Secretary of State Diego Morales at an employee appreciation lunch for his office in August. He awarded nearly every employee in his office a spot bonus so far in 2023. Photo from the Secretary of State’s Government Organization Facebook Page.

By Whitney Downard and Casey Smith
Indiana Capital Chronicle

INDIANA — 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.”

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.

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.”

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.

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.

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.

‘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.

Paul Helmke, the former mayor of Fort Wayne and a professor at Indiana University’s O’Neill School of Public and Environmental Affairs, 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.

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.”

For a government agency that might seek to punish bad actors in the future, it could feel hypocritical, Helmke said.