Finance Department Investigative Report Is In Derby Mayor's Office

DERBY — An investigative report about the city’s finance director has been completed and is in Derby Mayor Rich Dziekan’s office, the mayor’s chief of staff said on Tuesday.

The report centers on whether Agata Herasimowicz, the city’s financial director for eight months until being put on paid administrative leave in early March, followed proper procedures outlined in the Derby Charter.

She is still employed by the city and has an employment contract valid until July 5, 2024.

Whether the investigative report will be made public remains to be seen.

PUBLIC DOCUMENT OR NOT?

On Tuesday (June 7), Walt Mayhew, Dziekan’s chief of staff, would not release the report.

He declined to disclose basic details to the public, including which firm or person conducted the investigation, and how much money the report cost taxpayers.

Mayhew said the document must first be shared with the Derby Board of Aldermen & Alderwomen. That could happen if the Dziekan administration calls for a special meeting of the city’s legislative body.

​“We’re waiting before doing anything publicly because we want to have a session with the Board of Aldermen because they are involved in the process,” Mayhew said.

The completed report is a public document. While it may involve an employee, state law clearly spells out a document of that nature is public unless it is an invasion of the employee’s privacy.

The Valley Indy checked with two Connecticut open government experts Tuesday, including a lawyer, who both said the report is a public document (based on the information provided by The Valley Indy).

Mayhew was unable to point to a section of state law allowing the city to keep the report secret, saying that would be a question for an attorney.

HISTORY OF SILENCE

The Aldermen/Alderwomen could still attempt to bury the report, like a previous Board of Aldermen did in 2013.

At that time the board classified an investigative report into the alleged wrongdoings of a tax clerk as ​“privileged” communication from an attorney.

Derby did so despite repeated promises from the city’s former corporation counsel saying the report would be released. That report, which was not comprehensive, was leaked to The Valley Indy.

Today the members of the BOA/A are under what amounts to a gag order.

Two elected officials told The Valley Indy the city’s lawyer sent a letter to members of the BOA/A on March 21 telling them to respond to questions about the Herasimowicz matter by saying ​“this is a personnel matter, and I cannot discuss it.”

WHAT IS KNOWN

On March 11, in response to a Freedom of Information request from The Valley Indy, the city released a letter dated March 1 from Mayhew to Herasimowicz. 

The letter from Mayhew stated that Herasimowicz was being put on administrative leave ​“pending an investigation of possible violations of City policy and procedures in your role as Finance Director.”

Mayhew said Tuesday the investigation is not criminal in nature. He said it has to do with whether Herasimowicz followed rules laid out in the Derby City Charter.

The Valley Indy reached out to Herasimowicz for comment but had not heard back by 8 p.m. Tuesday.

HOW DID THIS START?

Mayhew said the seeds for the investigation were planted early 2022 when Jennifer Desroches, an elected official on the Derby Board of Apportionment and Taxation, asked questions about finance department practices.

The audio from a BOAT meeting in January shows Desroches wanted more detailed information from Herasimowicz prior to approving money transfers. Some of the discussion centered around a ​“financial services” line item, and transfers coming from the budget’s special working balance.

In addition, BOAT members asked questions about a bookkeeper Herasimowicz was using for help in the office.

Meeting minutes state that Desroches was ​“very adamant about not taking any money from the Special Working Balance until the Board is given more information.”

February meeting minutes show board member Chris Carloni made a statement saying expenses must be approved by the board before being paid.

“Out of the February meeting there were a number of accounts that were questioned as to why they had balances that they did, transfers that took place, checks that were cut, so forth and so on,” Mayhew said. ​“And so he (the unnamed investigator) was asked to pick a number of those instances to investigate, and that’s what he did. He was only asked to determine whether or not the policies and procedures as outlined in the charter had been violated.“

When asked for comment Tuesday, Desroches said her questions to Herasimowicz were routine, and that Mayhew had provided her with some answers.

She noted the Dziekan administration has not released information she requested, such as information about a specific bank account and whether she can review the city’s check registry. Desroches said a Freedom of Information request she filed with the city has not been answered.

She also said Herasimowicz was a capable finance director.

​“I don’t think Agata did anything wrong, and I hope they bring her back,” Desroches said.

FOI REQUESTS UNFULFILLED

Under the Connecticut Freedom of Information Act, documents are presumed to be public unless proved otherwise. This includes the public’s right to see personnel files of individual public employees.

In an effort to learn more about why the Dziekan administration put Herasimowicz on paid administrative leave, The Valley Independent Sentinel submitted a Freedom of Information request on March 16 asking for all written and email communication between Mayhew and Herasimowicz from January until March.

The city acknowledged the request but has not released anything.

Mayhew said he has turned over emails to the city’s lawyer for review.

HIRED TO BRING STABILITY

The Derby Board of Aldermen & Alderwomen voted to hire Herasimowicz in May 2021. She officially started in July 2021. Her stated salary at the time was $110,000.

The position previously paid about $70,000, which is below market rate for the position in Connecticut. She was hired as part of an effort by the Dziekan administration and elected officials to attract higher quality candidates to the job.

Herasimowicz arrived on the job with specific skills. She has a degree in accounting from the University of Connecticut. She worked for Tolland Public Schools as a financial accountant. Her previous municipal finance gigs include separate stints as the director of finance in the towns of Rocky Hill and Killingly. From 2007 to 2017 she was the assistant finance director for the Town of Tolland.

FINANCE DEPARTMENT ISSUES

During her eight-month stay in Derby, Herasimowicz spoke openly a few times about the problems she was facing.

In December 2021 Herasimowicz publicly pointed out the city made a mistake while putting together its budget the previous spring (not under her watch). The Derby Board of Apportionment and Taxation, with the support of the Dziekan administration, voted to include a $1.2 million state grant in its budget.

That grant was included in Gov. Ned Lamont’s initial budget presentation, but did not make it through the legislative side, meaning the grant money wasn’t coming. It was information that was available to Derby officials when they voted to count the money as revenue.

At the time Herasimowicz said she raised the issue because the revenue shortfall would present a challenge for Derby finances.

Herasimowicz also noted that Derby politics had played a role in her position prior to her arrival, an issue raised by the Municipal Finance Advisory Commission (MFAC) in February.

MFAC is an eight-member body of municipal finance experts who have been reviewing the city’s budgetary practices. Derby government volunteered for the program after the city revealed a series of budget and accounting blunders that went back several years. The image below shows meeting minutes from a MFAC meeting in September 2020 during which Derby explains some of its financial problems, which were solved, in part, by raising taxes and refinancing long-term debt.

Members of that commission reacted to political meddling in the Derby finance director’s position during a meeting on Feb. 16.

​“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,” MFAC chairwoman Kathleen A. Clarke-Buch said at the time.

At that same meeting, commissioners were concerned about the lack of staffing in the Derby finance department. Specifically, they asked about whether a deputy finance director had been hired to help Herasimowicz. Instead of answering directly, Herasimowicz asked whether Mayhew, Dziekan’s chief of staff, wanted to answer.

When there was no response, Herasimowicz said a deputy finance director had been hired — but was focusing on some ​“special projects.” Another commissioner noted that it didn’t appear that the deputy finance director reported to Herasimowicz.

The video from the meeting is embedded below.

Herasimowicz’ said the deputy finance director did not report to her, but would do so eventually. It wasn’t clear at that meeting just who the deputy finance director was working for. Commission members said they were concerned that the organizational structure of Derby’s finance department would prevent the city from addressing numerous problematic audit findings going back several years.

The Valley Indy asked Mayhew on Tuesday if the Derby deputy finance director, who quit six days after Herasimowicz was put on leave, was answering to him while she was employed by the city.

“Again, this is Agata working her spin. She called them and told them what was going on here, yes,” Mayhew said. The chief of staff said Herasimowicz went behind the administration’s back by reaching out to MFAC. He said that had nothing to do with why she was put on paid administrative leave.

IS IT TIME FOR THE STATE TO STEP IN?

At the last MFAC meeting in April, commission members said they were concerned with Derby’s progress with its financial practices. At the end of the meeting, the commission’s chairwoman said the commission may consider sending the City of Derby to the Municipal Accountability Review Board, or ​“MARB.” That’s a state agency with more teeth than MFAC.

The Valley Indy asked Mayhew whether, given the months-long drama with the finance director’s position, Derby’s chances of being recommended to MARB are high.

​“I doubt that is going to take place. I talked to a number of people on the MFAC committee. There’s no justification for it,” Mayhew said. ​“We put an 8‑point plan in there that recouped all the money that brought the concerns out (referring to the city’s ​‘recovery plan). We have over a $5 million fund balance right now, which is more than 10 percent of the operating budget, which wound up giving us an increase in our bond rating. The city is doing everything that it should do. It had a $1.5 million surplus last year,” Mayhew said. ​“This city is on the right track moving forward.“

The next MFAC meeting is scheduled for 10 a.m. June 29.

THE EMPLOYMENT CONTRACT

Mayhew said the next step in this saga is for the Board of Aldermen & Alderwomen to meet to discuss the investigative report. 

If that meeting involves Herasimowicz, it will likely be held in executive session, a type of meeting closed to the public. However, Herasimowicz has the right under state law to ask that the meeting be conducted in public.

What happens next remains to be seen.

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.

POLITICAL REACTION

The Valley Indy reached out to Aniello Malerba III for reaction to the finance department saga. Malerba is the chairman of the Derby Democratic Town Committee.

​“Unfortunately it’s no surprise that little to no information has been released on this topic because the mayor‘s office continues to operate with a blatant and deliberate lack of transparency,” Malerba said via email. ​“Why are they conducting a four-month investigation for an employee who was only working for the city for seven months? What are they trying to hide from the public? One would hope with the state considering coming in and overseeing the finances and having to go through a budget season without a finance director that this issue would have been resolved quickly and efficiently, but instead this is what we get when we have a Mayor who has abandoned his post.“

Mayhew said the city was proceeding in a professional matter and that the city’s finances are healthy.

​“When dealing with personnel matters, the responsible, prudent course of action is to exercise care, and due diligence, to follow the process and procedures put forward by the city’s labor attorney in order that the interests of both parties, the employee, and the city, are appropriately safeguarded, regardless of political considerations. That is the path this administration has chosen,” Mayhew said in an email. 

“The city’s finances are doing just fine. The city had a $1.5 million surplus for FY 20 – 21. It has seen its bond rating improved by Standard and Poor due to the successful enactment of an 8‑point plan that resulted in a fund balance that is now over $5 million dollars compared to the negative $1.7 million this administration inherited from the previous Democrat administration,” he said. ​“The budget recommended by the Mayor, which was largely adopted intact by the BoAT, which kept the mill rate steady, did not increase taxes and this followed a mill rate reduction last year.”

Mayhew’s stance on past budget problems in Derby has evolved. When he ran for treasurer and the tax board with the Democrats in 2019 he put the blame on the current administration.

THE HISTORY OF INSTABILITY IN THE DERBY FINANCE DEPARTMENT'S LEADERSHIP

Here is a history of Derby finance directors since The Valley Indy launched in mid-2009:

* 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. She was placed on paid administrative leave at the start of March.