Derby Mayor Rich Dziekan, center, with members of the Derby Board of Aldermen & Alderwomen at a meeting Tuesday, June 21, 2022.
DERBY — An investigative report released by Derby Mayor Rich Dziekan’s office on Tuesday says Derby Finance Director Agata Herasimowicz violated the City Charter several times but stops far short of assigning blame to her.
Instead, the report concludes her actions were “reasonable” when it came to paying for police video equipment and bringing in temporary workers to help fill vacancies in Derby City Hall without the proper authorization outlined in the charter.
In addition, the report notes the city lacks basic financial policies — an issue Herasimowicz tried to address before she was put on paid administrative leave. The report is embedded at the bottom of this story.
“The investigator ultimately concludes that the city lacks policies and procedures with respect to the management of the finances of the city,” Vincent Marino, Derby’s corporation counsel, told members of the Derby Board of Aldermen and Alderwomen at a meeting Tuesday.
“And as a result, maybe that excuses the way that the finance director took action. And so maybe that should excuse her violations of the city’s charter, which were substantiated on five different occasions,” Marino said.
Please click the play button above to listen to comments made by Marino during Tuesday’s meeting.
Background
The report was commissioned by Mayor Rich Dziekan’s administration after the administration placed Herasimowicz on paid administrative leave in early March.
Herasimowicz was put on leave so the administration could investigate “possible violations of City policy and procedures” in her role as finance director, according to a March 1 letter from Walt Mayhew to Herasimowicz.
Mayhew is Dziekan’s chief of staff.
Tuesday’s Meeting
The report was discussed at the meeting of the Derby Board of Aldermen & Alderwomen on Tuesday. The board had planned to go into a closed-door executive session with Marino to review the report.
However, Herasimowicz blocked that move by requesting the discussion happen in public, which is her right under state law. The move also made the investigative report undisputedly public. Previously the administration would not release any info about the document, including who authored it.
Ultimately, the alders will have to wrestle with the report and decide what course of action to take, which could range from asking Herasimowicz to return to work to determining there is just cause for termination.
Marino did not go into the report’s details on Tuesday, but talked in general about its findings.
“The investigator’s report finds on five occasions that the finance director violated the city’s charter, but, because of the lack of policies and procedures, maybe that’s OK. And that is ultimately for this body to determine,” Marino said.
The report notes that since formal policies and procedures don’t exist in Derby when it comes to financial practices, “City officials, employees and board members might operate under a set of assumptions that may or may not violate City Charters and ordinances.“
The investigative report — dated May 20 — recommends “that City management develop formal financial policies and procedures in collaboration with its oversight Board(s) to ensure compliance with the City’s Charter and Ordinances.“
Those recommendations are not new to Derby City Hall.
Similar recommendations have been made in audit reports that predate Herasimowicz’s employment in Derby. (She was on the job for eight months.) The same issues explain why the city currently meets with the Municipal Finance Advisory Commission, a group encouraging Derby to make improvements to its understaffed finance department.
Herasimowicz Could Respond Thursday
Herasimowicz is scheduled to respond to the report and provide additional information at a meeting scheduled for 6 p.m. Thursday (June 23) in the Aldermanic Chambers in Derby City Hall. Herasimowicz has requested that the meeting be held in public. NOTE: THURSDAY’S MEETING WAS CANCELED AT 5:12 P.M. WEDNESDAY
Herasimowicz attended Tuesday’s meeting, which was the first in-person meeting of the city’s legislative body since the pandemic reached Connecticut in the spring of 2020. The corporation counsel said she could observe but not participate.
Herasimowicz did, however, hint at management problems within Derby City Hall.
“I don’t even know who I report to,” Herasimowicz told the aldermen & alderwomen toward the end of Tuesday’s pow-wow.
The Report
The investigative report was authored by Mohoney Sabol and Company, LLP, an accounting and auditing firm out of Glastonbury. The firm was engaged by Marino’s law firm.
There are two parts to the report: an “independent accountant’s report on applying agreed upon procedures,” and a “summary of observations, conclusions and recommendations.“
The summary portion of the report looks at three areas: the purchase of police video equipment, a contract for temporary employment services, and the city’s “policies and procedures” in general.
Police Video Purchase
Regarding the purchase of video equipment for the police department, the report sides with Herasimowicz, saying a payment didn’t follow the rules but was reasonable under the circumstances.
The report notes that the Board of Aldermen/Alderwomen authorized Mayor Dziekan on July 22, 2021, to sign a contract with WatchGuard to purchase video equipment for the Derby Police Department. The alders also gave a green light to use money from the American Rescue Plan Act to pay for the purchase, and that the mayor entered into a contract with WatchGuard on Aug. 2, 2021.
However, the report states that Herasimowicz did not attend the Aldermen meeting and was not aware “that a contract had been executed for the purchase.”
“Per Finance Director Herasimowicz, she learned of the purchase when she received an email request to pay the WatchGuard invoices from Chief of Police (Gerald) Narowski,” the report states.
WatchGuard needed to be paid quickly, because Derby had to meet a deadline to apply for reimbursement from the State of Connecticut for the purchase. So, on Oct. 29, 2021, Herasimowicz approved the payment of $119,291, which was processed by the finance department.
However, the payment had not been authorized by the Derby Board of Apportionment and Taxation (BOAT), the elected body that monitors Derby’s finances and votes on a budget and mill rate each year. The report notes Herasimowicz brought it to board’s attention at the November 2021 meeting, but the issue was tabled.
A review of the public record shows that Herasimowicz spoke about the issue at the December 2021 BOAT meeting, and the issue was tabled again — and was tabled again in January 2022, according to meeting minutes.
“MahoneySabol noted that the purchase and payment of the Police Video Equipment was neither performed in accordance with the City’s Charter and Ordinances nor sound budgeting practices,” the report’s summary states.
But the report also states the expenditure (and associated liability from the signed contract) had already “been incurred by Mayor Dziekan and Chief of Police Narowski.“
The report concludes “we believe it was reasonable that Finance Director authorized payment of the invoices with the intention of requesting funding at the next BOAT meeting.“
Temporary Employment Services
Next, the report summary looks at “temporary employment services” for which Herasimowicz contracted.
According to the report, Herasimowicz authorized an $875 payment to Robert J. Brunell II for bookkeeping services on Sept. 10, 2021, and a $3,769 payment to Robert Half International on Nov. 5, 2021 for work performed in the tax collector’s office.
Herasimowicz brought in the extra help because of vacancies creating staffing shortages in the tax collector’s office and the finance department, according to the report.
The report notes Herasimowicz did not get a purchase order to encumber the funds, and that contracting and paying for the temporary help “were not performed in accordance with the City’s Charter and Ordinances or sound budgeting practices.“
But the report does not find fault with Herasimowicz’s actions.
” .… we believe the use of the temporary employment services was necessary and reasonable and did not at any time result in an over expenditure of Finance Department’s or Tax Collector’s budget,” the report’s summary concludes.
In addition, the report notes BOAT authorized moving money around in the city budget to cover the costs at a Sept. 20, 2021 meeting.
Not noted in the investigative report: the lack of staffing — specifically a lack of support staff to help Herasimowicz do her job as finance director — has been raised as a concern by members of the Municipal Finance Advisory Commission. Derby officials are scheduled to meet with MFAC via teleconference at 10 a.m. on June 29.
Overspending
The report points out three items in the Derby budget exceeded the amount budgeted for. Example: an account labeled “computer consulting” was budgeted at $35,000 — but $36,924.02 was spent, leaving the account overdrawn by $1,924.02. No encumbrance was approved or recorded in connection to the purchase, according to the report.
An employer health savings account also went over budget to the tune of $11,938.77, according to the report.
However, the report’s summary, in a section titled “Policies & Procedures,” notes that “the overpayment of expenditures by Finance Director Herasimowicz can be attributed in part to a lack of defined financial policies and procedures.“
The lack of an adopted set of policies and procedures leaves things open to an employee’s interpretation, the report states.
The MohoneySabol report points out four deficiencies in the city’s purchasing and payment process:
1. The City does not consistently utilize purchase requisitions and purchase orders.
2. The authorization of purchases often happens after purchases.
3. Vendor invoices are not always submitted in a timely manner.
4. Payments are not always reviewed for budgetary compliance before they are approved.
The report states that Herasimowicz acknowledged the city doesn’t have safeguards in place to prevent over expenditures — but also indicated the finance department was broken when she starting working in city hall in July 2021. Issues with Derby’s financial practices have been pointed out in audits going back years.
Herasimowicz indicated “that there were so many accounting issues that had to be addressed that it was impossible to address all of the problems at once,” the report states.
No Procedures, But …
Finally, while the report notes the city’s lack of procedures, the report notes that Herasimowicz tried to tackle the issue.
In January 2022, Herasimowicz drafted a procurement policy, with procedures, and presented it in writing to the Derby Board of Aldermen/Alderwomen as part of her report to the elected officials on Jan. 13, according to the investigative report.
Alderwoman Barbara DeGennaro noted the policy would have to be reviewed by a subcommittee, and then brought back to the full Board of Aldermen/Alderwomen. The matter comes up briefly at the six minute mark of this audio record from the Jan. 13 meeting.
The board took no action on the procedure Herasimowicz proposed.
The record shows her proposal was talked about for two minutes during a meeting of the Aldermanic subcommittee held on Feb. 24, 2022. Click this link and then fast forward to the 1 hour, five minute mark to hear Herasimowicz talk about her proposal, which she describes as trying to create a formal finance department policy that dovetails to the city charter. At that meeting, Alderwoman Sarah Widomski asked Herasimowicz to send the proposal again to the mayor’s office and the full board. She was put on leave prior to the next meeting.
The investigative report states formal policies, such as those suggested by Herasimowicz, are needed in Derby City Hall.
“The effective implementation of these controls would significantly reduce the risks of Department Heads contracting in excess of budgetary account appropriations and the Finance Director making payments in excess of the budgetary account appropriations,” the report concludes.
THE DERBY INVESTIGATIVE REPORT IS EMBEDDED BELOW
Derby Investigative Report by The Valley Indy on Scribd
