In Mill Creek, more drama at City Hall — and a budget crisis

MILL CREEK — The city manager has handed pink slips to longtime employees to offset the fiscal toll of the COVID-19 pandemic. But two temporary workers — his colleagues from past jobs who live in other states — are still on the payroll, drawing criticism from residents who are concerned about the city’s future in the face of a financial crisis.

City Manager Michael Ciaravino has laid off six employees and axed nine vacant positions. The layoffs, which came despite protests from city council members who wanted to see other alternatives, have decimated Mill Creek’s workforce of roughly 30 people, not including police officers.

City leaders also refused to bargain with a union representing some of the employees when the decision was made, the Washington State Council of County and City Employees alleged in a complaint recently filed with the state Public Employment Relations Commission.

Ciaravino has defended his decision to let the employees go, saying the city communicated openly with the union and did nothing illegal.

“The City of Mill Creek sincerely regrets that the current financial circumstances caused by COVID-19 and the City’s operational needs resulted in these layoffs,” he said in a statement.

The city manager is under growing scrutiny — not only for the layoffs but also for allowing the city’s legal costs to climb and for hiring his acquaintances.

Those two people, Interim City Clerk Naomi Fay and Interim Chief of Staff Grace Lockett, work remotely from their homes in New York and Ohio, respectively.

Fay was hired without submitting an application or resume, and her contract violates the city’s own policies, records obtained by The Daily Herald show.

The previous city clerk resigned last fall with less than two weeks’ notice, giving Ciaravino little time to fill the position, he said in an email.

The coronavirus pandemic is expected to result in a more than $2 million blow to the city’s nearly $30 million general fund budget.

Meanwhile, Mill Creek is on track to spend upwards of $1 million more than the roughly $1.1 million the city had budgeted for legal fees in 2019 and 2020, staff project. And that was before the union filed the complaint, which will add to the city’s legal bills.

The city continues to defend a series of lawsuits filed by former city spokeswoman Joni Kirk, who has alleged that she was terminated in retaliation for reporting a previous city manager’s misconduct. The lawsuits also say that the city has refused to hand over related public records.

Attorneys for the city also recently negotiated a separation agreement with ex-police chief Greg Elwin, who parted ways with the city after an investigation found that he allowed a fugitive relative to live in his home and failed to report an employee’s potentially threatening comment.

In April 2018, Kirk and Elwin were two of four high-level city officials who highlighted issues with former City Manager Rebecca Polizzotto. The city cut ties with Polizzotto later that year amid reports that she misused her city credit card and bullied staff.

The city council hired Ciaravino in spring 2019, hoping his leadership would move Mill Creek past a turbulent chapter.

But now the work environment at City Hall is barely functional because the administration fails to communicate with city employees, former staffers Kim Mason-Hatt and Bill Craig told The Herald.

“There was literally zero direction from administration. Zero communication,” said Mason-Hatt, who worked as an administrative assistant for Mill Creek for nearly 20 years.

“Morale is at an all-time low,” she said.

Mill Creek’s current personnel and budget woes, underscored by a pattern of misconduct allegations among staff, raise questions about whether the city will be able to sustain services for its roughly 20,000 residents as the pandemic drags on.

“It can hobble along. They’re not going to be able to provide the same level of services that the residents and customers expect,” Mason-Hatt said.

Laying off longtime employees

Mason-Hatt, Craig and Engineering Technician Larry Celustka received layoff notices from Ciaravino at about 1:45 a.m. on June 10, according to the complaint filed by their union, the Washington State Council of County and City Employees.

Just hours before, city councilmembers objected to the layoffs at a meeting.

At least two of the employees, Mason-Hatt and Celustka, had been with the city for decades.

“To me, this looks like the latest example in a pattern of not really valuing city employees — and that’s led to legal costs, and inefficiencies, and more loss of staff through quitting, which comes with its own expenses,” Mill Creek resident Carmen Fisher told the council at a June 23 meeting.

Under the city government’s structure, the city manager has the authority to make staffing decisions without interference from the council, Councilman John Steckler said during an interview.

“The city council can provide an opinion,” Steckler said. “Then the city manager makes the decision — whether they want to go with that opinion or not go with that opinion. That’s their right.”

This puts the council in a “very difficult position” when the city manager makes controversial calls, such as the layoffs, Steckler said.

“No one is happy about a reduction in force,” Steckler said. “Nobody wants that. It’s terrible.”

The council, which has the power to hire and fire the city manager, will assess Ciaravino’s performance during his upcoming annual evaluation.

Ciaravino also laid off three part-time employees, the city manager said in an email to The Herald.

Another full-time city employee, Tom Rogers, was slated to be let go. But when Public Works and Development Services Department Director Gina Hortillosa “unexpectedly resigned,” Rogers was retained to help “manage the planning department,” Ciaravino said in a July 10 email to Miguel Morga, the union’s staff services director.

No police department employees were laid off; however, four empty positions are subject to a hiring freeze, said Acting Police Chief Scott Eastman.

Retaining far-away employees

Morga sought the contracts for the interim employees, Fay and Lockett, when he attempted to negotiate the layoffs with the city. The city, however, refused to provide the documents, the union complaint says.

Fay was Ciaravino’s executive assistant when he was the city manager of Newburgh, New York. Lockett was a human resources coordinator in Maple Heights, Ohio, when Ciaravino served as the city’s mayor more than a decade ago.

“The city manager stated that he’s concerned about entanglements and appearances and red flags in city contracts. Yet the direct appointment of personal acquaintances to high-paying positions doesn’t seem to raise those same concerns,” Mill Creek resident Jon Ramer told the council during the June 23 meeting. “What bothers me even more is that neither of the individuals who are filling those two positions even live in the state of Washington. The optics on this look absolutely horrible.”

Fay’s employment agreement, provided to The Herald in March in response to a records request, does not have an end date — a violation of the city’s personnel policies, which define a “temporary” employee as someone “hired to fill a position with a defined end date.” The policy also states that the length of a temporary position “will generally not exceed” six months; Fay’s offer letter, however, says that her employment will continue “until a permanent City Clerk/Public Records Officer has been appointed.”

Fay signed the employment agreement on Nov. 5, the last day for former City Clerk Gina Pfister, records show.

“While the City posted for the position, there was insufficient time to complete the full interview process because the City was in the middle of its budget process and was responding to voluminous pending public records requests pertaining to ongoing litigation,” Ciaravino said.

So, he reached out to Fay to see if she was interested.

“Fortunately, she agreed to accept the position which allowed the City to maintain continuity of those critical functions during a particularly busy time for the City,” he said.

Fay then cleared a background check that was requested and completed on Nov. 18, records show.

She is paid $40.53 an hour under the agreement.

In the past six months, Fay has helped the city respond to nearly 500 public records request, Ciaravino said. She has also prepared council meetings and agendas and performed other necessary tasks, he said.

Fay and Lockett hold essential positions, even though they have a temporary status, he said.

“Unfortunately the COVID-19 pandemic and the City’s need to work remotely has delayed our ability to resolve the status of these positions, but both Ms. Fay and Ms. Lockett remain committed to providing continuous service to our employees and the community,” the city manager said.

Allegations of refusing to bargain

Ciaravino told Morga, the union representative, in a July 2 email that the city wouldn’t consider alternatives to the layoffs, according to the union’s complaint. Ciaravino also said the city would offer the cash equivalent of three months of insurance under COBRA (the Consolidated Omnibus Budget Reconciliation Act), and indicated that each employee would be required to sign a release of liability, the union alleged.

“Refusing to bargain and refusing to provide information relevant to the Union in order to bargain constitute bad faith bargaining,” the union’s complaint states.

The city argued in a news release that the union “has no contractual right to bargain over the layoff decisions.”

“Instead,” Ciaravino stated, “under the agreement, the parties are obligated only to bargain over the effects of those layoff decisions on the individuals impacted by the decision.”

City officials provided 30 days’ notice before the layoffs took effect and spoke with union representatives over the phone multiple times during the month-long period, Ciaravino said. The city also considered the union’s proposal to instead implement furloughs, “despite having no obligation” to explore other options.

He added that the city has “arranged for a consultant to provide laid off employees with re-employment support services, including help with their resumes, and job interview coaching.”

Still, the union asserts there were better options.

“Why they were not being explored, I really don’t know. It doesn’t really make any sense to me,” said Craig, who worked as a temporary communications and marketing coordinator. “To do that to long-term employees is just mind boggling.”

Mason-Hatt, the local president for the bargaining unit, said the layoffs “unfairly targeted” union members.

“Layoffs should be the last resort after you start with all the other alternatives. If you start with layoffs, where else do you have to go?” she said. “That’s like cutting off your hand if you have a hangnail.”

Making up for a budget shortfall

The city is bracing for a $3.1 million shortfall in 2020 compared to 2019. More than $2 million of that is expected to come from the city’s general fund of roughly $30 million, city Finance Director Jeff Balentine said at the June 9 city council meeting.

Those projections, based on a snapshot of sales tax data, are very preliminary, Balentine cautioned.

During a hiring freeze, the city saved another $1.2 million by cutting the nine vacant full-time positions.

City staff also plan to eliminate some discretionary contracts to reduce expenses by $260,000 more.

As of May 26, the city’s biennial budget for legal fees in 2019 and 2020 was about $1.13 million. But the city had already spent $1,163,000, Balentine said at a council meeting that night. He has estimated that, by the end of 2020, the city could spend $1 million or so more on attorneys.

“This is just getting to be too much — it’s an obscene amount of money,” Mayor Pam Pruitt said at the meeting, adding that the city manager will be “looking at options” of reducing those expenses.

Ciaravino blamed the rising legal costs, in part, on the hundreds of public records requests.

“Because many of the public records requests relate to potential or ongoing litigation, the City’s legal counsel has been involved in the process to protect the City’s legal interests and applicable privileges,” he said in an email.

He noted that The Herald submitted eight requests.

“The time to locate, assemble, and provide these records do come at a rather high cost to the City,” he said. “Although the City has not adopted a policy requiring requesters to pay for the responsive records, it may need to reconsider that policy in light of the voluminous requests and the City’s budgetary constraints.”

Rachel Riley: 425-339-3465; rriley@heraldnet.com. Twitter: @rachel_m_riley.