This is an expanded version of a previously published article.
After a flurry of activity that quickly produced two employment contracts, and included a hastily scheduled special City Council meeting and the retroactive resignation of the town's interim city manager, Atherton has new interim leadership.
Deputy City Clerk Theresa DellaSanta is now the town's interim city manager, and former manager John Danielson will continue working for the town of Atherton as an independent consultant, but for $2,000 less per month than the town appeared poised to pay him just a day before his contract was signed.
Both decisions were made by a unanimous City Council on Friday morning, Jan. 27, at a special meeting called after Mr. Danielson abruptly left his post as interim city manager. His departure was in response to a decision, unexpected by town officials, by the California Public Employees Retirement System (CalPERS) that essentially forced him to resign.
The town announced late Wednesday, Jan. 25, that the City Council would vote Jan. 27 on a proposed contract that would pay Mr. Danielson $14,000 per month, for up to three months, to help find a permanent city manager, and to serve as an adviser to the new interim manager. Mr. Danielson had been making $15,000 per month as interim city manager.
But on Jan. 27, shortly before the council met to vote on his and Ms. DellaSanta's contracts, the town issued revised proposed contracts, adjusting Mr. Danielson's salary downward to $12,000 per month.
Mayor Bill Widmer said the number was recalculated based on the estimated cost of hiring a search firm to recruit a permanent city manager; Mr. Danielson will be paid $5,000 per month to do so. The remaining $7,000 per month is to cover Mr. Danielson's work advising the new interim manager, as needed.
Ms. DellaSanta will make about $8,012 per month in her new post, about 25 percent more than her current monthly salary of about $6,410.
Mayor Widmer noted that the financial terms of both contracts represent a net gain of about $1,400 per month for the town.
The town faced an urgent situation with CalPERS' decision not to exempt Mr. Danielson, the retired city manager of Elk Grove, from a rule that prohibits public employee retirees from working for a single public employer for more than one year if he or she is to receive a pension. Mr. Danielson began working for the town on Jan. 3, 2011.
The council in December requested the exemption, with City Attorney Bill Conners advising that a provision in state law allows CalPERS to grant such an exemption. But a state statute went into effect on Jan. 1 clarifying ambiguous wording in the law, and that change clearly makes an exemption illegal, Mr. Conners explained.
Because town staff was forced to work so quickly to negotiate both contracts by the time the council met on Jan. 27, the council and public didn't receive the proposed contracts until about two hours before the meeting.
Mr. Conners said he worked much of the night to fine-tune Mr. Danielson's contract in such a way that it will pass muster with CalPERS which is important if Mr. Danielson is to continue his status as a retiree and receiving his pension.
"CalPERS has raised concerns that hiring (Mr. Danielson) back in any capacity will be a sham," Mr. Conners told the council. Therefore, he said, the contract must be solid and clearly state Mr. Danielson's role as a consultant rather than an employee.
The rush was so great that the proposed contract presented to the council that morning had already been revised. Mr. Conners read the revised "Scope of Services" section from a hand-held mobile device after rewording that section. This prompted Councilwoman Elizabeth Lewis to say, as she expressed concerns over the speed with which the council had to act, that she was apprehensive about approving a document when "the main portion of it was just read from a cell phone."
Councilwoman Kathy McKeithen had earlier presented a list of concerns with the contract, and Mayor Widmer advocated more specificity in both duties and accountability in Mr. Danielson's contract.
But Mr. Conners stressed the need to keep the contract flexible enough and still meet CalPERS' strict requirements that Mr. Danielson not in any way act in a capacity that could be construed as employment by the town.
In the end, council members acknowledged the need to act quickly, and expressed trust in Mr. Danielson to work in the interests of the town.
Why the rush?
With the town scrambling to secure the CalPERS exemption to keep Mr. Danielson on board -- only weeks before his contract was to expire -- the question arises: Were the council and the interim city manager asleep behind the wheel?
"I wouldn't say that," Mayor Widmer told the Almanac.
But one of two priorities the council gave Mr. Danielson when it hired him for 960 hours, up to 12 months, was to find a permanent city manager. The search for a manager typically takes three or more months. So why wasn't the search begun in September at the latest?
"There were other things that were very pressing that took priority with regards to the staffing and the outsourcing," Mr. Widmer said.
Indeed, the other key duty the council assigned to Mr. Danielson was fixing the town's estimated $856,000 structural deficit -- a problem the interim manager approached by outsourcing two departments and laying off 13 of the town's 16 general employees.
Complicating the situation was Mr. Danielson's medical crisis in mid-November, which kept him from work for weeks. When town officials finally came to grips with the fast-approaching end of Mr. Danielson's contract, "there was an assumption that the law allowed for an extension" to the contract, Mayor Widmer said.
Meanwhile, Mr. Danielson dodged a potential bullet by revising his date of resignation. Although the town announced on Jan. 25 that his resignation would be effective Jan. 27, that date was changed to Jan. 19.
The Almanac reported on Jan. 26 that CalPERS, in a Jan. 19 letter, stated that Mr. Danielson had to "cease employment immediately" if his status as a retiree was to remain in effect. Amy Norris of CalPERS told the Almanac that the agency must have his letter of resignation by Jan. 30, showing that he had resigned by Jan. 19.
When the town sent out the revised reports and contracts on Jan. 27, the date of resignation was not specified. The Almanac requested the resignation letter, and learned that the resignation date had been changed to meet the CalPERS requirement.