Derby Investigates 'Possible Violations' Of Unnamed Policies & Procedures

DERBY — Mayor Rich Dziekan’s office released a letter Friday showing the city’s finance director was put on paid administrative leave so the administration could investigate ​“possible violations of City policy and procedures.“

The letter was released March 11 in response to a Freedom of Information request from The Valley Indy submitted on March 3.

The letter, which was written by Walt Mayhew, Dziekan’s chief of staff, and addressed to Derby Finance Director Agata Herasimowicz, does not explain what policies or procedures may have been violated.

The letter is dated March 1.

“While on paid administrative leave, you are not authorized to conduct City business and may not enter City Hall without my prior approval,” Mayhew wrote. ​“Your City email account will be restricted and you may not access City systems except on an inquiry only basis and with my approval.”

In a separate email obtained by The Valley Indy from Herasimowicz to Mayhew, she says she does not know why she was put on administrative leave.

Mayor Dziekan’s name is not mentioned in the letter, nor is he copied on the letter.

However, John Marini, one of the city’s attorneys, said the letter should not be interpreted as coming only from Mayhew, a veteran Derby politico who was hired by Dziekan in December 2021 and started in January 2022.

​“I would characterize it as ​“the Mayor’s office” placed her on leave,” Marini said.

FINANCE DEPUTY RESIGNS

Derby now has two management positions open in its finance department.

Derby’s Deputy Finance Director Angela Gencarelli resigned her post Monday, March 7, six days after the administration put Herasimowicz on leave.

Herasimowicz started in July. Gencarelli started in January.

On Thursday, March 10, The Valley Indy received a prepared statement from the city’s law firm attributed to Mayor Dziekan. It addressed the deputy finance director’s resignation.

​“On Monday, I was informed that our Deputy Finance Director vacated her position without advance notice. While I am disappointed that Angela left the city in the way that she did, I can appreciate the unanticipated pressures created when the finance director was put on administrative leave and I wish her well in her future endeavors,” Dziekan said.

The Derby Board of Aldermen & Alderwomen voted March 10 to authorize the administration to contact a firm in order to find a temporary person to fill the deputy director’s position. The board did so after meeting in executive session, a type of meeting closed to the public and allowed for specific reasons — in this case, the city’s legislators said they would be discussing a contract.

HISTORY OF INSTABILITY

A public employee being put on paid administrative leave is not terribly unusual. However, the finance director is a key position in Derby government.

The finance director is the city’s top fiscal agent, keeping track of the books and playing a key role in the formation of the city budget each year.

Looking back over the last decade, the finance director’s position has not been stable in Derby.

* In 2012, Henry Domurad, the city’s finance director at the time, sued the city for wrongful termination saying Mayor Anthony Staffieri fired him, then released a letter to the public saying Domurad had resigned. The matter went to court, where a judge ruled in the city’s favor.

* As that controversy ensued, the city brought in Alan Schlesinger, a former Derby mayor and finance director, to fill in on a temporary basis. However, Derby Democrats on the tax board quickly declined to pay him, which caused Schlesinger to walk out.

* Tommy Thompson was Derby’s finance director from 2012 until 2015. Domurad returned to Derby City Hall as Mayor Anita Dugatto’s administrative assistant in December 2013. Thompson left abruptly shortly after Mayor Dugatto was elected.

* In November 2015, the Dugatto administration hired Salvatore Coppola as finance director. He resigned abruptly in November 2019, shortly after Dziekan was re-elected to a second term.

* Coppola was immediately replaced by city treasurer Keith McLiverty in November 2019, who had lost his re-election bid as treasurer to Mayhew about a week before Coppola resigned. In January 2021, Derby hired David Taylor as interim finance director at a rate of $90 per hour. He replaced McLiverty. Taylor remained on the job until Herasimowicz was hired. McLiverty remained a consultant on the payroll through 2020, even after accepting a government position in Virginia. McLiverty was off the city payroll as of May 2021, according to statements made at public meetings.

* Herasimowicz’ hiring was announced in May 2021, and she started in July.

BUDGET BLUNDER

Outside of the many finance department changes, the city has a series of less-than-ideal financial practices that have been pointed out in audits for years.

At a tax board meeting in May 2019, McLiverty, at that point the city’s treasurer who played an outsized role in Derby’s budget process, announced that the city had mistakenly double counted school district grant money for several years, creating a hole in Derby’s budget.

The Dziekan administration repeatedly pointed out the mistake started while Dugatto was mayor. The city had to come up with a ​“recovery plan” that included raising taxes and restructuring debt to get Derby’s finances back on track. Click play on the video above to learn about the ​“recovery plan,” which was unveiled in 2019.

STATE COMMISSION: THIS POSITION SHOULD NOT BE TIED TO POLITICS

Because of the financial issues, the Dziekan administration now makes regular, voluntary appearances in front of the state’s Municipal Finance Advisory Commission (MFAC), an eight-member body who have been asking questions about the problems pointed out in various Derby financial audits.

At a meeting in mid-February, members of the commission asked several questions about staffing levels in the Derby finance department. During that meeting, the city’s website listed four people working in the finance department.

One member noted the small number of employees working in the finance department was ​“unheard of,” and stressed the city needs to budget for additional employees to make a dent in Derby’s audit problems. The city also needs a new accounting system, the commission pointed out.

The video from the meeting is posted below. The Derby discussion starts about 14 minutes and 15 seconds into the video. The article continues below.

The city budget approved last May allocated $299,502 for the finance department. An early draft of mayor’s newly proposed budget suggests upping that allocation to $354,479. The ultimate decision is up to the tax board.

The members of the state commission also asked several questions regarding the deputy finance director. In addition, the members of the commission seemed taken aback by a comment Herasimowicz made in her ​“management letter” to the commission regarding her department’s tumultuous history.

​“This is not your issue, this is something the elected officials need to address, but there’s a statement that the city changes finance directors every election year. That is just not a good practice. It’s a position that you need to have continuity, you need to have independence from the political process. I think that’s a message we need to push with the elected officials,” said MFAC chairwoman Kathleen A. Clarke-Buch. 

The Dziekan administration, with bi-partisan support from the Board of Aldermen/Alderwomen, hired Herasimowicz at a salary of $110,000 with the goal of getting the finance department up to snuff. The Dziekan administration has said Derby’s financial ship has been righted, and point to a recent bond rating upgrade as proof.

Click here for the draft meeting minutes from the February meeting.

The commission meets again on April 20, 2022, according to this website.

SO WHAT’S BEING INVESTIGATED, SPECIFICALLY?

At the March 10 Aldermen/Alderwomen meeting, corporation counsel Vincent Marino warned public officials about discussing Herasimowicz, characterizing it as a personnel issue. He said information could be released when it is appropriate to do so.

The Valley Indy emailed Mayhew and Dziekan March 15 asking them to comment on what ​“possible violations of City policy and procedures” the administration is looking into.

Nothing jumps out from recent meetings that Herasimowicz participated in.

Videos and minutes from Derby tax board meetings in January and February show some members questioning Herasimowicz about expenses being paid without the authorization of the tax board. This is an occasional issue in Derby, such as when the Alders or the mayor’s office create positions the tax board must fund. The members also asked questions about how tabled discussion items appear on agendas. The discussions did not seem to generate controversy among the elected officials and Herasimowicz.

At a Derby Aldermen/Alderwomen finance subcommittee on Feb. 24, Herasimowicz and Alderman Charles Sampson got into a rather long conversation about what resources Herasimowicz needed to improve the finance department. Click here to watch the video from the meeting.

Herasimowicz expressed some confusion at Derby’s budget process. This year the department requests went to the mayor’s office in February, instead of the process spelled out in the Derby Charter, which says budget requests go to both the mayor and the tax board.

At that same meeting resident Karen Kemmesies praised Herasimowicz for her professionalism and efforts in the finance department.

Herasimowicz has an employment contract with the city that is valid until July 5, 2024. Click here to read it.

According to that contract, Herasimowicz can be terminated if both she and the city want to part ways. An agreement must be put in writing.

Her contract says she can be terminated for poor performance, but the city first has to provide her a letter giving her 30 days to improve. She can be terminated for things such as committing a crime or abusing a substance.

If the city opted to terminate Herasimowicz without cause, the city would still have to pay her annual salary until July 2024.

It is not clear when Herasimowicz might return to work. She is being paid while the city conducts its review.

Correction: The original version of this story left out David Taylor’s tenure as interim financial director.

The prepared statement is from the administration regarding the departure of the deputy finance director last week.