— With little fanfare over the last few weeks, more than 500 state government employees have arrived at work to find a letter waiting for them.

In dense legalese, it explains they will soon be designated "exempt" from the State Personnel Act.

"Generally, this means that policies and rules relating to disciplinary action, separation and appeals do not apply," one version of the letter reads, before asking for a signature to confirm notification.

What may be lost in this jargon is the practical effect of the memo: Within 10 days, these employees will become at-will workers in departments managed by political appointees. It also fails to mention that the status change comes straight from the governor.

Gov. Pat McCrory has said designating these employees exempt will give him and his cabinet secretaries more flexibility to streamline state government, hire and fire, reward strong performers and get rid of deadwood.

"We want to reward our talented state employees, but seat warmers must be a thing of the past," McCrory said during his State of the State address this year. "But I want to also say, we have to continue to attract, retain, reward and appreciate our state talent that works so hard for all of us in state government."

An analysis by WRAL News shows most of these newly exempt employees are already paid at the top of their salary ranges. Compared with their nonexempt colleagues, who are overwhelmingly paid at the bottom of their pay scales, the difference is stark.

In the coming months, up to 500 additional employees will receive these letters in the mail, bringing the number of exempt workers tapped by the governor to 1,500. That increased cap, the result of a law signed by the governor last week, is more than triple the number for any governor in more than a quarter-century.

Findings not surprising, says personnel expert

Salaries for state employees are relatively prescribed.

Salary range distribution Most state positions have matching salary ranges that set minimum and maximum pay. Mouse over the charts to how full-time exempt and nonexempt employees compare. Salary ranges that could not be matched were marked "N/A." All full-time employees Exempt employees Similar job titles

Some positions have salaries set by law. For the 2,700 other positions in state government, the Office of State Human Resources is responsible for setting and publishing minimum and maximum pay ranges. Departments have the ability to set salaries for individual employees within those ranges based on experience and qualifications.

Using this salary range data, the state's public employee database and the list of exempt positions provided by the governor's office, WRAL News reviewed the compensation for the almost 1,000 currently exempt employees. Although governors can re-designate positions at any time, they're not required to issue notification of these changes for 180 days, making this the most accurate snapshot possible with publicly available data.

Most of these exempt workers – who serve in roles crucial to department management and policy-making – are paid far higher on their respective pay ranges than non-exempt employees.

Almost 60 percent of exempt employees earn salaries that rank in the top half of their pay range. By comparison, about 70 percent of full-time state employees earn in the bottom half of their salary ranges.

Even when the comparison is narrowed to employees with similar positions, exempt personnel still come out on top.

More than 5,000 state workers share the same job titles with those on McCrory's exemption list. Overall, workers with these titles overwhelmingly earn in the bottom half of their salary ranges.

Drake Maynard, who worked at the state personnel office and specialized in exempt designations before his retirement in 2010, said he's not surprised to see these employees at the top of their salary ranges – especially for those the governor has hired himself.

"These are the people that the governor is depending on to get his programs out among the state employees that he's responsible for and get that work accomplished," Maynard said. "Oftentimes, these people who come in with the governor might not have state government experience, so that salary is set when they come in."

For many of these employees, Maynard said, there may be good reasons for higher compensation, chief among them that they "may have been making that money legitimately in another job."

"These steps were put in to make sure that, as a general rule, the state doesn't pay more for work – and the talent and education and qualifications – than they want to," Maynard said in an interview last week. "The state's policy is to lag a little bit behind the market."

Staffers paid above salary ranges make up small minority

But very rarely, state workers are paid more than their salary ranges otherwise allow.

About 2 percent of exempt employees make salaries outside the range for their positions, compared with only 0.1 percent for state employees overall.

In terms of raw numbers, very few exempt employees – 16 so far – are paid outside their respective salary ranges, and the majority of these individuals last received a salary bump from a legislative increase in 2012. Others transferred from different agencies in 2013, and their salaries stayed the same.

New exempt hires paid above listed salary range Name Job title Agency Salary Max. salary

listed % above

max Christine

Mulder

Deputy secretary,

communications Public

Relations

Officer* DOT $125,000 N/A* N/A* Carol

Steckel

Director, Division

of Medical Assistance Director DMA DHHS $210,000 $136,900 53% David

Richard

Director, Division

of Mental Health Dir Div Of Mt

Hlt Mt Ret/sub

Abuse Serv DHHS $150,000 $143,499 5% *NOTE: DOT human resources says this is a "flat-rate" job title not comparable to other public relations officers in state government (whose salaries are capped at $65,204) and was created for Mulder to recognize her "experience and significant responsibilities" at the department. A spokesperson for the Department of Transportation said there is no salary range for these flat-rate titles.

But three McCrory hires – two health directors and a public relations officer at the Department of Transportation – make thousands more than their listed pay ranges would typically allow.

Carol Steckel, who heads up the state's $13 billion Medicaid program, makes $210,000. That's far above the $136,900 limit. The department's mental health administrator, Dave Richard, also makes slightly more than his salary cap of $143,499. In both of these cases, DHHS spokesman Ricky Diaz said in an email, the state personnel office ruled their experience levels justified higher salaries.

Diaz pointed out that, under the Perdue administration, both positions were also paid more than the maximum salary.

"Overall, DHHS’ payroll is approximately $21.9 million less than one year ago," Diaz said in the email.

Cris Mulder, the public relations officer who serves as Transportation Secretary Tony Tata's deputy secretary of communications, is paid almost double the maximum range for the "public relations officer" role listed in both employee records and the state salary plan, although officials say her actual classification is different and more reflective of the responsibilities she carries out for the department.

She's paid only slightly more than Ted Vaden, who previously filled the position under Perdue. Unlike Mulder however, he was classified as a "deputy secretary" in the state's employment system and earned the maximum $118,815 for that job title. Mulder came to the department from the Wake County Public School System, where she earned $134,090 as chief of family and community engagement, according to a Wake County spokesperson.

Through a DOT spokesperson, a human resources staffer said Mulder's "public relations officer" title listed in state employment records is a different type of classification that pays a flat-rate salary of $125,000. This classification is not listed in the state salary plan.

In an email Monday evening, Office of Human Resources Public Information Officer Margaret Jordan said Mulder's "flat-rate" job title is not comparable to other public relations officers in state government.

"Because we did not currently have a classification that clearly fit her role, an existing flat-rate title was used with the intent to study the role in the future," Jordan wrote.

Just like their nonexempt colleagues, exempt workers are still subject to compensation rules. These rules are designed "to cut down as much as possible on jockeying for higher salaries – for whatever the reason might be," Maynard said.

For some employees, however, the personnel office considers a number of factors before granting an exception.

"This is not just an arbitrary thing," State Human Resources Director Neal Alexander said in an interview in early August. "There is a process that is in place that state personnel has the accountability to renew and sign off on both the qualifications and the compensation of the individual they're considering."

High salaries raise eyebrows

McCrory's administration has already come under fire over raises and high starting salaries within his cabinet departments.

After the left-leaning blog Progressive Pulse reported large salary increases for two 24-year-old DHHS staffers, The Associated Press identified five additional young employees earning more than $50,000.

North Carolina's median income is $46,291, according to U.S. Census data.

Several of these employees are among McCrory's 1,000 exempt. Of the 140 newly exempt employees who have been hired, promoted or given raises since McCrory took office, 95 are paid in the top half of their new ranges.

The salary revelations have become a common talking point for liberal groups, who say general state employees deserve raises before administration hires. According to the legislature's Fiscal Research Division, state employees have seen only one pay increase – of 1.2 percent – in the past five years.

McCrory has said raises for state employees are high on his legislative agenda.

Progress North Carolina, a liberal advocacy group, urged lawmakers last week to investigate the raises and the administration's hiring practices for exempt positions, especially in light of a McCrory decree in March that agencies freeze pay to cover the state's Medicaid shortfall. On Friday, House Democratic leader Rep. Larry Hall did the same.

If this kind of bad press continues, Maynard said, it may force McCrory to answer some tough questions from fellow Republicans in the General Assembly too.

"The thing that may be creating difficulties for governor – this is state money, tax dollars," Maynard said. "As friendly as the legislature is, they're going to want to know how the money they appropriated was spent."

CLARIFICATION: Information on Cris Mulder's position with the Department of Transportation has been updated in this story and the table to reflect new information from the Office of State Human Resources and DOT human resources. The job title, which was created as a "flat-funded" position, is not comparable to the state salary plan's "public relations officer" classification, according to the DOT.