By Casey Smith and Whitney Downard
Indiana Capital Chronicle
INDIANAPOLIS — Indiana Secretary of State Diego Morales has given a spot bonus to nearly every employee in his office this year — including a family member and his former campaign manager — for a total of more than $308,000.
New data obtained by the Indiana Capital Chronicle showed that just four of six offices led by elected officials awarded spot bonuses in 2023. But Morales’ spending far outpaces his peers and includes five $10,000 bonuses and two $12,000 bonuses.
Secretary of State Spokeswoman Lindsey Eaton said in a written statement to the Capital Chronicle that the office does not have a formal or written bonus salary payment policy.
Instead, Morales’ employee compensation policy is that any employee “who exemplifies the office’s stated purposes and values” — “Serve Hoosiers by being Welcoming, Responsive, Efficient, and Innovative” — will receive “fair, competitive, rewarding compensation, recognition, and opportunity for advancement.”
Eaton said the “constraints of the state’s finance, accounting, budget, and employee classification system” make bonus payments necessary, and that the agency’s ability to adjust salaries “is not always available or advisable.”
“There are cases where extraordinary employee performance merits ‘extraordinary’ compensation,” she continued. “Because salary setting for state employees is a somewhat bureaucratic and collaborative process between government agencies, there are instances where issuing a bonus is the most practical approach for interim employee compensation.”
Where did the $308,000 go?
Eighty bonuses have been doled out this year to 68 staffers in the Secretary of State’s office — an office with roughly 75 employees — ranging from $500 to $12,000, for an average of $4,540 per employee. Nearly a dozen employees received two bonuses from Morales within the 10 months scanned by the Capital Chronicle, and one got two in one month.
Excluding the $500 bonus, which was awarded before Morales was sworn into office on Jan. 10, the next-lowest bonus of $719 went to a part-time employee. The lowest bonus from Morales to a full-time employee was $2,500 — more than two times the maximum outlined in a non-binding state personnel guidance for agency bonuses.
The Attorney General’s Office, by comparison, has hundreds more employees at a total staff of 373, but has only issued $48,000 in bonuses this year. For that office, bonuses ranged from $500 to $3,000 and averaged $1,333 per bonus across 36 employees.
Attorney General Todd Rokita didn’t respond to a request for comment on the office’s spot bonus policy.
“It’s really shocking to me (and) it’s hard for me to get shocked by anything in government circles sometimes,” said Paul Helmke, the former mayor of Fort Wayne and a professor at Indiana University’s O’Neill School of Public and Environmental Affairs. “It raises questions: are you just rewarding your friends? Is this just some sort of slush fund that they’ve created? It just doesn’t make sense to me … This smacks of favoritism.”
Bonuses offset low compensation, office says
The majority of the bonuses from the Secretary of State’s office came during June, accounting for $238,500 or 77% of all awards. The state’s fiscal year ends on June 30th, which Eaton cited in her statement.
According to the office, the previous Secretary of State Holli Sullivan learned that the department’s salaries were “underpaid compared to those in comparable private sector employment.”
Without naming Sullivan, Eaton said Morales’ predecessor advised staff that “salaries would be reviewed and action taken.”
“The former Secretary of State raised the hopes and expectations of agency employees but did not act on the matter before leaving office … and did not request an appropriation increase for employee compensation,” Eaton said.
In January, Morales amended the budget submitted to legislators to include a 12.5% increase in employee salaries — but that meant employees wouldn’t see an increase until July at the earliest, according to the statement.
“It was in consideration of the October 2022 (State Personnel Department) State Employee compensation study, our employee’s raised, but unmet expectations for salary increases, and the (generally) high level of understanding and patience shown by employees of the new administration, that the Secretary approved the agency-wide of spot-bonus awards ($2,500 and $4,500),” Eaton said. “The agency viewed the June ‘23 bonus payments that stemmed from the (SPD) Compensation study basically as making good on promised, long-overdue compensation overlooked by a previous administration.”
The office declined to elaborate on awards to specific employees, though several high-ranking staffers have received more than $12,000 in bonuses so far this year — including $42,000 to four employees in the last two weeks.
“The office cites employee privacy concerns as the basis for not commenting on individual employee compensation,” Eaton noted.
Eaton was one of 11 employees to get two bonuses under Morales. Others included his brother-in-law Shawn Grady, auto dealer services co-director Kyle Bonick, Chief Legal Counsel Jerry Bonnet and Morales’ former campaign manager Kegan Prentice.
Bonick and Bonnet both received combined bonuses of $16,500 — the two highest individual awardees — while Grady and two other employees received a combined $12,500. Four of these five employees have salaries over $110,000, according to the state’s transparency portal.
Eaton and Prentice were on the lower end of awards with $5,500 each in two separate bonuses.
General guidance to agencies
State agencies under the executive branch adhere to guidance from the State Personnel Department when it comes to spot bonuses, which dictates that such awards range from $100 to $1,000 to “recognize outstanding performance ‘on the spot.’”
Some of the state elected officials indicated they followed SPD guidelines for bonuses, including the Comptroller’s Office, which houses the state’s payroll data.
That office, led by Tera Klutz, was one of four agencies to award spot bonuses in 2023, spending $23,500 in awards to 24 employees. The office said the majority of bonuses — all of which were rewarded in the first pay period of January — were related to the statewide implementation of a new payroll and human resources system that launched in May and December of 2022.
The only other statewide office holder to use spot bonuses in 2023 was Gov. Eric Holcomb, who spent $3,250 on four separate bonuses ranging from $500 to $1,000.
The maximum spot bonus for the Attorney General’s office was $3,000, which six employees received.
“The Secretary of State’s office is an autonomous Constitutional Office, authorized to function independently of other state offices or agencies and policies under the direction and control of the Governor of the state.” Morales’ office said in its statement. “While the office typically cooperates with the administration of other state offices, it is free to establish and follow whatever policies it believes will best serve its Constitutional and statutory responsibilities,”
‘It’s at the whim of the boss’
To qualify for such bonuses, SPD says employees must be employed for a minimum of six months and be engaged in “exceptional performance which produced a measurable outcome,” though agencies have the ultimate discretion.
Examples of exceptional performance include: completing a significant project ahead of schedule with results which exceeded expectations, creating a solution to a problem and/or providing exceptional customer service, according to the employee handbook.
Helmke noted that no such program — which was reformed in 2022 — existed when he was mayor, but he said he recognized the value of it, considering the low pay of the public sector and competitiveness with the private sector.
The SPD guidelines indicated that a small award every few years would be appropriate, Helmke said, when someone went “above and beyond.” But using it too often or multiple times in one year diminished the ‘on-the-spot’ aspect.
“I don’t understand how you get multiple — you shouldn’t be getting it multiple times in a year. If you’re doing that, maybe you’re in the wrong job category and need a promotion,” Helmke said. “It’s great to get these bonuses every year but why not just build it into their pay at the start?”
Without an explicit process for rewarding bonuses, Helmke said it seemed to boil down to making the boss happy. When nearly all of the bonuses are clustered together — 68 awards in June, five in August and four in October — it’s no longer “exceptional performance.”
“Which makes it sound like it’s at the whim of the boss not — in any sense, really — earned for justified,” Helmke said. “I don’t mind an extra bonus (from) my taxpayer dollars to go to exceptional work. But it does bother me when it’s … a state elected official who throws around these taxpayer dollars whenever he or she feels like (they) want to reward somebody.”
For a government agency that might seek to punish bad actors in the future, it could feel hypocritical, Helmke said.
“Next time I see that they’re cracking down on businesses that are using funds improperly, it sort of raises the issue: are you using your funds properly?”
