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State needs to change policy on bonuses

Written by Observer editorial reports October 12, 2009 02:30 pm

The state treasurer’s office should have used a little more common sense before it decided to dole out bonuses to 11 employees in his office this year. The economic times that we’re in should have given Treasurer Ben Westlund a clue that this isn’t a year for bonuses. It makes sense that the Legislature’s Joint Ways and Means Committee wants to review the practice. The Oregonian last week revealed that in February the 11 investment managers received bonuses ranging from $9,860 to $57,006.

By and large, bonuses have been cut from most budgets, along with employee work days and in some cases, wages. It seems that some Wall Street firms, banks and, most shocking, some government entities haven’t gotten the message that the economy dictates sacrifices by all.

There’s a reason the treasurer’s office has a bonus program for investment managers. Over the years, the office has lost its best and brightest to the private sector, where bonus payments are routine and much larger. At the Oregon treasurer’s office, state investment managers earn a base salary that averages $160,000 a year, The Oregonian reported. If the funds they manage perform better than 55 percent of comparable funds, based on a five-year average, the managers get a bonus. The maximum payout can be up to 30 percent of salary.

State government does need to be able to have incentives to recruit and keep the best employees it can find. And nowhere is that need greater than in the treasurer’s investment branch. But government at all levels must recognize, just like the private sector does, that conditions can change. This just isn’t a year, economically, for bonuses. Most folks understand that.

In reviewing the state’s program for bonuses, the Way and Means Committee should tighten the reins. When the economy is declining, when unemployment is soaring, when state tax revenues are down and budgets, including salaries, are being cut, it’s not a time for bonuses.