When the Minnesota Iron Range Resources and Rehabilitation Board offered early retirements last year as part of a broader restructuring, 17 workers took the Eveleth-based economic development agency’s offer.
IRRRB veteran Brian Hiti, a former deputy commissioner, was one of the volunteers. After a 30-plus year career with the state, Hiti was offered an early separation package that included post-retirement health benefits, more than $66,000 in unused vacation and sick days and a $99,347 one-time cash payout. All told, Hiti was paid $166,016 to leave his post.
The retirement didn’t last long.
A month later, Hiti was back on the IRRRB payroll as a part-time contract worker making $41-an-hour, or up to $43,597 a year, according to terms of the arrangement disclosed by the IRRRB in response to an inquiry from the Star Tribune.
The IRRRB says the post-retirement contract, allowed under state law, was necessary to fill key duties and ensure a smooth handoff of Hiti’s responsibilities as an adviser on mining issues. IRRRB Commissioner Mark Phillips said both the early separation program and subsequent contract were approved “by the book” in public hearings.
But Hiti’s contract, set to expire July 31, has come under fresh scrutiny at an agency long criticized for cronyism, lax accounting and political influence.
In April, Gov. Tim Walz’s office announced that he would tighten hiring rules across his administration after learning that former state Rep. Joe Radinovich, a prominent Iron Range Democrat, had been installed in a six-figure-salary civil service job without going through the normal hiring process.
Radinovich resigned and Walz sent a letter of reprimand to Phillips, who enjoys strong support from Iron Range lawmakers.
The circumstances surrounding Hiti’s employment could open the agency to yet another round of criticism in the wake of a 2016 Legislative Auditor’s report questioning both the governance and the financial oversight at the IRRRB, which was founded in 1941 to leverage the region’s taconite mining into broader economic development.
“It’s cronyism under another umbrella,” said DFL Rep. Julie Sandstede, one of nine Iron Range legislators who serves on the agency’s advisory board. “That’s what it looks like to me.”
“If he wasn’t ready to retire or they couldn’t replace the position then they shouldn’t have let him retire at that time,” she added. “There were individuals who wanted the buyout who weren’t given it as an option. It creates haves and have-nots and there’s no understanding as to why.”
Hiti did not respond to a request for comment. When reached on his cellphone by a Star Tribune reporter, Hiti hung up.
Hiti’s retirement was part of an early separation initiative program approved by the Legislature in 2017 after the IRRRB transferred operations of the money-losing Giants Ridge Recreation Area, a state-owned ski hill and golf course in Biwabik, to a private company.
While the incentive was meant for Giants Ridge employees, some IRRRB staffers who were at least 60 years old or had worked for the agency for 30 years also qualified for the buyout deal. The legislation allowed the agency to offer medical and dental benefits through age 65 as well as “cash incentives” to eligible employees but did not stipulate the amount or structure of the payout. In Hiti’s case, about $66,000 was paid into a health savings account. Another $99,000 was transferred in cash.
Seventeen employees accepted the offer. Hiti, who made $99,347 a year as a full-time staffer, was the only one hired back under the post-retirement option, according to the agency.
In a statement to the Star Tribune, an IRRRB spokeswoman said Hiti was offered a state-sanctioned post-retirement contract to “provide mentoring and consultancy services to the agency on mining-related policy issues and to represent the agency at various mining industry meetings/committees/task forces.” In an interview, Phillips said the agency was legally required to offer all eligible employees the early retirement plan. Hiti, he said, did the agency a “favor” by agreeing to come back, noting that the post-retirement contract is at a lower hourly rate than his former job.
“If I was making up the rules, I wouldn’t have let him” qualify to retire early, Phillips said. “He’s one of the top mining experts in the whole state.”
Phillips defended the decision in a Friday board meeting in Eveleth, saying the Minnesota Management and Budget agency signed off on the idea. But he noted that a plan to “wean” Hiti’s contract down to 11 hours a week next year was dropped after concerns were raised about the arrangement.
“This has been a handoff from that individual to [another employee] on the mining issues,” Phillips said, adding that there is no one else at the agency equipped to handle an upcoming meeting on the topic that had been requested by the governor’s office.
Phillips said that while he has no current plans to hire back other retired employees, he would in the future if he needed to lean on their expertise. Next time, though, he said he would check with the agency’s nine-member advisory board, which consists of Iron Range lawmakers.
“I assure you that, even though I don’t have to do this, I will not do it without coming back to the board and having a discussion about it,” Phillips said. “I was pretty transparent here about this stuff.”
But one Phillips ally on the board, Sen. Tom Bakk, DFL-Cook, said that concession may not be necessary. Bakk, the DFL leader in the upper chamber, dismissed concerns that the setup was unusual, adding that he sees no need for Phillips to consult the advisory board if he does decide to extend another contract.
“State agencies do this all the time,” Bakk said. “Cops retire at 50 years old and they work another 10 years beyond their pension doing something else. This is common across state government. … To the commissioner’s point, there is a lot going on out there related to future mining opportunities ... there’s plenty to do.”
Rep. Sandy Layman, a former IRRRB commissioner, said she thought the questions about the contract were appropriate given the recent Radinovich “hiring fiasco.” In this case, she was satisfied with the answers. The Cohasset Republican said while the arrangement went on longer than expected, the hope was that Hiti could use the time to share his knowledge and train other employees.
“Brian has probably a deeper understanding of mining than any people there,” said Layman, who had picked Hiti as her deputy commissioner. “And so the commissioner had asked to bring him back, rather than try to hire a replacement for him.”
But Sandstede, a two-term House member, remains frustrated by what she called a lack of transparency at the agency. She only discovered Hiti was still on the payroll after she “tripped on it by accident” while reviewing the latest budget. She questioned why the agency didn’t tell legislators when they extended the temporary contract past its original March end date.
Her chief concern, she said, was not about the merits of the individual or job in question, but the need for board members to understand the need for positions and other spending decisions. Efforts to press officials for more information are frequently rebuffed, she said.
“We’ve had a lot of scrutiny, a lot of questions surrounding the agency and as a board member I want to feel completely informed and able to defend or articulate the rationale for why we should or shouldn’t be doing something,” Sandstede said. “There’s just been none of that.”
Torey Van Oot • 651-925-5049