact that it was illegal," McCulloch said.

Johnson said he takes Manion's opinion "at face value."

"I'm disappointed that I'm not in a position to show more appreciation for the work that that team performed in the office," Johnson said. "But it is what it is."

Johnson said he believed his decision to award the bonuses was within his prerogative as the head of an agency to show appreciation for the appointees' excellent work.

"There is nothing sinister," he said. "It seems to be this is one of the classic cases of no good deed goes unpunished."

Johnson's former chief deputy, Ralph Peck, said Thursday that he "wouldn't anticipate a challenge in court."

Last week, Peck told McCulloch's chief deputy that the former Johnson appointees would sue if the checks weren't issued.

"At this moment in time, that has never been my intent," Peck said Thursday of a lawsuit. "I just want to make sure things are done correctly."

In his legal opinion, Manion said state law allows employees who end their employment to receive accumulated wages, vacation, sick leave and compensatory time. Johnson's employees collected these payments; the bonuses were to be in addition to those amounts.

However, Manion said that employees who terminate employment "may not receive severance pay, a bonus or any other type of monetary payment" beyond that under state law.

"The 'performance awards' do not appear to fall within any exception to the payment prohibition addressed in (state law), including the incentive award program," Manion said. "Based upon the available information, the awards were not negotiated before the work and there were no performance appraisal tools in place against which to evaluate each employee performance.

"Further, the payments were not meant to retain the employees and their valuable talents. These salient characteristics suggest that the awards were gifts, the payments of which (state law) was designed to prevent.

"Finally, the awards do not meet the criteria of the incentive award program. They were not submitted to the Department of Administration under the program; they exceed (the maximum amount of) $500; and no cost savings were documented."

Manion noted that no Montana court has interpreted a state law. He suggested McCulloch might want to seek a court injunction to stop the payments until the decision is made. McCulloch is satisfied with the legal opinion.

Manion said he was not issuing an opinion on the $150,000 in bonuses issued by former state Auditor John Morrison to 71 employees in June. He was asked to examine only the Johnson bonus awards.

House Speaker Bob Bergren, D-Havre, said he will still introduce his bill to make it clear that elected officials can't give bonuses to their appointed staffs.

"If it's not illegal, it should be," he said. "We found out it probably was. These were gifts, and it wasn't tied to any performance."

Johnson had authorized the former appointees in the secretary of state's office to receive bonuses equal to 10 percent of their annual salaries. Here is the list of employees and when they began working for Johnson:

Janice Doggett, who started in April 2006, $8,755; Stan Ullman, July 2008, $8,240; Jean Branscum, January 2005, $6,695; Jeff Garrard, April 2006, $6,695; Bowen Greenwood, May 2007, $6,695; Peck, June 2007, $6,695; Susan Ames, January 2005, $5,431; Lynn Staley, January 2005, $5,271; and Stephanie Hess, August 2007, $3,502

Peck worked half-time as chief deputy. His award was set equal to the office's deputies for purposes of the bonuses.

Lisa Kimmit, Johnson's elections deputy, turned down her $6,695 award. She was the lone Johnson appointee retained by McCulloch.

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