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High Cost of Saying Goodbye: Williamstown Copes with Severance Payouts
By Stephen Dravis, iBerkshires Staff
04:00AM / Monday, August 09, 2021
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Updated on July 10 to clarify comments from the interim town manager in the 14th paragraph.
 
WILLIAMSTOWN, Mass. — Town officials last week expressed confidence that Williamstown will have the money to meet its obligations from a pair of severance agreements negotiated in 2020 and 2021, but questions remain about how nearly $280,000 in liabilities went unaccounted for in the budget and were not communicated to the town's Finance Committee.
 
The liabilities stem from the severance agreements executed between the town and its former police chief and town manager.
 
The former town manager negotiated a deal with the former police chief, who left the town's service in December 2020. The Select Board negotiated a severance agreement with former Town Manager Jason Hoch that was voted in February of this year.
 
Under the former, ex-Chief Kyle Johnson will "continue to receive his regular compensation, including educational incentive and longevity payments, through June 30, 2023."
 
Under the latter, the Select Board agreed on a 4-1 vote to pay Hoch through May 31, 2022.
 
In fiscal year 2022, which runs from July 1 of this year through June 30 of 2022, those combined packages will cost the town $279,818.87, according to statistics provided by Town Hall. That is on the order of about 3.2 percent of the $8.7 million FY22 general government budget approved at June's annual town meeting.
 
Except there is no mention in the town's FY 22 budget of either severance package.
 
Instead, the budget carries line items for the police chief ($115,000, a figure which appears not to reflect the total cost of his severance package, $158,755.84) and the "interim and new manager" ($125,000).
 
Interim Town Manager Charlie Blanchard confirmed last week that those two line items in the FY22 budget are being applied to the payments for the two former town employees, even though the Select board is working to bring in a new town manager as early as this fall, in time for the FY23 budget season.
 
"You are correct that the salaries in the FY22 Town Manager and Police Chief budgets will cover the town's obligations for the FY22 cost of the severance agreements," Blanchard wrote in response to an email seeking clarification. "When I asked Jason [Hoch] how he had planned to pay for the salaries of a new Town Manager and Police Chief once they were hired, he said that he anticipated using part of the funds that generally remain unspent at the end of the year which then go into Free Cash once it is certified by the State."
 
Williamstown historically has carried a healthy sum in free cash (technically, the "General Fund Unreserved Fund Balance") because Hoch and his immediate predecessor drafted budgets using conservative estimates for revenues and worked hard to keep actual costs lower than projected. If the town ends up taking in more money than it budgeted for and spending less than it approved, the difference "falls" to free cash.
 
Blanchard said he projects the free cash to be north of $1 million, even after deducting his salary as an interim town manager and the $230,000 June's town meeting authorized to apply from free cash to the FY22 budget in order to lower the tax rate.
 
Blanchard said if the Select Board meets its current target of hiring a new town manager by the end of November and that town manager hires a new police chief even as quickly as three months into his or her term, the total expenditure from free cash, even factoring in the remainder of Blanchard's own compensation in FY22, would be about $145,450.
 
He noted that by May 2022, the new town manager could ask the Select Board and Fin Comm to approve that transfer from free cash transfers within the appropriated budget in the last two months of a fiscal year.
 
When asked whether the lack of a salary line for a new interim police chief influenced his decision to appoint an existing WPD lieutenant to the post, Blanchard said, "The main reason was that Chief Ziemba was by far the best choice, but yes I knew there was no money in the budget to hire an interim chief."
 
Finance Committee Chair Melissa Cragg said last week that she is not concerned about the plan to cover the cost of a new town manager and new police chief from free cash while paying the former officials from the FY22 budget line item designated for those posts.
 
"I'm not concerned because years of conservative financial stewardship provided the capacity to absorb last year's extraordinary events," Cragg wrote in an email replying to a request for comment.
 
The first inkling the public got about the size of the severance packages for Hoch and Johnson came on July 14 when Blanchard asked the Finance Committee to help fund FY21 shortfalls from the Finance Committee's reserve account. That night, Fin Comm members expressed surprise about the magnitude of payments owed to the former employees.
 
That led to a discussion at the ensuing July 26 Select Board meeting about the need for more communication between the two town panels.
 
Two days later, when the Select Board met at the Williams Inn, a discussion about a Finance Committee's request to set up a liaison between the Select Board and Fin Comm led to Select Board member Hugh Daley remarking that, "The budget held."
 
Later, he clarified that remark.
 
"I think I said the overall budget held," Daley wrote in an email. "Which means, the total appropriated amount for town operations was not exceeded, as far as I understand. That means, through savings in other accounts or not filling positions enough budget was available to fund the payments without further appropriation. 
 
"This is still an increase in costs. Money that would have been savings ended up being spent."
 
Daley also acknowledged that while Hoch's severance package was part of the public record in the spring, he was not clear on whether Johnson's was. Both since have been released by Town Hall.
 
While it is true that the Select Board voted on Hoch's severance agreement in a public meeting, it did so without any mention of severance payments, let alone their magnitude. The whole "discussion" of the severance agreement consumed a little more than a minute of a 93-minute meeting, and the severance document was not included in the public "packet" of meeting materials on the town's website, where public documents up for consideration for the board generally are placed.
 
In a March 10 meeting of the Finance Committee where it was reviewing, among other items in the FY22 spending plan, the police budget, Hoch directly was asked about severance packages, and his answer gave no indication of the cost.
 
About 1 hour, 56 minutes into the meeting, resident Arlene Kirsch asked, "Does the police budget include any severance funds in it that we just don't see?"
 
"No," Hoch answered.
 
Again, the severance agreement with the former police chief, which keeps him on the books through FY23, was executed in December 2020 — three months before that exchange at the Fin Comm meeting and six months before the budget was passed at town meeting. Likewise, Hoch's severance package was OK'd by the Select Board on Feb. 22, long before the FY22 budget went to town meeting.
 
Dan Caplinger was the Fin Comm member who asked the Select Board last month to increase lines of communication between the two bodies. He said last week that while there are bigger picture issues at play, it is fair to see the lack of communications about the liabilities for severance payments as an impetus for his request.
 
"I don't remember there being any conversation about [severance payments] during the budget review," Caplinger said. "Looking back and understanding the timeline, it sounds to me like whatever agreement the town made with the former police chief probably would have been set by the time we had a budget in front of us. I would think we could have discussed that in some form as we had our normal budget conversations."
 
Cragg, the Fin Comm chair, said she, Blanchard and Select Board Chair Andy Hogeland have agreed to meet monthly to make sure "we're all on the same page."
 
"While this is unlikely to change budgets or have a direct impact on the town's fiscal health, enhanced communication is, in my experience, always a good thing," Cragg said.
 
Caplinger said that in hindsight, the Fin Comm could have pressed for more information about the severance package costs, but he and Cragg agreed that none were communicated during the FY22 budget review.
 
"I certainly understand the awkwardness of the former town manager presenting a budget that may or may not have his own severance money included," Caplinger said. "I get that. That's an unusual place to be.
 
"As naive as it sounds, I thought everyone involved [with Johnson's and Hoch's departures] said, ‘The heck with it. I've had enough.' As naive as it is in hindsight, it never occurred to me there was an agreement with that extent of forward payment. It sounds silly, but it never occurred to me."
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