Some Oak Bluffs contracts are found to be improper

By Aubrey Gibavic - March 8, 2007

Oak Bluffs selectmen learned last week that they did not have the authority to enter into a handful of personal service contracts they have signed with certain town employees.

The opinion came from town counsel Ron Rappaport and labor counsel Michael Gilman, in a letter the two wrote to the selectmen. The lawyers had been asked by the selectmen to review the contracts. The lawyers advised that the five employees with contracts they characterized as unauthorized be employed and paid pursuant to the town's personnel bylaw, and that that change should be implemented by July 1.

One contract, that with Paul Manzi, the town finance director, was judged to be properly entered into, in light of the two lawyers' reading of pertinent law.

Seven other contracts were judged to have been authorized, according to language in Massachusetts General Law. Three of these are no longer in force.

The Gilman/Rappaport opinion (available here) was based on their review of town contracts, payroll warrants, and performance evaluations given the employees by Oak Bluffs town administrator Michael Dutton. The lawyers also reviewed applicable state law and discussed the matter with representatives of the state Department of Revenue.

The letter comes nearly 10 months after selectman Kerry Scott first irritated several of her colleagues by contacting the Department of Revenue (DOR) independent of her selectman colleagues, regarding the town's use of personal service contracts.

"I knew about the contracts, but when I would discuss it with Casey she saw nothing to be concerned about," Ms. Scott said. "And that's why I wrote the letter." Casey Sharpe was a former town administrator.

Ms. Scott said the town has vested too much power in very few positions, and that the board of selectmen has work hard to fix that.

"Casey created a mess," Ms. Scott said yesterday. "There are so many resources available and she didn't do that, and there's a responsibility factor there."

Municipalities may hire employees using either a contract negotiated with a bargaining unit or a personal services contract. The latter allows towns to employ people independent of the terms of a union contract.

In response to Ms. Scott's criticisms, Selectman chairman Duncan Ross and selectman Greg Coogan said that skirting the board by contacting the DOR on her own was unwise. Selectman Roger Wey said Ms. Scott's action was appropriate.

The differing opinions deepened a rift, compounded by the addition of Ron DiOrio to the board of selectmen in August, that found Mr. Coogan, Mr. Ross, and then selectman Michael Dutton on one side of many issues and Ms. Scott and Mr. Wey on the other. Mr. DiOrio, supported by Ms. Scott in his campaign for selectman, replaced Mr. Dutton who became town administrator, and the rift widened.

In January, Kathleen Colleary, chief of the Bureau of Municipal Finance Law at the DOR, responded to Ms. Scott's inquiry, advising the selectmen to consult town counsel. The selectmen followed with an inquiry letter to Mr. Rappaport a month ago, asking his opinion on the various personal service contracts, and other issues such as merit pay bonuses, differing health insurance contributions and length of term questions.

After examining those contracts, the lawyers said in the letter that the town "did not have the authority to enter personal service contracts" for the positions of highway superintendent, wastewater manager, principal assessor, harbormaster, and information technology manager. The other contracts that were examined - including those for the finance director, and police and fire chiefs - were deemed appropriate under state law.

As evidence that the five contracts were entered into without having the proper authority, Mr. Rappaport and Mr. Gilman cite a town bylaw and statute that they say defines the powers of the town administrator. "There is nothing in the statute or the bylaw which empowers the Town Administrator to enter into personal service contracts with individual Town employees. Rather that power rests with either the Board of Selectmen or with specific boards who have been granted that authority by statute (or town meeting vote)," the letter reads.

Aside from the contracts for the fire chief and wastewater manager, a quorum of the board of selectmen - three - was not met, when these contracts were approved.

"We have asked for, and have not been provided with, any documentation establishing that the other contracts were authorized by a vote of the Board of Selectmen," the letter reads.

A provision in some of the personal service contracts stipulates that the town pay 100 percent of the employee's health insurance premium. The lawyers said the town's share of health insurance premiums must be the same for all employees, no matter whether they are hired according to contracts or as ordinary town employees.

"Absent specific statutory authority, no officer or town board has the authority to negotiate a contract which provides more favorable benefits to a particular employee than those offered to other employees," the letter reads.

However, in a footnote, the lawyers acknowledge that state law does provide for some employment contracts to be written to allow the town to pay a greater share of health insurance premiums than is paid by the town on behalf of other employees. But the lawyers recommended that the town consult the Massachusetts Group Insurance Commission for further clarification.

Town officials react

Various town officials responded to the letter this week, including Ms. Sharpe, who in her two years as executive secretary and four as town administrator, negotiated four of the contracts that the letter characterizes as unauthorized. The fifth contract, with the wastewater manager, had been negotiated just before she arrived, she said.

"I don't think anybody was more surprised than me," Ms. Sharpe said of the conclusions drawn in the letter. "I was obviously disappointed, but I accept their opinion, and I accept full responsibility."

Ms. Sharpe said she negotiated the contracts in good faith and said they were in the best interest of the town. She said her apologies go out to the employees whose contracts are now in question. "Those are the people that I most strongly believe that I let down. They had a right to have confidence in me as town administrator," she said yesterday. "To wake up and find out that your contract isn't worth the paper it's written on has to be devastating, especially since it's in the second term. It's to those people that I would most sincerely apologize."

When Ms. Sharpe was hired in 2002, the personal service contract for the wastewater manager, Joe Alosso, had just been negotiated, she said. She admits that she did not check with town counsel as to whether that contract was valid.

"The work was delegated to me; should I have checked? Of course. It's a rule of thumb you should never assume anything, but we had the precedent, and I believed it was in the best interest of the town," Ms. Sharpe said, referring to the later contracts whose terms she negotiated.

Ms. Sharpe recently declared her candidacy to run against Ms. Scott in next month's election. She said publication of the lawyers' letter would not dissuade her from that campaign.

Mr. Dutton, the current town administrator, said the letter still leaves some question as to whether the town can enter into personal service contracts with certain employees.

"Mass general law specifically authorizes certain contracts for certain employees, but it's very silent on other employees," Mr. Dutton said. "So that's the great unanswered question; it's never been litigated."

Mr. Dutton said some selectmen told him they distinctly remember voting to give the chairman the authority to sign employment contracts - which would do away with the need for a quorum. And, referring to a section in the letter stating that positions in the town's Classification Plan are not entitled to personal service contracts, Mr. Dutton said that language is misleading because most town employees are in the Classification Plan.

"While there are some clear-cut answers, much of what the recommendations are built upon is open to some interpretation," Mr. Dutton said. He said his primary concern is that health insurance contributions be equitable among town employees.

A lawyer by training, Mr. Dutton said he plans on meeting personally with Mr. Rappaport and Mr. Gilman soon. "My reading of this letter does not indicate that there is illegality," he said.

Mr. Ross said this week that he was surprised by the opinion in the letter and confused by its meaning. "I believe that if we can't have personal service contracts, we can still have contracts, and I think that's probably where we will end up going," he said. "The points the letter brings out, which we've been working on anyway, is trying to make things equitable, such as medical insurance and health insurance."

Mr. Ross said his hope is that the letter will not affect the day-to-day work and morale of key town employees. "I don't see us pulling the rug out from beneath anybody, nor do I want to do that," Mr. Ross said. "It's another storm that we will get through."