Regulatory commissioner says state insurance executives tried to push through double-digit pay raises for themselves
Patrick Lyons, a state public regulation commissioner, on Wednesday publicly accused executives of the state Insurance Division of a backroom deal aimed at giving themselves double-digit pay raises.
By day’s end, Insurance Superintendent John Franchini ordered that the raises be eliminated from a budget draft for his agency.
“I was surprised. I didn’t know anything about it, and I’m stopping it,” Franchini said in an interview.
Lyons, above, R-Clovis, said in a separate interview that he uncovered the insurance division’s budget draft during the last few days and was angered by it.
It showed Franchini listed for a $19,000 raise that would make his salary $120,000 a year. His deputy, Jolene Gonzales, was penciled in for a $6,000 increase, to $90,000 annually.
Gonzales and others in the insurance division crafted the budget draft, Franchini said. Franchini said he was blindsided by it, knowing nothing of it until Lyons brought it up Wednesday at a public meeting.
The insurance division in July will become a stand-alone agency, broken off from the PRC. Lyons, his voice raised and his face flushed, said Gonzlaes was trying to use the separation from the PRC to fatten her salary and those of three other executives in the insurance division.
In an interview, Gonzales said the budget draft was prepared in concert with the PRC’s chief financial officer, Matthew Lovato. But Lovato said he played no part in proposing any salary increases, that the insurance division staff did that on its own.
Franchini, right, described the document Lyons obtained as only “a building block” for a budget. He said the confusion brought about by his agency’s upcoming separation from the PRC may have caused miscommunication.
Nonetheless, Franchini quickly ordered that any proposed raises be stripped from the budget.
“There’s no reason for this new department to start off with a lack of credibility,” he said.
Lyons told Gonzales she wanted to fatten her own paycheck during the insurance division’s transition to stand-alone status.
“They want to do what they want. They don’t want any oversight,” Lyons said.
Lyons said that markedly higher salaries for a select few executives were not what taxpayers had in mind when they voted to separate the insurance division from the PRC.
For her part, Gonzales said that Lyons had missed the big picture.
The agency will be professionalized by its move to independence. It needs higher salaries to be competitive, and positions are being reclassified to account for heavier workloads and enormous responsibilities, she said.
Franchini said there was no guarantee that he or Gonzales would hold top positions in the newly configured insurance division.
But, he said, he intended to apply for the superintendent’s job. A committee created by the state Legislature will fill that position. In turn, the superintendent will then hire a staff of up to 96 people.
Five other federal employees are working in the insurance division top help with the Affordable Care Act.
Gonzales said draft proposals for higher executive salaries were created because of projected increased workloads and because the insurance superintendent and other employees were underpaid compared to cabinet secretaries and their top staff.
But the proposal for a $120,000 salary for Franchini’s position would exceed that of some cabinet secretaries.
Franchini said Gonzales had good motives, but there was no immediate need to seek or even discuss salary increases.
The insurance division is to operate on a $7.7 million budget as a stand-alone agency. That is the same amount allocated to it now, though it pays the PRC for certain shared services, such as human resources and information technology services.