The Western Wayne School District may have acted improperly in 2017 when it approved a contract amendment for former Superintendent Joseph Adams to add health benefits for his wife, state Auditor General Eugene DePasquale said Monday.
Auditors found the post-employment amendment to the contract, under which Adams agreed to stay on as a consultant in exchange for health insurance for his wife, will cost the district at least $86,000 over eight years.
The audit concluded the arrangement was not negotiated in the “best fiscal interests” of the district.
“The estimated cost of the health benefits assumes that the cost of health care won’t go up, and that is just incredibly wishful thinking,” DePasquale said in a statement.
Adams, who is now a Wayne County commissioner, said Monday the costs of the additional benefits for his wife have been minimal while the work he has done to date as a consultant have resulted in a direct savings to the district of more than $179,000.
“Once all the information is provided to them, I think they might reconsider some of the things they said,” Adams said of the auditor general’s office.
Adams was hired as the Western Wayne superintendent in 2015 and served until he retired on Feb. 1, 2017.
Five days later, on Feb. 6, 2017, the school board voted unanimously to amend his contract to authorize the spousal health benefits in exchange for consulting services to be provided by the former superintendent.
However, the board never authorized a separate written contract for the consulting services, nor did the amendment reference the appointment of Adams as a consultant, the audit report said.
“Having a former superintendent act as a consultant in exchange for under-the-table health benefits without a legitimate contract is not the proper way a school district should conduct business,” DePasquale said.
Adams took exception to DePasquale’s characterization of the benefits, saying the school board acted in “good faith” on a formal motion at a public meeting.
“It was not ‘under the table,’” he said. “Nothing was hidden. It was absolutely out in the open, in the public.”
Although the state school code does not prohibit amendments to retirement clauses in superintendent employment contracts, DePasquale’s office said it believed the Adams amendment was flawed for two reasons.
First, the audit report said, it was approved five days after Adams’ retirement had taken effect, meaning the underlying contract “was arguably already nullified.” Second, even if the contract were considered valid, the added benefits may have constituted a severance or buyout option that is prohibited under the school code.
In its formal response to the audit, the district said it disagreed with DePasquale’s finding that the arrangement was not in Western Wayne’s best interests.
However, based on a recommendation in the audit report, the school board on May 7 finalized a formal consulting contract with Adams, Superintendent Matthew Barrett said.
The district also put together a reporting system to better track the former superintendent’s consulting activities, including the hours worked, the duties performed and any potential savings resulting from his work, Barrett said.
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