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Members of the Montana Board of Investments awarded raises to some of the panel's top personnel on Wednesday over the objections of its former chairman, who cited underperforming investments and rising costs in his unsuccessful bid to stop the proposal.

Board member Karl Englund proposed the raises to make up for several years of essentially frozen salaries for board staff. He said the increases will move their compensation closer to the market average.

The nine-member board manages Montana's $13 billion investment portfolio, including $7.7 billion in pension funds for public employees.

Englund, a Missoula attorney, said he crafted the raise package in collaboration with Ewer.

The salary increases include an 8.5 percent hike for the board's executive director, David Ewer, and a 9.75 percent raise for Chief Investment Officer Clifford Sheets. Six others will receive raises of 5.5 or 8.5 percent.

"We've deferred this since 2009. It's time for us to act," Englund said. "We're making up for a lot of years here."

Former board chairman Gary Buchanan, who runs an investment firm in Billings, cast the lone dissenting vote on the pay plan. He pointed to investments by the board that consistently have underperformed its own benchmarks over the past seven years — even as costs have increased sharply.

Ewer joined the board two years ago after serving as former Gov. Brian Schweitzer's budget director for most of the Democrat's two terms. He will make $173,600 annually once the salary increases go into effect this summer.

Sheets — already one of the highest-paid state employees, according to the Montana Policy Institute — will make $217,259.

Most of the others receiving raises had their salaries frozen for three years beginning in 2009 before getting a 1 percent raise last year.

Thousands of state employees endured a similar pay freeze in recent years, before Schweitzer and state employee unions last summer agreed to two years of 5 percent across-the-board raises at a cost of about $152 million. The Legislature amended that plan in April to reduce the amount available for raises, leaving it to Gov. Steve Bullock to negotiate with employees on how to distribute the money.

While the Board of Investment's performance has turned around this year, Buchanan said it's too early to say if that trend will continue. He offered an unsuccessful alternative plan Wednesday under which the board would have given blanket 5.5 percent raises and then reconsidered the issue after June 30.

"I don't think benchmark performance is sentimental," Buchanan said, referring to comparisons between returns on the state's investments and the returns from a broader economic index. "It's just astounding that we didn't have quantifiable measures of performance."

Englund said benchmark returns are considered in employee evaluations, but only as one factor among others including investment aptitude, leadership and decision-making.

Buchanan also pointed to costs incurred by the board that he said in recent years have mushroomed to about $50 million annually. Most of that money went to outside investment management firms, a practice Ewer defended as increasing returns on the state's investments by hundreds of millions of dollars over the past 15 years.

A state lawmaker who serves as a non-voting legislative liaison to board, Republican Sen. Dave Lewis, of Helena, questioned why Ewer was receiving more than state government department heads who make a little more than $100,000 annually.

Lewis said that while other staff members handle the board's investments, Ewer's role is essentially that of a department head and his pay should be set accordingly.

Lewis said the compensation issue is likely to be addressed by the Legislature when it meets again in 2015. Although the board itself has authority over salaries according to state law, lawmakers could revoke that authority or reduce the board's budget if they want to send a message about salaries, he said.