Monday, October 15 , 2018, 5:08 pm | Fair 74º

 
 
 
 

Review Reveals Goleta Overpaid City Council Members Thousands of Dollars in Health Benefits

Noozhawk finds that Mayor Paula Perotte, Councilman Roger Aceves among those required to pay city back for an apparent accounting mistake that was overlooked for years

The Goleta City Council during a recent workshop meeting. Two members — Mayor Paula Perotte, center, and Councilman Roger Aceves, right — mistakenly and unlawfully received more benefits compensation than they should have, and were given invoices to pay the city back for “excess health insurance premium coverage.” Click to view larger
The Goleta City Council during a recent workshop meeting. Two members — Mayor Paula Perotte, center, and Councilman Roger Aceves, right — mistakenly and unlawfully received more benefits compensation than they should have, and were given invoices to pay the city back for “excess health insurance premium coverage.” (Giana Magnoli / Noozhawk photo)

[Noozhawk’s note: First in a series investigating health insurance overpayments for Goleta City Council members. Click here for the second article, and click here for the third. Click here for a related article.]

For at least six years, the City of Goleta mistakenly paid some of its council members thousands of dollars too much in health benefits — including more than $22,000 to current Mayor Paula Perotte.

In 2012, the city demanded the money back. That’s when then-City Attorney Tim Giles realized the problem: the city was paying 100 percent of its council members’ health insurance premiums — in some cases, the payments exceeded the allowance amount that the city’s rank-and-file employees were getting, which is not permitted under state law.

The overpayments occurred every year between 2007 and 2012, and there is at least one instance before that, in 2004, according to city records obtained by Noozhawk through a California Public Records Act request.

Four current and former City Council members were to receive invoices on Nov. 8, 2012, for the excess health insurance premium coverage, which totaled $32,169.68.

Former Councilwoman Jean Blois owed $110.04, former Councilman Ed Easton owed $269.04, Councilman Roger Aceves owed $9,114.44 and Perotte owed $22,676.16.

As Giles explained in a March 19, 2013, email to Aceves, obtained under the records request, “the health benefits which were provided to you prior to this year exceeded the employee allowance, thus resulting in compensation beyond what is permissible under state law. The total cost of your health benefits exceeded the allowance to employees by $9,114.44 over your term in office. Because the payments were not allowable under law, they must be repaid.”

Aceves and Easton have paid off their balances in full, and Perotte had paid $1,780 of the total as of late February — through payroll deductions of $20 each two-week pay period since 2013. Council members currently are paid $585 a month for their service.

Blois, who left the council in 2008, has not paid off what she owes, according to the records Noozhawk obtained. A handwritten note on the original invoice instructs city staff, “Do not attempt to collect. City attorney is handling. Per Tina,” referring to former city finance director Tina Rivera.

The debt remains marked outstanding in city records of the unpaid health insurance premium amounts.

City Manager Michelle Greene believes the health insurance snafu dates back to Goleta’s original City Council in 2002 or 2003. “It’s not consistent to state law, that says the City Council is not entitled to benefits above and beyond what’s entitled to employees,” she says. Click to view larger
City Manager Michelle Greene believes the health insurance snafu dates back to Goleta’s original City Council in 2002 or 2003. “It’s not consistent to state law, that says the City Council is not entitled to benefits above and beyond what’s entitled to employees,” she says. (Giana Magnoli / Noozhawk photo)

When contacted by Noozhawk, Blois said she was never told about her debt and would be happy to write the city a check. She added that she was seriously considering presenting one to the City Council during public comment at an upcoming meeting.

Paying for Premiums

Goleta has been paying for the health insurance plans of its council members apparently since it was incorporated in 2002. Municipal employees have been given a monthly allowance for health insurance premiums through the California Public Employees’ Retirement System, or CalPERS, which the city uses for its health benefits program.

“The (health insurance) program that the city offered started really soon after incorporation, once we began to hire staff and we built an insurance program,” City Manager Michelle Greene told Noozhawk. “I don’t know the exact year but I’m guessing probably in 2003.”

Greene has worked at the city since 2004, first as a management analyst, then as administrative services director before moving to deputy city manager and city manager.

The city’s insurance program gives an allowance to enrolled employees that they can use toward health, dental or vision premiums, and that amount has increased with the cost of living, she said.

“When this program was set up, for reasons I’m not aware of, the city at the time decided it would pay all the premiums for council members and not have them take the allowance,” Greene said.

“So when I got to the city that was already in place, and it was in September of 2012 that Tim Giles, our former city attorney, realized that council members’ premiums were being paid and they weren’t subject to the same allowance structure.

“It’s not consistent to state law, that says the City Council is not entitled to benefits above and beyond what’s entitled to employees,” she added.

In 2012, when the overpayments were discovered, four of the five council members were enrolled in the city’s health plan (Aceves, Easton, Perotte and Margaret Connell), and three of the four were hit with bills.

A Noozhawk review found that Mayor Paula Perotte owed the most for “excess health insurance premium coverage.” She has been paying back her debt of $22,676.16 at a rate of $20 every two weeks. “It was kind of shocking that this happened,” she says. Click to view larger
A Noozhawk review found that Mayor Paula Perotte owed the most for “excess health insurance premium coverage.” She has been paying back her debt of $22,676.16 at a rate of $20 every two weeks. “It was kind of shocking that this happened,” she says. (Giana Magnoli / Noozhawk photo)

“The City Attorney worked out repayment agreements with each of those three council members because the law is pretty clear, if the funds have been spent in error in these types of benefit programs then they need to be repaid to the city, whether it’s a council member or employee because otherwise it’s a gift of public funds,” Greene said.

Giles — who was asked by the City Council to resign earlier this year, for unknown reasons — declined to comment for this story.

Discovering the Mistake

The discovery of the overpayments came after a July 17, 2012, City Council meeting during which the council voted against second-tier benefits for city employees and decided not to make any changes to the council’s own premium payment health insurance program.

By the Sept. 18, 2012, meeting, then-City Manager Dan Singer said the council was on an allowance system for health benefits.

The premium payment system was in place for so long that no one remembers who set it up that way, but apparently no one questioned the arrangement until 2012, six years into the overpayments.

The lingering question is, why didn’t anyone catch it earlier?

Many levels of city staff members knew the council was receiving 100-percent of its premium payments, and the government code disallowing council members from getting more in benefits than employees isn’t exactly hidden. It’s the same one outlining the limits of council member salaries for General Law Cities like Goleta.

Somehow, no one put the two together for years.

Not Greene, whose previous positions in administrative services and deputy city manager included human resources duties; not Giles, who was city attorney for four years before learning how the City Council’s health benefit plan worked; not Singer, who was city manager from 2005 to 2014; not the city’s first contracted city attorney, Julie Hayward-Biggs, who served for eight years starting with the incorporation fight; and not any other city staff.

A copy of the $22,676.16 invoice Mayor Paula Perotte received for “excess health insurance premium coverage” for 2011 and 2012. Click to view larger
A copy of the $22,676.16 invoice Mayor Paula Perotte received for “excess health insurance premium coverage” for 2011 and 2012. (City of Goleta document)

“Honestly, it was a shock and what I couldn’t understand is why the previous city attorney never pointed that out, when the plan was adopted and in subsequent years,” Greene said, referring to Biggs, who is now a partner at Aleshire & Wynder LLP in Riverside.

Overpayments, with the exception of the small one for Blois, didn’t occur until 2007, according to invoices obtained by Noozhawk through the CPRA request.

The major overpayments occurred in 2011 and 2012, the years Aceves accrued $5,860.56 of his $9,115.44 debt, Easton accrued his $269.04 debt and Perotte accrued her debt of $22,676.16, according to the itemized invoices.

In 2012, when the overpayments were discovered, Aceves, Easton and Perotte were all serving on the council.

Councilman Michael Bennett also was in office at the time but the retired Santa Barbara County firefighter and battalion chief wasn’t enrolled in the city’s health plan.

Connell, who was also on the council at the time, told Noozhawk she was only enrolled in vision insurance through the city, since her primary coverage was through her husband, a retired UC Santa Barbara professor.

City Council Members Get Invoices

Among the affected council members, Perotte was enrolled in the city’s health plan for the least amount of time, but her accrued $22,676.16 debt is the largest by far.

She was first elected to the council in 2010, and has been enrolled in the city’s health insurance since 2011.

“It was shocking because at the time, you know, I had gone through budget cuts, I was working at the Community Action Commission and my program I worked with was discontinued so I had just lost my job,” Perotte told Noozhawk.

City Councilman Roger Aceves has paid back the $9,115.44 he owed the city for health insurance premium overpayments. “The staff should have known, and we should have never been placed in this situation,” he says of the oversight. Click to view larger
City Councilman Roger Aceves has paid back the $9,115.44 he owed the city for health insurance premium overpayments. “The staff should have known, and we should have never been placed in this situation,” he says of the oversight. (Giana Magnoli / Noozhawk photo)

“So yeah, it was kind of shocking that this happened.”

All the council members received confidential memos from Giles informing them of the overpayments and the fact that payment agreements had been worked out, but the affected council members weren’t named, she recalled.

“I started in 2010 and when I started with the city, the city offered me an insurance plan, and they said select the insurance plan you’d like and if you’d like to put family members on it,” Perotte said.

In 2012, “the city informed those of us who were receiving benefits that they learned the city made a mistake in offering us what they did,” she said.

“That was the first time I heard about it,” Perotte said. “And to be perfectly honest, if I had known, if I had known in advance that I wasn’t entitled to this or it would have cost me this much more or I shouldn’t have put a family member on it, I would have never selected this plan, I would never have put a family member on it.”

She arranged the payroll deduction to start paying back the debt, $20 every two weeks, and said she has no plans to alter that repayment plan.

“For me, let’s see what the future holds,” she said. “Right now I stand by the agreement that I’ve made, and we’ll talk about that when I leave.”

Perotte speculated that her debt was so high because of the plan coverage she selected and the fact she had included her daughter on it.

It was her primary insurance, she said, while some other council members — some of whom were retirees and/or covered by Medicare — used it as supplemental coverage.

A copy of the $9,115.44 invoice City Councilman Roger Aceves received for “excess health insurance premium coverage” for 2007 through 2012. Records show Aceves has paid off the debt. Click to view larger
A copy of the $9,115.44 invoice City Councilman Roger Aceves received for “excess health insurance premium coverage” for 2007 through 2012. Records show Aceves has paid off the debt. (City of Goleta document)

Perotte is still enrolled in health insurance through the city, and council members get an allowance now, the same as employees get.

“I guess that’s what was supposed to happen all along but the city was not aware,” she said. “It’s just a mistake that went from the beginning of time, supposedly, so I can’t even say how many were affected by this.

“I just know what happened to me.”

Aceves, who was first elected in 2006 and has been enrolled in Goleta’s health insurance program since 2007, got an invoice for $9,115.44.

“Our then-city attorney, Tim Giles, sent us all an email with a bill,” he recalled. “He said that we were overcharged on our insurance payments because we were only eligible to receive exactly what the employees receive and not a penny more.”

Giles asked them all to contact him to make arrangements to pay it off, Aceves said.

“We had to pay it back because his opinion was it was a violation of the state Constitution because it was more compensation than allowed,” he said.

“The staff should have known, and we should have never been placed in this situation.”

Aceves said he took no salary for a little more than a year, leaving just enough to keep a direct deposit account open, and then the city gave him a letter saying he had complied and paid off the debt.

Former Councilwoman Jean Blois learned from a Noozhawk reporter that she owes the city $110.04 for health insurance overpayments. “I would be very happy to give them $110 if they asked me, but no one has ever called or anything,” she says.
Former Councilwoman Jean Blois learned from a Noozhawk reporter that she owes the city $110.04 for health insurance overpayments. “I would be very happy to give them $110 if they asked me, but no one has ever called or anything,” she says. (Blois family photo)

He, too, said the overpayment revelation was a shock, since Singer had told him he would have all of his insurance paid for, including coverage for his family.

“I thought what a great deal that was, because as a City of Santa Barbara retired policeman, that was like $1,400 a month,” Aceves said. “So that was a no-brainer for me to have the city take it up.”

Although the bill was unexpected, he thinks Giles was right to take action.

“It made sense,” he said. “There’s no reason in the world the elected officials should be receiving more compensation than the employees in terms of health insurance.”

Aceves is also still on the city insurance, covering himself and his wife, and they receive the same allowance amount as employees do, he said.

He recalled that the overpayment discovery came at a time when several Southern California public agencies were being investigated due to overcompensation.

“When Giles caught it, I’m so glad he did because we could have received the same criticism,” he said.

Blois, who served on the City Council from incorporation through 2008, said the city never notified her of her $110 debt.

“I’d be happy to send them a check,” she said.

City staff created an invoice of $110.04 in “excess health insurance premium coverage” for former Councilwoman Jean Blois, but reportedly never notified her of the debt. Click to view larger
City staff created an invoice of $110.04 in “excess health insurance premium coverage” for former Councilwoman Jean Blois, but reportedly never notified her of the debt. (City of Goleta document)

The invoice shows the overpayment occurred in 2004.

Blois said she and her late husband were on Medicare during her time on the City Council, but she was told she also had to sign up for the city’s health plan.

She told Noozhawk she planned to call Greene about the debt and might even deliver a check for the $110.04 during an upcoming council meeting.

“I would be very happy to give them $110 if they asked me, but no one has ever called or anything,” she said.

Easton, who was enrolled in the city’s health insurance from 2009 through 2014, could not be reached for comment for this article.

Like Blois, Connell was elected to Goleta’s first City Council. She retired at the end of 2012.

Connell was enrolled in the health insurance program for at least five years, including in 2012 when the overpayments came to light. She didn’t receive a bill, according to the records Noozhawk reviewed.

She was covered through Medicare and her husband, who had retired from UCSB, but she was enrolled in vision coverage through the city, she said.

As far as she could remember, Goleta had always paid 100 percent of council members’ premiums, if they chose to enroll in a plan.

Former Councilman Ed Easton, pictured in 2014, owed the city $269.04 for health insurance overpayments, and promptly repaid it. Click to view larger
Former Councilman Ed Easton, pictured in 2014, owed the city $269.04 for health insurance overpayments, and promptly repaid it. (Noozhawk file photo)

“Well, I think that was from the beginning of the city, because I think it was a surprise to everybody when that was shown to be a problem,” she told Noozhawk.

“My understanding is whatever council members were involved in the need to address this, they worked out a repayment plan so it should not be an issue.”

Connell said she remembers asking Giles if the city could “simply draw a line under what’s happened so far and just move on, not worry about what might be owed.” She said he said the repayment was necessary.

Benefits, including retirement and health insurance, were built into council compensation, she said.

“So you just assume, you sort of assume in this case, that you’re being told the correct legal way things are supposed to be,” she said.

Connell doesn’t recall whether City Council health benefits were even an issue that came to the council in the early days of cityhood, or if it was just assumed to be part of the package.

“It’s easy to accept what’s good to you,” she said.

Bennett has never been enrolled in the city’s health insurance.

“It was never brought to the council, so I have no comment,” he said. He did note that he gets his insurance through the county Fire Department’s program and Medicare.

A copy of the $269.04 invoice former City Councilman Ed Easton received for “excess health insurance premium coverage” during his time on the council. Records show Easton paid the invoice. Click to view larger
A copy of the $269.04 invoice former City Councilman Ed Easton received for “excess health insurance premium coverage” during his time on the council. Records show Easton paid the invoice. (City of Goleta document)

Former Mayor Jim Farr, who was elected to the council in 2012, was enrolled in the city’s health insurance for his four-year term, which ended in 2016.

“I’ve always thought this issue was a peculiar one, you know,” he told Noozhawk.

“The city made this enormous mistake and overpaid on all these policies. I don’t know who was to blame for that, but I personally think someone should have been horsewhipped for it.”

Farr thinks the repayment plans are the right resolution, unless the city could forgive some of the debt because of the impact it had on some council members.

“I’m glad I wasn’t involved in that because it would have been a hit,” he said.

“They get paid $500 a month, which is not very much for the time they put in on that. My sympathy is totally with the council on this.”

Noozhawk managing editor Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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