WRAL.com

January 24, 2006

The foundation that provides most of the money for the North Carolina Museum of Art doesn't have the authority to nearly quadruple the salary of the museum director or pad the pay of other workers, according to a state audit released Tuesday.

The review also found that the N.C. Museum of Art Foundation Inc., the private fundraising and membership arm of the state-owned Raleigh museum, oversaw museum work and supervised state employees, troubling State Auditor Les Merritt.

"The museum is a state museum that receives funding assistance from a private foundation, yet it operates in many ways as a private museum that receives state funding," according to the report signed by State Auditor Les Merritt. "The museum is in fact a state museum and should be operated as such."

The foundation provides roughly 65 percent of the museum's $11.7 million annual budget, helping bring in high-quality art exhibits and raising operating for a new wing to display works by Auguste Rodin.

Museum director Larry Wheeler received a total compensation package of $358,041 last year, more than the $97,621 listed as his state-paid salary in the budget approved by the General Assembly. The rest came from the foundation, through "consulting fees" of $135,642, a salary supplement of $111,192 and vehicle expenses of $13,856.

The foundation also paid supplements totaling $372,999 to an additional 33 of the museum's 79 state employees in 2004, the review found. The supplements appear to violate the state's dual-employment policy, which prohibits state workers from receiving pay beyond their salary to perform duties within their department.

But the extra money is needed to keep Wheeler from being lured away by other museums, foundation President Joyce Fitzpatrick said.

"We've been very public about it all along," she said. "We're very straight forward about the fact that if we want to have the best, we have to pay."

Even with the additional money, Wheeler's compensation ranks low compared to that of his counterparts at private museums, the audit said. The review recommended the department determine appropriate pay for Wheeler based on what directors of government-operated museums receive.

Cultural Resources Secretary Lisbeth Evans, whose department oversees the museum, argued in a written response to the audit that the workers who got salary supplements are exempt from state personnel laws. State law also doesn't prohibit Wheeler from receiving outside money and his total compensation has been made public, Evans wrote.

The cultural resources department said Tuesday it already was working before the review's start to ensure salary policies and procedures are consistent with state law and policy.

The museum and the foundation drafted an operating agreement in November describing their working relationship. They also placed a written agreement on Wheeler's consulting duties, previously agreed to verbally by Evans and her chief deputy, in his personnel file, Evans said.

The review also questioned whether the supplements for Wheeler and the assistant director of marketing should count toward their state pensions, as they have since 1994. Cultural resources officials asked the state Attorney General's Office last year for a legal opinion on that question, but has not received an answer.

Nearly 320,000 visitors came to the museum, for the year ending last June 30. The museum opened 50 years in April in downtown Raleigh, and moved to west Raleigh in 1983. The General Assembly set aside $1 million in 1947 to build the museum's collection.