They’re local government officials overseeing public health care for about 950,000 of Orange County’s low income and disabled residents.
After a series of salary spikes in recent years under then-Chairman Andrew Do, they’re making more than the President of the United States.
The local agency is CalOptima, which manages the publicly-funded health coverage for low-income children, adults, seniors and people with disabilities.
And the salary spikes are drawing questions from former top officials.
“CalOptima is out of line with where it should be,” said Dr. Paul Yost, a former chairman of CalOptima.
“Those are healthcare dollars that ought to be going to provide healthcare for the neediest population.”
Top-level CalOptima officials make more than their counterparts in much larger LA County – who manage an agency that serves three times as many people.
The agency is now facing a state investigation into the salaries and contracting practices, while rank and file employees are questioning how their bosses are able to get 50% pay spikes.
[Read: Sacramento is Investigating Pay Spikes and Hiring Practices at OC’s Health Plan for the Poor]
Bloated Salaries?
After his salary was bumped up 50% a year into the job, CalOptima CEO Michael Hunn, a former priest, now makes $841,000 per year in base salary – not counting other perks like bonuses, car allowances and pension.
That’s more than twice as much as the $400,000 salary of the President of the United States, whose pay is the cap for nearly every other salary in the federal government. It’s also nearly four times as much as the California Governor makes.
And Hunn’s salary is more than his CEO counterpart at LA County’s much larger agency LA Care – who makes $705,000 per year.
CalOptima’s HR Director, Brigette Hoey, also has seen her salary jump by a reported $300,000 per year – to a new maximum of around $512,000 per year.
In contrast, her counterpart at LA County’s larger agency makes less than $364,000, according to data provided by LA Care.
Former chairs of CalOptima’s board called the OC raises “extremely egregious” and “out of line.”
“[These salaries] sound to me like they are extremely egregious and out of line with a taxpayer-funded county organized health system,” said former Chair Ed Kacic.
Yost said CalOptima is already shortchanging service providers to serve the needy.
“CalOptima is already paying under market rate for most of the services that they’re getting. To me it’s frustrating to see executives get above market rate for their [work], while service providers are paid under market rate for services,” Yost said.
For the latest series of CalOptima raises – which went into effect in December – executives claimed in agenda documents they were adjusted to market rate.
But the documents did not mention actually conducting a comparison survey to determine what market rates are, or what the survey found.
Hunn, Do and CalOptima board members didn’t return messages for comment, including on whether they did in fact conduct a salary comparison survey.
The lower salaries at the much larger LA Care agency raise questions about how CalOptima’s raises were justified.
“If [CalOptima leaders] claim to be setting these salaries based on market conditions and being competitive, my questions are to whom are they trying to compare themselves? Are they truly a competitive entity?” Kacic said.
“How many people have they lost to entities like that which they claim to be comparing themselves to, and at what salaries did those folks leave? To me, this doesn’t hold water.”
Rank-and-file CalOptima employees have had their raises capped around 3% per year while executives have gotten pay bumps that exceed 50%, according to audio reviewed by Voice of OC of an all-staff meeting Hunn held earlier this month.
A State Audit Amid an Increasing Takeover by Politicos
As Voice of OC reported earlier this month, the CalOptima raises are now drawing scrutiny from state investigators who are conducting a probe that’s expected to result in a public report in April.
The audit also is looking at CalOptima’s spending on homeless health services and other programs – whether those services are being delivered quickly and if CalOptima is being transparent about the spending.
The review by the California State Auditor’s Office came after CalOptima was increasingly placed in the hands of Do and one of his top aides.
The aide, Veronica Carpenter, was hired into a $282,000-per-year top agency position as chief of staff a little over a year ago, despite having less than one year of healthcare administration experience.
Yost, the former CalOptima chairman, said it’s “unusual for someone to come in who had minimal healthcare administration experience and be placed in a senior position.”
“It does not serve the organization well. Not a good use of tax dollars,” he added.
Carpenter hasn’t returned multiple messages for comment.
She now makes up to $372,000 per year in base salary, under December raises approved by Do and the rest of the CalOptima board.
As CalOptima’s chairman, Do presided over major pay raises for the agency’s other executive positions – including raising the CEO’s maximum base salary from $600,000 to $765,000 in fall 2021.
Under Do’s leadership, the board approved another raise for Hunn in recent months – bumping it up to a maximum pay of just over $840,000 per year.
Rank and File Employees Begin Questioning Salaries
The day after Voice of OC revealed the state probe, Do resigned from CalOptima’s board on Feb. 2.
Later that afternoon, employees asked Hunn a series of tough questions, citing the Voice of OC article.
According to audio reviewed by Voice of OC, employees asked how the large salary bumps for the CEO and other top executives were justified.
“With this investigation…and executives making close to $1 million, how will this impact the rest of our employees and our relationship with our members?” an employee asked in a written message Hunn read aloud during the all-staff meeting.
“How do we justify to our low-income families that our executives are making so much money?”
Another asked how hourly staff are receiving 2 to 3% raises, while executives have gotten 20 and 50% raises.
“How is this justified?” the employee asked.
Hunn responded the executive salaries are based on market conditions and a compensation survey. But he didn’t say which other organizations were allegedly used for comparison.
Employees weren’t satisfied.
“It doesn’t seem fair that execs receive almost 50% raises in some instances, and all other staff receive only 6[%]. [Is it] really true that a salary study only showed execs needed an adjustment of that much, but not the rest of the staff?’ ” an employee asked, in another question read aloud by Hunn.
“How is it that employee annual [raises] don’t go over 3%, but executive level salaries do?” asked another employee.
Hunn again reiterated that the executive pay increases were based on market rates, without saying which organizations were allegedly compared with.
And he said $1.1 million was the “midpoint” of his “salary compensation scale.”
He didn’t return a message for comment on how that could be the case if the board approved pay goes up to about $841,000.
During the all-staff meeting, Hunn credited Do with being key to CalOptima’s direction in recent years.
“He was instrumental in creating our current strategic plan, our mission and our vision,” Hunn said.
Hunn also told employees his agency was being fully open about its activities.
“It’s our job to be transparent. And I think we do a very good job of exactly that,” he said.
He hasn’t answered any of Voice of OC’s questions about how he justified the large pay raises for himself and other top executives.
“We’ve been completely transparent,” Hunn told employees.
Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.