For the sixth-consecutive year, Mike Preston, executive director of the Arkansas Economic Development Commission, will get a performance bonus of more than $50,000 in private funds from an affiliated nonprofit foundation.
Gus Vratsinas of Little Rock, chairman of the Arkansas Economic Development Foundation, said Friday that the private nonprofit foundation's board on Thursday night approved a $54,810 bonus for Preston recommended by Gov. Asa Hutchinson.
Preston performed well during the coronavirus pandemic in the past year, Vratsinas said.
He said the Air Force's selection of Ebbing Air National Guard Base as the preferred facility to set up a Lockheed Martin F-35 Lightning II training center for Foreign Military Sales participants and the new home for a Singaporean General Dynamics F-16 Fighting Falcon training unit "is huge."
"Just that in itself, I would say it was a great year."
Vratsinas said he expects Preston will receive his check from the foundation early this week.
Asked about that bonus, Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said Friday, "Personally, I don't have any heartburn over it."
"I'm OK with the bonus since it is not taxpayer funded and also as long as no special favors are being given due to this arrangement," he said.
Vratsinas said the bonus is part of the compensation package agreed to in 2015 when Preston was hired. Hutchinson evaluates Preston's performance each year.
"Tell him that's it no different than the Razorback Foundation paying the football coaches," Vratsinas said.
Preston also serves as secretary of the state Department of Commerce, created in July 2019 under Hutchinson's consolidation of 42 executive branch state agencies into 15 departments.
The department includes the Economic Development Commission, Development Finance Authority, Bank Department, Division of Workforce Services, Insurance Department, Securities Department, Division of Aeronautics, Wine Producers Council, Waterways Commission and Office of Skills Development.
ACCOMPLISHMENTS
In a letter dated June 11 to Vratsinas, Hutchinson said he conducted Preston's annual performance evaluation and recommended awarding the "full bonus" of $54,810.
Preston is eligible for a performance bonus of up to 30% of his total salary under a memorandum of understanding he has with the foundation. His salary for fiscal 2021, which ends Wednesday, is $182,700. The state pays $155,295.09 of that, according to the Arkansas Transparency website. The foundation pays the rest, according to the governor's office.
Preston will receive a 2.8% increase in his state-paid salary to $159,954 in fiscal 2022, said Shealyn Sowers, a spokeswoman for the governor.
Hutchinson said in his letter to Vratsinas that the commission's accomplishments under Preston's leadership during a particularly difficult year included:
• Managing programs that disbursed $9 million in Quick Action Bridge Loans to 483 businesses resulting in the retention of 6,610 jobs.
• $10 million in Community Development Block Grants to 27 rural hospitals resulting in the retention of 7,800 jobs.
• $130 million in Ready for Business grants to 11,409 businesses affecting 225,000 employees.
• $7.8 million provided to developmental disability providers for paycheck protection resulting in the retention of 4,000 employees.
"In a year when unemployment rates skyrocketed across the nation, Arkansas reached an unemployment rate of 10.2% before dropping back down to 4.4%, a full percentage point below the national average," the governor wrote.
The commission also distributed $118 million in grants for broadband deployment resulting in 130,000 Arkansans gaining access to broadband and spent $2 million in grant funding for the Arkansas Accelerator Program in the past year, Hutchinson said.
Hutchinson said the commission, in the past year, signed 47 incentive agreements that yielded 2,242 new jobs with a proposed average hourly wage of $20.87 and a capital investment of $830.9 million. These competitive projects represent new payroll of $97.3 million and yield a positive cost-benefit analysis on the tax dollars spent, he said.
"Since 2015, the total number of competitive projects won is now over 524 bringing in more than $10.5 billion in new capital investment and more than 25,000 new jobs."
Hutchinson wrote, "I would also be remiss if I did not recognize Secretary Preston's extraordinary leadership in securing the new foreign F-35 and F-16 training mission at Ebbing Air National Guard base in Fort Smith (Ebbing).
"This was a highly competitive project that was bolstered by a commitment to extend the base's runway by more than 1,000 feet," he wrote.
"This major announcement will result in hundreds of jobs and more than $800 [million] in annual economic impact to the region," the governor said. "Secretary Preston and AEDC's Global Business and Military Affairs Team were instrumental in identifying incentives that ultimately led to Ebbing's selection."
As with last year, Hutchinson said he has worked closely with Preston.
"Throughout Secretary Preston's tenure, I have been impressed with his professionalism, determination, focus, energy and character," wrote in his letter to Vratsinas. "He has poured himself into Arkansas and has gone the extra mile every day to assure that our state is an economic engine for growth and increased opportunities for Arkansans."
Before Preston started working at the development commission, he spent 6½ years as vice president of government relations for Enterprise Florida, the state's primary economic development organization.
LEGISLATIVE CRITICS
In April of this year, Sen. Trent Garner, R-El Dorado, told senators that he had lost confidence in Preston and Preston should be replaced.
Garner urged senators to vote against the Department of Commerce's appropriation, which required a three-fourths vote for approval. In its fourth try, the Senate approved the appropriation. The House approved that appropriation on its second vote.
At that time, Hutchinson said, "Mike Preston is one of the most successful economic developers in the nation, and Arkansas is fortunate to have him at the helm of the Department of Commerce."
Garner's call to replace Preston was made after Garner's bill that would have barred the development commission from having an office in China failed to clear a House committee.
In the 2020 fiscal session, the Joint Budget Committee rejected Garner's proposal to close the office after Preston said the department already planned to trim the office's budget from $285,000 to $125,000 a year, starting in July 2020, and employ an American citizen as a liaison in China.
In February, Rep. Fran Cavenaugh, R-Walnut Ridge, attempted to stop the foundation from paying additional salary to Preston.
She failed to get a motion in a House committee for her bill.
Cavenaugh said her bill would bar a Cabinet-level secretary from taking funding for a salary from an outside source for performing the secretary's duties.
Special language in the Commerce Department appropriation allows the foundation to use private funds to provide extra pay to the development commission's executive director, while special language in the Department of Education appropriation bars the education commissioner from accepting any additional salary from any other source, "so there is a double standard," she said.
State officials have said that numerous states, particularly in the South, maintain employment contracts with state employment directors that include additional private funds in the director's overall salary.
In the 2005 session, the Legislature gave then-Education Commissioner Ken James a raise in his state pay from $122,295 to $204,620 and banned him from receiving outside income. When James was hired in 2004, a private group, the State Board of Higher Education Foundation, agreed to provide him $81,000 a year. James also made $122,295 from the state, so his total salary amounted to $203,295.
The salary for the state's current education commissioner and education secretary, Johnny Key, is $239,361.20, according to the Arkansas Transparency website.
According to that website, the highest-paid executive branch department leader is Human Services Secretary Cindy Gillespie, whose salary is $287,042.06. Health Secretary Jose Romero's salary is $273,779.