For the fourth consecutive year, the executive director of the Arkansas Economic Development Commission has received a performance-based bonus of more than $50,000 in private funds from an affiliated nonprofit foundation.
Executive Director Mike Preston's bonus, from the private nonprofit Arkansas Economic Development Foundation, was paid at the recommendation of Gov. Asa Hutchinson.
Gus Vratsinas of Little Rock, foundation chairman, said this week that Preston was paid the maximum bonus of $54,000 on May 17, based on his base salary of $180,000 a year.
The state paid $149,862 of his salary and the foundation covered the other $30,138 during fiscal 2019, which ends Sunday, commission spokesman Brandi Hinkle confirmed Wednesday.
Preston's total compensation of $234,000 in state and private funds ranks him behind only Department of Human Services Director Cindy Gillespie's state-paid salary of $282,800 and Education Commissioner Johnny Key's state-paid salary of $235,823 in fiscal 2019 among department heads reporting to the governor.
Starting Monday, Preston's salary will increase to $182,700 a year, with the state paying $152,860 and the foundation covering $29,840 in fiscal 2020. He will be eligible for a performance-based bonus of up to 30% of his salary, Vratsinas said in a memo dated May 23 to Preston. The Arkansas Democrat-Gazette obtained the memo under the Arkansas Freedom of Information Act.
"We are pleased with what the AEDC is doing," Vratsinas said. "We need to keep all this stuff going."
In a May 17 letter recommending the bonus, Hutchinson told Vratsinas that "throughout Director Preston's tenure, I have been impressed with his professionalism, determination, focus, energy, and character.
"He has dedicated himself to Arkansas and has gone the extra mile each day to ensure our state is an economic engine for growth and increased opportunities for Arkansans," Hutchinson wrote.
During the past year, 110 competitive projects "were won resulting in signed incentive agreements, which yielded 3,413 new jobs with a $25.27 proposed average hourly wage, and a capital investment of $653,898,610," according to the Republican governor.
"These competitive projects represent new payroll in the state of $192,568,493 and the cost benefit analysis for discretionary incentives is 5.37 to one," Hutchinson wrote. His letter cited 23 of what he called a partial list of Preston's accomplishments.
Preston has been executive director of the Arkansas Economic Development Commission since April 2015. He previously was vice president of government affairs for Enterprise Florida Inc., a public-private partnership between that state's business and government leaders.
He is one of the highest-profile department heads under Hutchinson. He has been eligible for a bonus from the foundation after each year of employment with the Arkansas commission.
The foundation paid the maximum bonus of $50,311.80 in both 2016 and 2017 based on salary of $167,706 a year, state officials said then. In 2018, the bonus was raised to $54,000.
Hutchinson wrote in his letter to Vratsinas that "since 2015, the total number of competitive projects won is now over 400 bringing in more than $8.5 billion in new capital investments and 17,000 new jobs."
A number of states, particularly in the South, maintain employment contracts with their state economic development directors that include additional private funds in the director's overall salary, state officials have said.
The Arkansas Economic Development Foundation helps the state be competitive in compensating the executive director, just like the Razorback Foundation has helped compensate coaches at the University of Arkansas, Fayetteville, Vratsinas has said.
Sen. John Cooper, R-Jonesboro, who chairs the Senate Agriculture, Forestry and Economic Development Committee, said Wednesday, "I think Mike Preston is doing a great job."
"I know he is extremely effective in the job he is doing," he added.
But Rep. Dan Douglas, R-Bentonville, who chairs the House's counterpart committee, said Preston "is doing fairly good," with the state recently announcing several new businesses.
He said he didn't know the status of the Chinese-owned Sun Paper's proposed paper mill near Arkadelphia.
Sun Paper announced the mill in 2016. It has pledged to invest $1.8 billion and create 350 jobs in Arkansas.
Hutchinson said Wednesday that the "Sun Paper project is proceeding, and we are very pleased that the environmental engineering work has been filed by Sun Paper for the air quality permit.
"Public hearings took place a couple weeks ago, and there were no objections. That means [the Arkansas Department of Environmental Quality] and [the federal Environmental Protection Agency] are reviewing the application, and the state could issue the permits in the next couple of months," the governor said in a written statement.
The state hopes for a spring 2020 groundbreaking.
Douglas said he would like to see the Republican-controlled Legislature and Hutchinson put more emphasis on workforce development as well as career and technical education in high schools to give students better skills for job openings when they graduate.
Hutchinson said workforce training "has been a priority and continues to be on the forefront of our transformation efforts."
Starting Monday, Preston will have more responsibilities as secretary of the new Department of Commerce, besides heading the commission.
He will be one of 15 Cabinet secretaries under Hutchinson's reorganization of state government in which the number of agencies reporting to Hutchinson will drop from 42 to 15.
The Commerce Department will oversee the state's workforce services and skills development. The department also will include agencies overseeing banking, insurance, securities and development finance.
Metro on 06/27/2019