Traverse City Record-Eagle

November 10, 2013

Ottenwess: Partly responsible for $200K gaffe

By ZACH JAY The Mining Journal (Marquette) zjay@miningjournal.net)
Traverse City Record-Eagle

---- — EDITOR’S NOTE: This is the second of a three-part series by the Mining Journal in Marquette that details the city of Ishpeming’s overpayment of health insurance premiums for 21/2 years under the watch of Jered Ottenwess, currently the city manager for Traverse City.

ISHPEMING — Former Ishpeming City Manager Jered Ottenwess and City Treasurer Anita Keto responded to a report prepared by former city manager Alan Bakalarski and released by the city in September.

It detailed the results of an investigation into the city’s overpayment of health insurance premiums for eight employees, including two who were former employees, by nearly $200,000 during parts of four fiscal years.

Ottenwess responded to a report from the city by acknowledging that he was partly responsible for the city’s overpayment of the health insurance premiums, but said it was important to look past heated emotions to find out what really happened and how to prevent it happening again.

Overpayments began in the spring of 2010 and continueduntil the end of November 2012, when they were discovered by the Ishpeming City Council during union contract negotiations.

Of the $198,805 overpaid, the city was reimbursed by the Michigan Employee Benefits Services, the city’s health insurance provider, for $42,696, which were the premiums paid for July 2012 through June.

According to the report, Keto was responsible for making sure the payments were made on time and in the correct amounts. It stated that while Keto’s previous job performance had been “excellent,” beginning in mid-2010 her work became “unsatisfactory,” characterized by a failure to complete job requirements.

Keto responded in an email by saying that the transition to a new city manager — Ottenwess — gave her an overwhelming amount of new responsibilities.

“A new city manager was hired, my workload increased and continued to increase,” she said. “I was asked to do items that previous city managers had completed.”

Keto said she spent “extensive hours” with Ottenwess “regarding budget, departments, projects, meetings, etc.” At this time she said she informed him that her work was not getting done.

“His comment was that he needed my assistance, and that was the priority at that time,” Keto said. “At the same time he wanted me to reduce (or) eliminate the extra hours that I had been working without additional pay to keep up with the work load.”

Keto also said the city switched over to “a self insurance policy through MEBS,” and that there was a follow up on insurance changes.

In April 2012 it was discovered that health insurance premiums were being paid late and several new employees had not been enrolled in the city’s health plan. Ottenwess issued Keto a written reprimand.

In response, Keto said there were missing invoices and that she felt she was being “set up to be fired.

“A number of various invoices, including engineering services, contractors, etc. that were not given to me to be processed for payment suddenly surfaced,” Keto said.

At the time of the reprimand, Ottenwess transferred the insurance enrollment and status change duties to City Clerk Jenifer Rajala.

Following the discovery in April, the report said Ottenwess remained “unaware of the full extent of the health insurance issue and failed to investigate further by reviewing monthly billings.” The report also cited “a lack of management oversight” and “no management follow-up on these issues” by Ottenwess following the written reprimand, and said there did not appear to be “any coaching or any assistance” from Ottenwess to Keto on how she might “regain her prior stellar job performance.”

There was evidence from Carol Holmgren, assistant to the city manager, that Ottenwess “did not always pass along invoices to the treasurer for processing and simply marked the invoices for filing,” according to the report.

“I think that’s totally unsubstantiated,” Ottenwess said in a phone interview. “There is no reason that I would do that. Absolutely none. And as soon as the issue came to my attention, in terms of inaccuracies with our enrollment and overpayment of premiums, I did everything I could, everything I could to fix it.”

Ottenwess — who left his position as Ishpeming’s city manager in July to take a job as city manager in Traverse City — said people get emotional when mistakes are made and that “there’s a lot of blame to go around,” which is human nature. But, he said, the most important thing was to “recognize where the failures occurred, and fix them, to be transparent about it.

“Let’s lay it out there,” he said. “What actually happened?”

When asked if part of the responsibility for the overpayments was his, Ottenwess said, “Of course. Ultimately as city manager, that’s my responsibility, and I think the report sounds like that’s accurately conveyed.”

Ottenwess said hindsight is 20-20.

“I wish I could go back and dig into all those premium issues more deeply,” he said. “We had a small staff there. ... We had one employee basically that was doing everything related to accounts payable functions, for the most part. I don’t think it’s reasonable that you can expect the city manager to review every premium.”

Ottenwess said that at the time he discovered the premiums were being paid late in April 2012, he did take a brief look at the documents, though he said he was only given an “abbreviated invoice” that didn’t include the entire roster of employees enrolled in the plan — which he said would have enabled him to “cross-check who was enrolled versus who was being paid.”

Ottenwess also said the problem arose partly because there were only two employees responsible for all of the human resources functions of the city, and the city’s accounting department is understaffed.

In December 2012, once the overpayments were discovered, Ottenwess issued a “stern disciplinary action” to Keto and began the process of changing the city’s insurance procedures and trying to recover some of the money.

Ottenwess said that he couldn’t speculate on the actions of Keto but suggested that the disciplinary action may have been a factor in her decision to retire in February.

“I had a disciplinary action plan that I think was very strict in terms of setting up expectations and what needed to be accomplished,” he said. “And she didn’t follow through on it, and she decided to retire. Draw your own conclusions.”

Keto has a different view of her retirement.

“The working relationship between the city manager and myself had changed — probably closer to the end of 2011,” Keto said. “The stress of the job was affecting my physical and mental well being — that was the main reason for retiring. I had been contemplating it for some time and had drafted a termination letter (which I kept changing the date on), and during a discussion with (Ottenwess) he made the comment that he ‘didn’t know what I did on a day to day basis.’ I (then) made the decision to leave.”

Despite the findings of the report, former City Manager Alan Bakalarski and current interim City Manager and public works director Jon Kangas both had glowing reviews of Keto’s job performance in her nearly 28 years with the city and more than 11 as treasurer.

“She was sort of a go-to person, very dependable, reliable and put in a lot of extra hours,” said Bakalarski, who worked with Keto for three and a half years when he was city manager.

“I can attest in the times that I worked with Anita, I would show up to Buck’s (Restaurant) on Friday morning for breakfast, (and) she was (at city hall) working already. And that wasn’t just on Fridays, it was every day,” Kangas said. “First one here, last one to leave. She was probably the most conscientious employee the city ever had.”

“I gave 28 years of my life to the city of Ishpeming,” Keto said. “I worked through several managers, shrinking funds and personnel and always remained dedicated to the job.”