Raleigh, NC – The North Carolina Office of the State Auditor (NCOSA) released a 661-page performance audit late Thursday that showed, as of Aug. 6, there were 8,846 long-term vacancies across 46 state agencies, totaling $1.04 billion in lapsed salary.
State agencies reported the information to NCOSA’s Division of Accountability, Value, and Efficiency (DAVE), which was created in August. The enabling legislation requires each state agency to report to the DAVE on how the agency spends taxpayer funds and instructs NCOSA to put together a report by the end of the year on which state agencies and jobs can be cut.
State Auditor Dave Boliek gave a preview of the report earlier this month to the Joint Legislative Oversight Committee on Justice and Public Safety.
Lapsed salary is defined by the Office of State Budget and Management (OSBM) as the amount not expended for salary during the entire period in which the position was vacant. The long-term vacant positions are funded by state appropriations, specific agency-generated receipts, and federal funding and grants.
In a press release, Boliek said while state agencies do expend generated lapsed salary, the total $1.04 billion generated does not necessarily represent actual dollars that were available and/or used by state agencies for other purposes, or total funds available in the future if long-term vacancies were eliminated.
But it does raise the question about the transparency of state agency spending.
The state agency with the highest number of long-term vacancies (six months or more) was the Department of Health and Human Services (NCDHHS), with 3,074 vacancies, or $375 million in lapsed salary.
The figure is down from $386 million from a report Boliek released on the agency in November.
In that report, OSBM reported that NCDHHS discovered the $386 million in lapsed salaries, with $151 million coming from state appropriations and $235 million from receipts and federal funding, which represented 30.6% of all lapsed salary funds in North Carolina for fiscal year 2024-25, and was the most of any state agency.
In an emailed statement to Carolina Journal, a spokesperson for NCDHHS hit back, saying the report contains “misleading associations and omissions of context.”
“Important statutory and operational realities are ignored, including NCDHHS’s compliance with vacancy and spending restrictions,” the spokesperson said. “Additionally, OSA did not consult with NCDHHS staff through a formal audit process under generally accepted government auditing standards or incorporate publicly available information already shared with the General Assembly regarding NCDHHS lapsed salaries.”
The statement also said that the report inaccurately conflates NCDHHS’s lapsed salaries with the Medicaid rebase shortfall.
Next on the list was the Department of Adult Corrections, with 2,817 vacancies generating $228.6 million in lapsed salary; followed by the Department of Transportation, with 838 vacancies generating $78.6 million in lapsed salary; and the Department of Commerce, with 684 vacancies generating $226.1 million in lapsed salary.
Boliek said that explanations for vacancies from state agencies were most commonly attributed to low compensation or unqualified applicants, positions recently filled or about to be filled, no response or unsure, and administrative lag.
“Long-term vacancies muddy the waters of government expenditures,” he said in the release. “In some agencies, you have tax dollars meant to go to a person serving a valuable state need, but instead that spot sits empty for years, and the money goes elsewhere. This first government efficiency report provides lawmakers and the public with needed transparency, and valuable data to make strategic, fiscally responsible decisions for North Carolina’s future. It includes several different options to improve government efficiency, from cuts to job vacancies to increases in areas where additional resources may be necessary.”
The report acknowledged that between the passage of the DAVE Act and the data collection deadline for state agencies, 13% of long-term vacancies have been filled. Additionally, 5% were reclassified, and 22% were never posted, while only 9% have been or are planned to be abolished.
Additionally, the report notes uncompetitive pay for correctional officers, nursing assistants, registered nurses, licensed practical nurses, and youth counselors. It was also found that the State Highway Patrol keeps positions vacant so they can make fuel purchases and respond to other vehicle needs.
At the same time, he said long-term vacancies in those positions should be preserved.
Recommendations:
- State agency budgets should accurately reflect the actual expenditures necessary to deliver services and fulfill statutory responsibilities to North Carolina.
- Tracking and reporting lapsed salary usage should be improved.
- Any position that meets certain criteria should be eliminated.
- North Carolina salaries should be competitive with those offered to similar positions in surrounding states.
- Administrative delays in the hiring process can be reduced by increasing accountability and streamlining workflows.
- Many State agencies should improve their tracking of hiring and vacancies.
Boliek stated that several cost-saving measures can be taken, including eliminating positions vacant for five years or more that are not federally funded or unfunded placeholder positions. That would cut 140 job vacancies, and result in an estimated $1.9 million in direct state appropriations savings and allow for the potential reallocation of $4.5 million in receipts.
Additionally:
- Eliminating positions vacant for three or more years would reduce 1,159 job vacancies, yielding an estimated $11.2 million in state appropriation savings.
- Eliminating positions vacant for one year or more would cut 4,514 job vacancies, create an estimated $138 million in state appropriations savings, and allow for the potential reallocation of $79 million in receipts.
The NCOSA also began publishing a dashboard on Dec. 31 that displays long-term state vacancies across different state agencies and the amount of funding generated from lapsed salaries.
Secretary of State Elaine Marshall stated at the Jan. 6 Council of State meeting that her agency continues to be understaffed while its workload has doubled since 2017, and agreed with Boliek’s initial DAVE Act report.
“This is not a partisan issue,” Marshall said. “The auditor’s recent DAVE Act report further underscores the difficulty and conditions facing state agencies. We [Secretary of State’s office] have the technology improvements to help manage the flood of filings, but technology alone cannot solve this problem. People are essential.”
Ardis Watkins, executive director of the State Employees Association of North Carolina (SEANC), sent a letter to Democratic Gov. Josh Stein; House Speaker Destin Hall, R-Caldwell; and Senate Leader Phil Berger, R-Rockingham; about her concerns with Boliek’s report.
“What went unsaid is that for nearly seven months, almost 3,000 state positions have been frozen under G.S. 143C-5-4 solely because a new budget has not been enacted,” she said. “Agencies have been unable to fill these jobs, no matter how critical the public need. That reality alone skews vacancy totals and distorts the narrative.”
Watkins added that if these frozen positions were permanently cut, North Carolina would have more than 1,000 fewer state jobs than in 2009, despite adding two million residents since then.
“These are not unnecessary jobs,” she said. “They are positions tied to real services. When agencies cannot hire, citizens wait longer, workloads grow, and outcomes suffer. Vacancy numbers will rise when hiring is prohibited, regardless of need.”
Theresa Opeka is the Executive Branch reporter for the Carolina Journal.