Screen shot from a February MFAC meeting posted to YouTube.
DERBY — Citing a lack of progress and a lack of staff in its finance department, an advisory commission could recommend the City of Derby be placed under the watch of the state’s Municipal Accountability Review Board (MARB).
The city already meets regularly with the Municipal Finance Advisory Council, but that’s only advisory — MARB has teeth.
The move to MARB would put Derby finances under some degree of official state oversight. Example: cities designated as “tier II” must have budget projections on state aid and property tax revenues approved by MARB.
MARB has further budgetary control over “tier III” communities. MARB recently made headlines when members voted to increase state control over scandal-plagued West Haven, which is now designated as a “tier IV” municipality.
Right now, Derby is a “tier I,” which means the city meets with MFAC (the advisory commission) to go over financials.
MFAC and MARB both live within the state’s Office of Policy and Management.
The potential MARB escalation was mentioned briefly at the end of a discussion about Derby finances at a meeting Wednesday (April 20) with Mayor Rich Dziekan and members of the Municipal Finance Advisory Council (MFAC).
During the roughly 16-minute discussion, several MFAC commissioners pointed out that Derby is not making sufficient progress when it comes to fixing long-standing problems that have been pointed out repeatedly in audits.
“You’re not making the progress you need to be making. And I think we’re going to have to give some consideration to whether you stay with us at the MFAC or whether it’s appropriate to move you, recommend that you be moved to the Municipal Accountability Review Board. I wanted to make you aware of that,” said Kathleen A. Clarke-Buch, MFAC chairwoman.
The complete discussion is embedded in the media player above.
Presumably, a discussion on whether Derby needs some form of state oversight of its finances will be held at MFAC’s next meeting, scheduled for June 29.
The commissioners also questioned the accuracy of revenue estimates included in Mayor Dziekan’s proposed budget, such as supplemental motor vehicle taxes.
They also asked whether Derby has a consultant to argue with insurance companies, as the city is facing large increases in health insurance costs, a fact that seemed to jump out to members of the commission.
The commissioners on Wednesday repeatedly pointed out the city currently does not have a full-time finance director or deputy finance director in place (note: the mayor’s office reached out to The Valley Indy April 21 saying the mayor misspoke during the MFAC meeting, and that Derby has hired a full-time deputy finance director on a temporary basis).
Walt Mayhew, Dziekan’s chief of staff, has assumed the role of finance director to fill the gap, according to a report from the city to MFAC. The Derby-specific content can be found on page 20 of this 225 page report.
For reasons that have not been shared with the public, the Dziekan administration put Derby Finance Director Agata Herasimowicz on paid administrative leave seven weeks ago.
Mayor Rich Dziekan has declined to answer any questions about the finance director, citing it as a personnel issue. Derby Corporation Counsel Vincent Marino said at a public meeting that the city is legally obligated not to talk about the issue, but may do so at some point.
On March 11, the city released a letter dated March 1 showing that Herasimowicz was put on leave so the administration could investigate “possible violations of City policy and procedures.“ That letter was released after a Freedom of Information request from The Valley Indy.
The Valley Indy submitted a separate FOI request asking for access to Mayhew’s communication with Herasimowicz. The Valley Indy asked the corporation counsel on Monday for an update on the status of that request.
This week the administration didn’t answer basic questions that the public has a right to know under Connecticut law, such as whether Herasimowicz, the city’s chief financial officer, is still employed by the city.
The administration has said some sort of review or internal investigation is underway, but has so far failed to state who is conducting the investigation, if anyone. The Valley Indy reached out to the administration on Monday morning.
The Valley Indy emailed Herasimowicz on Wednesday asking for her to comment. She previously declined comment.
Shortly after Herasimowicz was put on administrative leave, the city’s deputy finance director quit. A part-time (see previous explanation earlier in story) person is now working in that position as the city searches for full-time help.
Derby’s history of audit problems and budget mistakes put them in front of the Municipal Finance Advisory Council. The issues include double counting grant money, not reconciling bank accounts with the school district, not using modern accounting software, and repeatedly not handing audits in on time. Derby Public Schools also struggles, as it has gone through a steady stream of finance directors over 10 years.
The potential of state intervention in Derby finances comes only four months after Derby’s bond rating was upgraded by S&P Global Ratings.
A Dec. 28 report from the company highlighted the city’s financial strengths, indicating the city was bouncing back from several years of financial blunders. The Dziekan administration has repeatedly said they inherited budget defects.
Tuesday’s meeting was Derby’s first time in front of MFAC since Herasimowicz was put on administrative leave. Mayhew is on vacation this week, so Dziekan appeared before the advisory commission alone.
The commission had previously expressed concerns about the constant turnover in the finance director’s position in Derby.
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.
