Tisbury officials object to water department pay

By Janet Hefler - March 16, 2006

Almost one year after the water commissioners for Oak Bluffs and Tisbury signed five-year contracts with the water superintendent and water systems administrator to jointly manage both towns water supply, Tisbury selectmen are questioning the terms and legality of the contracts.

In April 2005 the Tisbury water commissioners and Oak Bluffs water commissioners signed contracts with Deacon Perrotta, superintendent, and Lois Norton, administrator, that called for them to work 20 hours a week for the Tisbury Water Works and 20 hours a week for the Oak Bluffs Water District at an annual salary of $100,000 each, plus benefits.

Last week, at a special meeting between Tisbury's selectmen and water commissioners, Tisbury selectmen objected to the contracts. Selectmen said that they did not act sooner because they only recently became aware of the pay and benefits the two employees receive.

"The overriding question is the legality of a contract not signed by the board of selectmen," said Ray LaPorte, chairman. Moreover, he added, "A review of compensation is under the role of the personnel board, established by a town bylaw.

Last week both sides staked out a legal position. The water commissioners justified the pay and benefits as commensurate with the responsibilities and insisted they had the authority to set pay. Tisbury selectmen disagreed.

At the Tuesday meeting Mr. LaPorte told the water commissioners that, according to a letter dated March 3 written by Tisbury town counsel Michelle Randazzo, the contracts signed with Mr. Perrotta and Ms. Norton were not valid. David Schwab, water commission chairman, said the board would seek advice from counsel, as well.

Referencing a judgment against the county in connection with a contract dispute, Mr. Schwab cautioned the selectmen, "We've signed a contract. This could go the direction the county commissioners and airport commissioners went."

In a reassuring tone Mr. Israel told him, "I have no doubt you entered into this for the best interest of the town, but I don't agree with you. The hope is that lawyers don't get rich doing this."

Much of the selectmen's comments were directed at the cost of the contract at a time when they said they are attempting to hold the line on salary costs. "My biggest concern is I believe the terms are exorbitant, and the ripple effects of this will go across not only the town but the Island," Mr. Israel said.

Noting the multi-year terms and benefits in Mr. Perrotta's and Ms. Norton's contracts, Mr. Israel said it is doubtful the personnel board would have approved similar terms. Mr. Schwab countered that the water works sends a budget to the Finance and Advisory Committee each year that itemizes employee salaries and supplies copies of all employee contracts to the town's personnel board.

Asked to comment, William Cini, Tisbury personnel board chairman, said, "The contract comes nothing close to what we have in the town."

The contracts have not generated a similar protest in Oak Bluffs where the water district operates as a separate municipal entity, said Michael Dutton, Oak Bluffs selectman, several days after the meeting. The Oak Bluffs water commissioners authorized the contracts last spring, which were included in a budget approved by voters at the water district's annual town meeting.

Contract details questioned
Under the terms of the contracts, Mr. Perrotta and Ms. Norton each received a salary of $100,000 (split between Tisbury and Oak Bluffs) for fiscal year 2005-2006 and additional benefits more generous than those given to other town employees.

In addition to their salaries, Mr. Perrotta and Ms. Norton will receive a four percent or more annual cost of living increase starting on July 1, 2006. They also receive $10,000 in deferred compensation and $3,000 for a Roth individual retirement account (split between Tisbury and Oak Bluffs), making them the highest paid Tisbury town employees and among the highest paid public employees on the Vineyard.

Their contracts also stipulate that their salaries, compensation, and benefits cannot be reduced at any time during the five-year period unless the same reduction is applied across the board for all water system employees. Also, should they be fired for just cause, they will receive one year's salary and benefits as a lump sum severance payment.

In regard to health and dental insurance, Mr. Perrotta and Ms. Norton pay only 10 percent of their premiums, compared to 25 percent paid by other Tisbury and Oak Bluffs town employees.

Why the scrutiny?
The contract issue arose when an Edgartown official called John Bugbee, Tisbury town administrator, to ask about salary amounts for the water department superintendent and administrator. In response, Mr. Bugbee examined the contracts, prompting him to raise questions about the salaries and benefits with the selectmen.

Mr. Bugbee also asked town counsel to review the contracts. In a letter to Mr. Bugbee, Ms. Randazzo wrote that the contracts presented several legal issues, including the water commissioners' authority to hire and fire personnel, the legality of multi-year contracts not funded through town meeting appropriation, and the terms of the contracts with respect to Tisbury's town employee compensation plan.

On Tuesday, Mr. Israel told Mr. Perrotta and Ms. Norton that the contract scrutiny was no reflection on their capability or proficiency. "We should have been more alert," he said.

Mr. LaPorte suggested that the selectmen look at how the department works with the town to improve the transparency and the checks and the balances. As a start, he said, the water department's payroll function should be taken over by the town.

He also assured Mr. Perrotta and Ms. Norton, "We need you. We have no criticism of the job you're doing and what the department has done for the town."

The selectmen laid part of the blame on the water department's independent operation. In 1905, when the town of Tisbury voted to buy the water company, the Tisbury Water Works was created by charter and set up as an enterprise system. Oak Bluffs operates its system as a water district.

In the late 1980s, when the water works' employees unionized, the board of selectmen filed a declaratory judgment action against the water commissioners to determine the appropriate authority for purposes of collective bargaining. In 1988, Dukes Superior Court Judge John Paul Sullivan handed down a declaratory judgment that the selectmen have authority over the terms and conditions of employment of Tisbury Water Works employees.

However, Attorney Randazzo wrote to Mr. Bugbee, "...the decision might be construed as only applying to unionized employees and not to the non-union positions of water superintendent and administrator."

Tisbury Water Works revenues are self-generated through water use fees paid by ratepayers rather than taxpayers. Although Tisbury Water Works' employee salaries are paid by the town and must be approved at the annual town meeting, they appear as a lump sum line item on the town budget.

Rationale for generous contracts
Mr. Schwab defended the size of Mr. Perrotta's and Ms. Norton's salaries, which he said are commensurate with the jobs they do. "We have two part-time employees, and other than that, Lois and Deacon take care of everything else," he pointed out. "With them doing all they do, they have kept the budget within a 5 percent increase each year and do a major project every year, such as water pipes on Main Street and a new well."

For the purposes of the management contract, Mr. Schwab said, Mr. Perrotta and Ms. Norton could not both be named superintendent but are considered co-superintendents and co-administrators. Both are capable of running the water system, and share equal management responsibilities and the same authority over all employees, he said.

As water commissioner Ralph Packer explained, "We've learned you can't be the guy with a pick and shovel and be in the office doing the paperwork. Deacon runs the crew and engineering work, and Lois does the compliance and paperwork. One person can't really do both." In addition, they face challenging management responsibilities for future capital projects and burgeoning compliance regulations, Mr. Packer said.

"I'm not disputing the tasks ahead or the job they're doing. It's just that the terms agreed upon are a bit over the top," said Mr. Israel.

Legal issues
In her examination of Mr. Perrotta's and Ms. Norton's contracts, Attorney Randazzo wrote that the Department of Revenue holds that town employment contracts are only enforceable for one year, given that appropriations are made on an annual basis.

The Legislature provides some exceptions for multi-year employment contracts in the case of town executive officers, town accountants, school superintendents, business managers, and principals. Collective bargaining agreements can be up to three years.

Ms. Randazzo also explained Massachusetts General Law requires towns to cover the same percentage of premium costs of health insurance for all current employees, with the exception of the town manager or administrator, or the police or fire chief. The same is true for deferred compensation and Roth IRA plans.

Ms. Randazzo concluded that while some of the contracts' issues might only be resolved through legislation, others could be resolved through the passage of a local bylaw or amendment of the special act creating the water supply system.