A rapidly rising compensation package for Star Valley’s former town manager has spurred both an investigation into possible violations of the open meeting law by the Gila County Attorney’s Office and a lawsuit against the town for failure to make severance payments of $29,000.
The Gila County Attorney’s Office sent Town Manager Tim Grier a letter last Friday stating it was looking into allegations the council broke the open meeting law in the possible way it handled 12 decisions which boosted former town manager Vito Tedeschi’s compensation by 37 percent during the course of about 20 months.
That included $133,000 in salary and benefits, according to documents provided by Tedeschi. The letter from the county attorney’s office put his compensation at $164,800 at the time he resigned.
The figures in the county attorney’s record were apparently provided by someone with detailed knowledge of the negotiations and the town budget, but did not match up with figures from copies of town documents provided by Tedeschi.
The allegations sent to the county attorney in a letter suggest that then-Star Valley mayor Chuck Heron negotiated and approved many of the increases directly with Tedeschi, without full council involvement and without properly listing the contract changes on a public meeting agenda.
Tedeschi told the Roundup the town council approved all changes made to his contract, either by voting to direct Heron to negotiate the terms or by approving the contract changes at a public meeting.
On Monday, before he was aware of the county attorney’s investigation, Tedeschi filed a civil lawsuit against Star Valley for breach of contract, according to court records. The lawsuit alleges the town failed to respond to Tedeschi’s request for his severance payments.
Tedeschi said he would not comment on that lawsuit, but he told the Roundup from his Casa Grande home that the council gave Heron authority to negotiate any pay raises and allowed the mayor to sign off on changes in his contract.
Heron said he did not think he or the council violated any open meeting laws.
“As far as I am concerned, we have never violated the open meeting law,” Heron said.
However, Heron also said he was not aware of each compensation increase Tedeschi received.
Chief Deputy County Attorney Bryan Chambers’ letter to the town provided a detailed list of salary and bonus increases for Tedeschi. These included cost of living increases during the 20 months of Tedeschi’s employment and extra fees for administering the system for tickets generated by the photo enforcement cameras.
Tedeschi also changed from being classified as a town employee to an independent contractor and back again, with increases in his contract at each step.
The county attorney will now try to determine if those contract changes violate the state’s open meeting law and if they were made with or without the council’s approval.
Timeline — Vito Tedeschi hired in 2006
Tedeschi was hired in November 2006 and paid $96,720 annually in salary and benefits. The town council approved that contract. Tedeschi’s employment agreement provided for negotiated compensation increases on an annual basis or sooner.
At an April 17, 2007 council meeting, councilors authorized the mayor to discuss the results of Tedeschi’s six-month employment evaluation with Tedeschi and initiate any personnel action Heron saw fit, including a salary increase.
In May 2007, Heron authorized a salary boost of $13,000, according to town records.
The following month, Tedeschi also got a 3 percent cost of living increase approved by the council for all town employees — a $2,500 a year bump for the town manager.
In November 2007, Tedeschi went from a town employee to an independent contractor, which Tedeschi said Heron was authorized to do based on the council vote in April of that year giving Heron the authority to initiate any personnel action.
Tedeschi said he asked to switch to contractor status because it allowed him to claim living expenses and travel on his taxes. Tedeschi’s family lives in Casa Grande and Tedeschi was driving home every weekend. He rented a home in Rim Country where he stayed during the week.
“As an independent contractor I could write off temporary housing and drive time,” he said.
“According to my income tax situation, it would be better to switch to a contractor. That went on for six months, but some councilors were upset because they thought I was making more money.”
As an independent contractor, Tedeschi received salary and benefits of $120,000 a year. He also received a one-time payment for accumulated vacation and sick time that totaled $22,000.
By April 2008, Tedeschi was managing the photo enforcement tickets program, which Tedeschi and Heron agreed generated a lot of extra work. Tedeschi received $1 per ticket, which worked out to $135 for March 2008, but rose to $463 in April.
In June of 2008, Tedeschi’s contract was changed to reflect an increase of $900 per month for supervising the new photo enforcement system, which was not in place when Tedeschi signed his original employment contract.
Town records provided to the Roundup show that then-town attorney Grier, Town Clerk Sarah Luckie and Heron all signed off on this addendum on June 3, 2008. The council approved the $900 a month increase at a June 17, 2008 meeting as a consent agenda item, according to town minutes. Since the change totaled more than $5,000, council concurrence was needed.
A consent agenda allows the council to vote on a number of items with a single vote. The council approves the consent agenda at the start of each meeting, but any councilor may remove an item from the consent agenda and discuss it.
Tedeschi was paid an additional $3,000 at the time to make up the difference for the four months he was paid $1 per ticket, less the amount he was paid in March and April.
By May 2008, Tedeschi was up for his yearly review and raise. The town council meeting minutes of April 1, 2008, indicate councilors again authorized Heron to discuss the results of Tedeschi’s evaluation and initiate any personnel action, including a pay increase. Tedeschi’s salary went from $41.59 an hour to $44.79 an hour.
A month after his second raise, Tedeschi said council members Bill Rappaport and Gary Coon came into town hall because they objected to paying Tedeschi as an independent contractor. So in June 2008, Tedeschi went back to being an employee.
No records could be produced showing the council voted on that specific change, but documents indicate the council had authorized Heron to approve personnel changes earlier in the year, Tedeschi said .
Finally, in July 2008, the council approved another 3 percent cost of living adjustment for all town employees, including Tedeschi.
Town manager’s pay rate
So, what was Tedeschi actually making after the many increases, contract changes and cost of living adjustments?
Tedeschi gave the Roundup a pay stub from September 2008 showing he made more than $51 an hour, around $8,200 a month, which included his photo enforcement bonus.
That works out to $106,800 a year. In addition, he received $26,000 in benefits, which brought his compensation to $133,000 a year, a 37 percent increase from when he started.
The county attorney’s letter provided different numbers for his compensation, which included a confusing mix of both salary and benefits and bonuses as Tedeschi’s status changes from an employee to a contractor and back again.
A summary of the compensation changes provided to the county attorney and included in Chamber’s letter to the town stated Tedeschi’s compensation including benefits was about $165,000.
About a month ago, Grier and Heron started looking into the procedure for giving out raises, said Heron. The former mayor said they decided to review employee raises annually on the anniversary of the hire date and that Grier was supposed to put that policy into writing.
Heron said like other new towns, Star Valley does not yet have a procedure in place for everything.
“There were a lot of things not in place, that a lot of other towns have in place,” he said. “But I don’t know why this is coming out now.”
Heron said that his decision to resign last week had nothing to do with the impending county attorney’s investigation.
Heron said he thought Tedeschi took advantage of the system.
“There is no doubt in my mind. The more I got into it the more I knew it,” he said.
However, Tedeschi said he negotiated the various changes in his contract in good faith.
“I was just trying to work an arrangement that was beneficial to me and them and I was struggling to make household expenses,” Tedeschi said. “It was tough.”
In the future, Grier said changes to the town manager contract would be negotiated by the town manager committee and voted on by the council.