For the seventh 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 Monday that the nonprofit foundation's board on Thursday approved a $54,810 bonus for Preston recommended by Gov. Asa Hutchinson.
He said he expects Preston will be paid the bonus this week.
"I think he did a tremendous job," Vratsinas said, noting that Preston played a part in the state landing the $3 billion United States Steel Corp. expansion project in Mississippi County announced in January.
The privately financed bonus is part of the compensation package agreed to in 2015 when Preston was hired. Hutchinson evaluates Preston's performance each year.
Preston also serves as secretary of the state Department of Commerce created in July 2019 under Hutchinson's consolidation of 42 executive branch 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.
As one of the highest-profile department heads in the Hutchinson administration, he has sometimes ended up in the cross-hairs of some state lawmakers over the past several years.
Preston said Monday that "I'm grateful for the Governor's recommendation based on my performance of the last year and thankful to the Arkansas Economic Development Foundation for providing their support."
"I'm incredibly proud of the wins our economic development team has had since the beginning of this administration and I remain focused on landing more deals this year and helping to build the infrastructure needed to make Arkansas even more competitive," Preston said in a written statement.
In a letter dated June 17 to Vratsinas, Hutchinson recommended that Preston be awarded "the full bonus of $54,810" after the governor conducted Preston's annual performance review.
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. State officials have said numerous states, particularly in the South, maintain employment contracts with state employment directors that include additional private funds in the director's overall salary.
Preston's total salary for fiscal 2022 that ends Thursday is $182,700 a year, the governor said in his letter to Vratsinas. The state covers $163,152.91 of Preston's annual salary, said Hutchinson spokeswoman Shealyn Sowers. The foundation pays the rest.
The increase in Preston's state-paid salary from $159,954 at the start of fiscal 2022 to $163, 152.91 is the result of a 2% cost-of-living pay increase granted by Hutchinson earlier this year, she said. In February, Hutchinson authorized 2% cost-of-living raises for employees at state agencies in the executive branch to help cope with inflation.
Preston will receive a 3% merit increase to $168,047.49 at the start of fiscal 2023 that begins Friday, Sowers said.
Last month, Hutchinson authorized state agencies in the executive branch to use 5% of their total payroll costs for merit raises for employees in the fiscal year that ends June 30, citing the rising costs of living.
Nearly 20 years ago, private funds briefly supplemented the state-paid salary of another state department head, then-state Education Commissioner Ken James, before the Legislature in 2005 raised James' state pay from $122,295 to $204,620 a year and banned him from receiving outside income. (Current state Education Commissioner Johnny Key's salary is $239,361.20 a year, according to the Arkansas Transparency website.)
In the 2021 regular session, Rep. Fran Cavenaugh, R-Walnut Ridge, made an unsuccessful attempt to stop the Arkansas Educational Development Foundation from paying additional salary to Preston. But her bill failed to get a favorable motion in a House committee.
The top-paid employee in the state's executive branch is state Crime Laboratory Chief Medical Examiner Theodore Brown, whose salary is $349,999.94 a year, according to the Arkansas Transparency website.
In his letter dated June 17 to Vratsinas, Hutchinson wrote, "As Arkansas returns to a post-pandemic era, [the Department of] Commerce and ADEC continue to play a critical role in ensuring new economic opportunities and job growth strategies."
In what the governor called a partial list of accomplishments of the Arkansas Economic Development Commission under Preston's leadership during the past fiscal year, Hutchinson said the commission signed 29 incentive agreements that yielded 4,286 new jobs with a $23.04 proposed average hourly wage and a capital investment of $1.61 billion in calendar year 2020.
"The numbers do not include the US Steel project, which was announced in January 2022, and at $3 billion is the largest investment project in the history of Arkansas," the governor said. The project will result in 900 new jobs paying an average wage of $106,000 per year, adding $95 million annual payroll in the state, he said.
Since 2015, the total number of competitive projects won is now more than 558, bringing in more than $13.9 billion in new capital investment and more than 26,700 jobs, he said.
Among other things, the commission also created a Small Business and Entrepreneurship Division to streamline agency services, assist small business owners and entrepreneurs, and develop partnerships among resource providers, state agencies and business communities, Hutchinson said.
The economic development commission also supported the Broadband Office within the state Department of Commerce to deploy $386 million in federal funds to bring broadband access to 109,000 more households in Arkansas, he said.
The commission also worked with the Broadband Development Group to identify the remaining underserved areas for the state and cost estimates to fully deploy broadband to all areas of Arkansas, Hutchinson said.
In April, a report from the Broadband Development Group estimated the cost of extending broadband access to about 110,000 households in Arkansas without high-speed internet at $550 million.
In its report, the group suggested that part of the $550 million price tag could be funded by tapping into federal funds in the range of $254 million to $358 million, reducing the remaining households down to about 10,000 underserved households within three years.
In May, the Legislative Council approved the creation of a new director position for the state's broadband office with a salary up to $200,000 a year, and two new systems architect positions for the office with a pay range of $89,541 to $129,835 a year.
Hutchinson said in his letter to Vratsinas that Preston conducted multiple recruitment trips, held scores of business recruitment meetings and attended numerous community engagements focused on economic development during the past year.
"Throughout Secretary Preston's tenure, I have been impressed by his professionalism, determination, focus, energy and character," the governor said. "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, increasing opportunities for Arkansans."
Before Preston started working at the economic development commission, he spent 6½ years as vice president of governmental relations for Enterprise Florida, that state's primary economic development organization.