Directors for the School and Institutional Trust Land Administration insist compensation for their executives is in line with similar agencies and corporations.
This issue continues to raise questions with the Office of Legislative Auditor General, as well as business and public policy professors from the University of Utah and Brigham Young University.
SITLA, which controls 3.4 million acres of Utah land, has amassed some $700 million for the state's permanent school fund since 1994. This performance record, its board of directors says, entitles them to almost $2 million in bonuses paid between 1997 and 2005.
For example, in 2006, SITLA's director Kevin Carter's salary of $106,000 was augmented by a $40,000 bonus. His base salary recently was raised to $115,000.
The next chapter in the tug-of-war between the auditor general and the trust-land agency is playing out with the release Wednesday of a new report that delineates friction points - as well as progress - in the aftermath of a critical January 2006 audit.
The agency has adopted seven of 10 recommendations the auditor general provided to the Utah Legislature in the initial audit.
But three key tenets of the 2006 report have yet to be employed.
"[A] continuing, underlying disagreement with the public/private aspect of the organization prevents full implementation of the 2006 report's recommendation," the follow-up audit states.
Guidelines for salaries and bonuses are among those nonimplemented recommendations that continue to dog legislators.
Following last year's audit, SITLA's board of directors hired St. Paul, Minn.-based consultant Fox Lawson & Associates to make compensation comparisons to similar entities. Their study showed that salary and bonus packages paid to SITLA officials were in line with equivalent positions in both the private and public sectors.
However, University of Utah and Brigham Young University professors - who were hired by the auditor general to review the consultants' methodology - found fault with Fox Lawson's conclusion.
"I have concluded that from a statistical standpoint, the computations performed by the consultant are flawed," said Don G. Wardell, chairman of the Management Department at the U. of U.'s David Eccles School of Business.
Referring to data provided by Fox Lawson, BYU's David Cherrington, professor of public policy, said he could not endorse bonuses.
"If the decision about bonuses was based strictly on market considerations, SITLA should not have a bonus program," Cherrington said.
But SITLA board Chairman Michael P. Morris said the agency's compensation is proper and necessary to keep top personnel.
"We believe that current compensation levels for SITLA management - who have been responsible for building trust financial assets from $83.5 million in 1994 to over $1 billion at the current time - are reasonably based upon our collective business judgement, as confirmed by our independent consultant."
During a Legislative Audit Subcommittee meeting Wednesday, Senate President John Valentine said legislators continue to be "troubled" by the issue because SITLA is a public-sector agency and not a private corporation.
Valentine asked Morris if general salary and bonus guidelines should not be implemented by the Legislature.
"You would have to justify compensation with that philosophy."
But Morris objected.
"The philosophy is already there," Morris said. "The board is to consider proper compensation. And we do."
csmart@sltrib.com
About the SITLA audit
* Provide salary and bonus guidelines
* Provide direction for land sales and development
* Ensure trust-land strategies best serve public education
2006 Auditor General's recommendations that SITLA did not implement:
What's next?
The follow-up audit will be forwarded to the Legislature's Management Committee. It will determine what, if any, action should be taken.
