ABC11 Investigates

Rural Center stops severance for ex-president

Monday, July 29, 2013

Directors of a taxpayer-funded nonprofit agency created to help North Carolina's rural communities are freezing payment of a $241,000 severance to its founding president.

The North Carolina Rural Economic Development Center's board of directors voted Monday that there would be no payments under Billy Ray Hall's severance pay arrangement unless authorized by the full board.

Hall resigned this month after a state audit found his $221,000 annual salary "unreasonable," the non-profit did not adequately oversee the $25 million in state funds it received annually, and claims of jobs created were not verified.

Gov. Pat McCrory called for Hall's ouster after the audit. State lawmakers cut off the group's funding, shifting rural development efforts to existing state agencies.

"I think that's a witch hunt," said former Lt. Gov. Bob Jordan.

Jordan started the Rural Center back in 1986. He tapped Hall to head it up, And Hall has been doing that up until just weeks ago.

Hall stepped down after an audit reported mismanagement and padded salaries. Hall made $100,000 more than the state would pay for. So the executive committee used interest earned on invested taxpayer money to pay the rest.

They used that same money to create a $250,000 severance package, which ABC11 learned Monday that Hall's lawyer has asked for.

Some board members, like Jordan, say Hall should get that money. However, the board's lawyer said giving it to him could violate federal tax code and the board held off.

The chair of the board, Valeria Lee wouldn't comment. She is also under the gun.

Two weeks ago, the governor called for her to resign along with Hall. It's a call being echoed by at least one board member.

"So the governor asked her to resign and now she's going to appoint the committee to determine the future," said board member Bob Luddy. "I think it's a very bad idea."

Monday, the board put Lee in charge of choosing five board members to work with the Department of Commerce and the governor's office to get currently frozen funds flowing again. The special committee will also make a recommendation about the future of the center.

As for whether Lee will keep her job.

"I am elected by the board," said Lee. "I have not decided that I have to step down. And to say, do I have any intentions, that's not a question I'm prepared to answer."

Besides criticizing Hall's salary amount, the audit also questioned the Center's oversight of state money and said it did not verify that jobs were created with grant money -- the Center's mission is to focus on economic improvement for people in North Carolina's 85 rural counties.

Right now, the newly-formed committee's biggest challenge is funding -- no money is coming in since the current General Assembly cut them out of the state budget entirely and they have no money to work with after McCrory moved to freeze the Rural Center's almost $175 million on the books following the review.

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(Copyright ©2014 ABC11-WTVD-TV/DT. All Rights Reserved - The Associated Press contributed to this report.)

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