By Dustin DuFort Petty and Lucas Day
A packet containing printed out emails, new contracts for City of East Lansing employees and more was inconspicuously dropped at the home of East Lansing Info (ELi) founder Alice Dreger.
Whoever put the packet together clearly aimed to bring attention to raises and promotions given to city employees by Interim City Manager Randy Talifarro before his departure at the end of September, though there was no statement of why the packet was being disseminated.
Among other things, the packet showcased discomfort among some department directors whose employees were scheduled to see raises and concern from Councilmember George Brookover about the impact the raises could have on city finances.
Talifarro explained to ELi his reasons for initiating the raises and promotions prior to leaving his position in September. New City Manager Robert Belleman and Finance Director Penny Wright also spoke with ELi about why they believe the raises are manageable within the city’s budget.
The packet begins with a request from Councilmember George Brookover for clarification.
The packet, mostly copies of emails between Talifarro and department directors, begins with an Aug. 17 request for clarification to the interim city manager from Brookover. The request was made on Sept. 23, four days after Council approved hiring Belleman as the new city manager.
“It is my assumption,” Brookover wrote, “that prior to your employment end date, you will be making no changes in salaries, benefits and/or job titles inasmuch as such actions would seem to possibly be in violation of the Charter, have significant budget implications without any budget amendment and/or modification by the City Council, and fly in the face of empowering the new City Manager’s ability to organize staff and salaries as he evaluates conditions.
“Such actions would further seem to complicate our existing and future collective bargaining negotiations,” he added.
Brookover closed his letter, saying, “Given this correspondence, and to the extent you may have already attempted to implement any such changes, I respectfully request that you immediately cease any such efforts.”
Brookover had copied the four other Council members and city department directors on the emailed letter.
Six days later, Talifarro responded, affirming he had made changes to some employees’ compensation and stating he had confirmed with the city attorney he had the authority to do so. Previously, Talifarro had publicly stated a salary study was necessary in East Lansing’s future, learning if the city was meeting industry standards and the salaries of its neighboring cities and townships. He had also spoken about giving raises to “those in high functioning, technical and highly competitive positions.”
“I have in the past made changes to salaries, benefits and in some instances job titles and reclassifications, while filling vacant positions,” Talifarro wrote. “This has not required Council approval. I have also made appointments during my tenure (i.e. the Interim Planning Director and the permanent Finance Director) and negotiated those contracts. I sign Blue Sheets [how supervisors report any changes in an employee’s compensation, title or employment] on a weekly (almost daily) basis as has all other City Managers. These Blue Sheets sometimes include ‘reclassifications.’ None of this has required Council action or approval. I did check with the City Attorney in advance of my actions and before your email was received. I was told these actions were within the authority of the City Manager provided it could be accomplished within budget parameters. The City Attorney will confirm this. These reclassifications can and will be efficiently managed through existing and projected vacancies. The changes will be budget neutral. I have subsequently confirmed this by the Finance Director.” (ELi reached out to City Attorney Anthony Chubb for comment but received no response.)
A forwarded email from Wright was included in the packet of papers.
“A review was completed of the information provided on the salary increases and the amount budgeted is sufficient to cover these additional,” Wright wrote. “This is due to the current number of vacancies in the Non-Union Exempt positions. As positions are filled, we will continue to monitor the budget balance.”
In his response to Brookover, Talifarro went on to say he had kept the incoming city manager abreast of his hiring and reclassification actions. In a Nov. 2 interview with ELi, Belleman said he had some knowledge of changes.
“Randy and I talked in general about some of the decisions he was making,” he said. “One of the questions I was going to ask was about these interim directors. When are you going to fill these spots? It’s important to start solidifying so people know who’s in charge and who’s responsible. That’s the conversation I had with Randy. He went through some of the changes he was making with pay bands and how some of them were being compensated.”
Belleman explained that 43 position adjustments had occurred under Talifarro with approximately $223,000 being used in those adjustments. Belleman said the unfilled positions in the city provided room for spending.
“If a position goes unfilled, that salary and benefits are available to be reallocated,” he said.
Belleman added he would only be concerned if all those positions were to be suddenly filled. He noted that raises can help protect employers like Michigan State University (MSU) and the state from poaching city employees.
In a separate phone conversation with Wright on Nov. 2, a similar comfort was expressed.
“We’re in a good position,” she said. “I looked at the impact before and have been reviewing it subsequently, and this is a good thing. There were several vacancies, as you know, for a long period of time that made these possible.
“If it becomes a concern,” Wright added, “we would address it in the budget.”
While Talifarro seemed confident in his decision to make the salary adjustments, he did raise concerns with Brookover about contacting him about his job duties. The City Charter dictates that Council act as the legislative branch of city government while staff handles day to day operations.
“I have serious concerns with your decision to communicate in this fashion directly with staff,” Talifarro wrote to Brookover. “It could be misinterpreted and may have made some reluctant to carry out the tasks assigned. Although I imagine it was not your intent, I would ask that you direct future communiques to myself and the City Attorney on this matter if need be.”
Talifarro had the authority to give raises. But some department directors were uncomfortable with the decision, timing and process.
The remainder of the thick packet of papers is almost entirely emails between Talifarro (with the city’s Human Resources Director Emily Kenney always copied) and department directors discussing salary and title adjustments for non-union, non-exempt city employees. There are also employment contracts for five directors: Wright; Kenney; Director of Parks, Recreation & Arts Director Cathy Deshambo; Director of Diversity, Equity and Inclusion (DEI) and Organizational Culture Elaine Hardy; and then-Interim Director of Prime Time Seniors Lisa Richey.
Other pages show tables of employee current and proposed classification. Each employee is in a pay band which has eight steps with each successive step leading to a raise in pay. These spreadsheets appear to have been attached to emails sent by Talifarro to department heads. They read, in part, “See attached spreadsheets with salary adjustments that are recommended for your non-union/exempt staff. These adjustments will bring some consistency throughout the organization regarding titles and job responsibilities for clarifications. Other staff should be considered at a later date as a part of a separate salary/wage study analysis conducted by a third party source.” These emails were sent on or around Aug. 15.
Responses from three concerned directors were included in the packet.
Tim Dempsey, Interim Director of Planning, Building & Development, who recently left the position for a job in Saginaw, communicated to Talifarro he “strongly disagree[s] with the decision to make these organization-wide decisions at this time.”
Dempsey gave several reasons for his opposition, including Talifarro’s interim status, potential public relations backlash, negative financial impacts and the possibility that “the next round of bargaining is going to be extra challenging once union membership is aware of changes.”
“[The city] continues to face strong financial headwinds,” Dempsey wrote, “including significantly underfunded pension funds, OPEB [other post-employee benefits] liability, unfunded capital improvement needs, and ongoing inflationary pressures…Do we truly have the resources necessary to avoid negatively impacting the number of positions and meet the City’s other obligations, especially if the economy hits a downturn?”
Acting Director of the Department of Public Works Ron Lacasse wrote to Talifarro with reservations about the budgetary impacts the changes could bring. (Since the email communications, DPW Director Scott House has returned from military duty and Lacasse has returned to his position as Deputy Director.)
“I have concerns based on City Council’s discussion regarding past ARPA bonuses [American Rescue Plan Act payments made to city staff],” he wrote. “During those meetings, Council had finance go back to get more precise on what bonuses would ultimately cost and they seemed very concerned on that point. I want to make sure City Council is aware of proposed changes and the impact on the FY24 budget and beyond.”
Lacasse went on to state his desire that Council and residents be made aware of the changes.
Talifarro responded by expressing confidence in the city’s ability to absorb the raises and affirming he is able to give the raises without Council approval. Talifarro also seemed surprised about Lacasse’s resistance to the raises.
“I am somewhat confused as virtually all of the DPT suggestions are consistent with the recommendations you made directly to me in our discussions,” Talifarro wrote. “You indicated you were having difficulty recruiting and retaining staff. I shared with you at that time that I was reluctant to look at individual positions, employees or departments because of the problems that might present. It was in part for this reason, I settled on all Non-Union/Exempt positions for consideration.”
Lacasse responded to Talifarro by apologizing and assuring Talifarro he didn’t mean to cause trouble. Lacasse also confirms Talifarro’s assertion that he advocated for salary changes for “technical positions,” feeling “these positions were under compensated.”
However, Lacasse went on to explain why he is against the changes for his department.
“Two significant things have changed since we first discussed my draft DPW org chart and pay structure,” he wrote. “First, the new City Manager has been selected and is very likely to start in less than a month. I am concerned about how the timing of this will be viewed. Second, this has been expanded to virtually all Non-union/Exempt staff with some pay scales increasing significantly. While I completely understand your reasoning behind wanting to look at the issue of pay more broadly and agree that the City Manager can change pay scales of individual employees without Council approval, the monetary value of the combined changes likely exceeds the scale of the ARPA bonus.”
Lacasse continued to express concerns about the financial impact down the road and a desire to further analyze potential outcomes.
“By the time this is scrutinized, which I expect it to be, you will either be leaving soon as Interim City Manager or already on your way back to Arizona,” he wrote. “I will be the one at DPW, tasked with answering questions as to why I signed off on the increases at this time and why I did not complete a review of the impact on my budget. The new City Manager and City Council will not be able to help me with this discussion and may even have questions of their own if neither are aware until they find out through an outside FOIA request or by some other means. From what I have read about the new City Manager, fiscal responsibility and accountability are high on his list, as they should be. Also, unlike other Directors who are receiving contracts with a one-year pay guarantee if they are terminated in the first year, I am an Acting Director and have no such contract.”
“There is no team more deserving of a pay increase,” he concludes. “Unfortunately, I do not feel comfortable preparing or signing the blue sheets under these circumstances.”
A day later, Lacasse reached out to Talifarro again, highlighting his own uneven position.
“I request my acting pay to be set equal to [pay band] 228 [step] 8,” he wrote. “I believe this is a reasonable request due to the length of time I have been acting, the unknown duration of the assignment and the fact that I am also still doing my old job as well as a portion of the vacant engineering position. I also request that I be given a contract for at least one year. Scott’s absence has been extended into September so will be in the assignment for at least six months and there continues to be no clarity on if or when he may return. All permanent directors are being provided a significant measure of security for at least the next year and I respectfully ask for the same consideration given what is being asked of me.”
It’s unclear how this matter was resolved.
DeShambo also reached out to Talifarro for clarification about the raises.
“I do want to again raise the concern that, initially, you had discussed that adjustments would be limited to Admin/Coordinator type positions,” DeShambo wrote. “I had specifically raised up that I also have staff in Non-union exempt positions as Specialists and you had indicated that those positions, city wide, would be dealt with through a wage study. However, I do see that there are some specialist positions being adjusted in a variety of departments, and you indicated in Leading today that adjustments were being made to a variety of positions and included specialists in that description. I just want to raise this concern again in the event that you have reconsidered your position on adjusting specialist’s pay bands. Any insight is appreciated as I want to be able to deliver accurate and timely information to staff.”
The specialists DeShambo references – five coordinator positions within the Department of Parks, Recreation & Art – each jumped six pay bands.
Talifarro explains to ELi why he felt the raises were needed.
In ELi’s interview with Talifarro before his tenure with the city ended, we asked him about the raises and promotions. He explained why he felt they were needed.
“If part of our problem is retaining employees,” he said. “We have an environment where there is a perception that the Council may not be in one accord, there’s some uncertainty about an incoming city manager, then I would look for a job if I were at a high level position. And I would be concerned that if they made a change that someone may come in with an agenda and may make sweeping changes and those things can happen. And so, I think it was absolutely necessary for at least that first year so that they would have an opportunity to present themselves and show the city manager that they are deserving of the positions and the city manager would have the opportunity to evaluate them without being under pressure themselves. And so, I think that helped to keep some people where we were losing a lot of good people. And I really could not necessarily blame them in a world of uncertainty. That was part of the severance changes.”
He went on to say there’s a context that’s lost on the wage changes.
“In many cases, what was done was to align the pay grades,” Talifarro said. “First of all, I aligned pay grades. So you might have a person who was wearing a title of a specialist and in one department, they may be paid a pay grade of 208, and I’m just throwing out numbers, and in another department, they might be paid in a pay grade of 203. And then there’s eight steps within each grade. So what could happen…and for me, job titles should mean something. If you’re a specialist, if you’re a coordinator, if you’re an administrator, you should have some similar responsibilities and some similar duties, and also, be paid similarly.”
Talifarro said he looked at existing pay grades and found the city needed to pay more to competitively recruit.
“So we were bringing people in at higher pay grades and steps than people who had been there for long periods of time,” he said. “And that created a disparity.”
Talifarro said he and his staff looked at all of the non-union/exempt employees and then looked at the non-exempt employees.
”We started working our way back, you know, where is the top pay band level and who are they reserved for,” he said. “Working back from the assistant city manager, and then aligning directors and a certain level of pay grades for directors and then working down to deputy administrators and deputy directors and administrators and working our way back and aligning all of those kinds of pay grades.
“And I could have explained this, but I never received any of those questions privately, so I think he [Brookover] may not have gotten a full context,” Talifarro said. ”Because sometimes when you move somebody from a pay grade 203, step 8, it may be very close to a pay grade 208, step 3. So I would move them into a different pay grade and that would allow them to continue to get step increases that they may not have received for years because they’ve been here for a long term.”
The other challenge, Talifarro said, is if he had done an across-the-board pay increase, then that would have been more of a negotiation of a contract. But more importantly, “it wouldn’t have addressed the problems we would have with regards to the disparity at certain positions.”
“So, for example, engineers are at a premium,” he said. “If our engineering pay rate was really low to begin with, and then you just do a unilateral, ‘well, we’re going to increase everyone three percent, they still may not be where we need to be to be able to recruit engineers. Whereas maybe another position may not be paid appropriately and we may not be having trouble recruiting and we may increase their pay grade just because. So we were very thoughtful with it. We went through and saw where the disparities existed. We looked at what were desirable skills. We looked at ways to bring people into a different pay grade if they were misaligned. There were outliers, but most of them were people who were way below what their peers were making and they had to be brought up.”
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