Attorney General Wayne Stenehjem has declined to resolve an argument about whether North Dakota's former workers compensation director was entitled to almost $128,000 worth of severance benefits.

State Auditor Robert Peterson had asked Stenehjem whether the payment was legal in light of evidence that Sandy Blunt resigned shortly before the directors of Workforce Safety and Insurance voted on Dec. 6 to dump him.

North Dakota law prohibits severance payments to employees who quit on their own. During followup work on an earlier audit, state auditors discovered an e-mail from Blunt that prompted questions about whether he quit before the board's vote.

"Although you raise the possibility that Mr. Blunt may have resigned prior to the Dec. 6 meeting, the resolution of that question would require a factual determination that is beyond the scope of legal opinions that can be offered by this office," Stenehjem's letter to Peterson says.

In any case, Blunt signed a severance agreement with Workforce Safety on Dec. 21, which superseded any agreement made beforehand, Stenehjem said.

Blunt said the auditor's office did not ask him to clarify the e-mail, which he wrote last August to WSI spokesman Mark Armstrong. Blunt wanted his agency paperwork to reflect that he had resigned as Workforce Safety's chief executive.

"I verbally resigned to Chair Indvik on 12/06/07 with Vice Chair Gjovig as a witness," Blunt wrote in the e-mail. At the time, Robert Indvik of Bottineau was chairman of WSI's board of directors and Mark Gjovig of Williston was its vice chairman. Gjovig is now chairman of the board.

Auditors said the only time Blunt, Indvik and Gjovig met alone that day was before the board's meeting, which spurred Peterson to ask whether Blunt had made himself ineligible for a severance payment by resigning on his own.

"The auditor's office could have saved the state a lot of time and money by just talking to me from the start in order to understand what I meant when I wrote the e-mail," Blunt said Friday in an e-mail to The Associated Press. "It is a shame they did not feel the need to do so."

Peterson also asked the attorney general if the payment met state law's requirement that a severance agreement increase an agency's efficiencies or reduce its expenses.

Stenehjem said it was up to Workforce Safety's board to determine whether it was worth it to pay Blunt to give up potential legal claims against the state.

"Although WSI paid Mr. Blunt a very large amount of money, about which I expressed deep reservations at the time, it is for the WSI board to determine in the exercise of its discretion whether the settlement with Mr. Blunt could reduce legal expenses through the release and waiver of potential claims," Stenehjem's letter says.

In his agreement with WSI, Blunt did keep the option of suing the agency to force it to pay attorneys' fees he has paid defending himself against felony charges alleging he misspent agency funds and conspired to misuse confidential information.

The conspiracy charge was dropped. Blunt is facing a trial next month on two remaining felony charges alleging he misspent agency funds on gifts, meals and trinkets for employees and state legislators, and on illegal bonuses for WSI executives.

The severance agreement required that Blunt be paid his salary and health insurance benefits from Dec. 7, 2007, through Aug. 31, 2008. WSI records show he was paid $122,393 in salary and $5,454 to maintain health coverage, for a total of $127,847.

In addition, Blunt was paid $19,740 to compensate him for unused vacation and $2,646 for his December work time, which brought the package's value to $150,233.

The payments for vacation and work time were not counted as part of the severance payment, because Blunt had earned the money and vacation benefit. He was paid the settlement's proceeds last January, agency documents show.