Scottville releases investigative report that led to manager’s resignation. 

February 2, 2021

Scottville releases investigative report that led to manager’s resignation. 

By Allison Scarbrough, Editor. 

SCOTTVILLE — On Monday, Feb. 1, 2021 the Scottville City Commission accepted the resignation of City Manager Courtney Magaluk, following an investigation of why the city’s state revenue sharing application deadline was nearly missed. See related story here. Magaluk’s resignation was accepted retroactively to Jan. 18.

The following is the report filed by a special committee created by the city commission, consisting of Mayor Marcy Spencer, City Attorney Carlos Alvardo, and Acting City Manager (and Police Chief) Matt Murphy. Murphy assigned Scottville Police Detective Aaron Sailor to the task of investigating the incident. The following is Sailor’s report, including Magaluk’s responses, as obtained by MCP through the Michigan Freedom of Information Act. 

Editor’s Note: The report is presented unedited, except for personal information has been removed. 

December 21, 2020 

Mrs. Courtney Magaluk 

(personal email address removed by MCP). 

SENT VIA EMAIL 

RE: Confidential Report Committee Appointed to Conduct Investigation to determine why the timely preparation of the Revenue Sharing Report for 2020 was overlooked, who is responsible for such deficiency, if any, and to determine whether there are other reports or tasks that may not have been performed. 

The first part of the report contains the findings from Detective Sailor. The second part contains the responses sought from City Manager Magaluk. The recommendations of the Committee follow. 

DETECTIVE SAILOR REPORT 

Summary 

I (Det. Sailor) was contacted by the acting City Manager, Matt Murphy, and requested to complete an investigation related to certain tasks falling within the job description of City Manager, Courtney Magaluk. As reported by Acting City Manager Murphy, the investigation was prompted by the City of Scottville almost missing a deadline to submit an application for revenue sharing funding from the State of Michigan. 

I met with Matt Murphy and Mayor Spencer prior to beginning my investigation and was advised that in addition to the issue with the revenue sharing application, the investigation should encompass a broader spectrum of issues and tasks. They mentioned there were several other issues had come to their attention that could be a reflection of the job performance of the City Manager. I was advised that the City Manager was on maternity leave and that was expected to return back to work (from home-remotely) on a limited basis on the week beginning Monday December 14. The investigation was completed between December 9 and 17, 2020. A zoom conference meeting was scheduled for December 17, 2020 with the members of the Committee: Mayor Spencer, Acting City Manager Murphy, and City Attorney Alvarado. 

At that time, I have completed the investigation into several of the issues that have been brought to my attention by the Committee. It should be noted that this investigation was not an exhaustive investigation into all the issues identified; however, after a review of the findings, I determined that appears to be a pattern of inefficiency by City Manager Magaluk in the performance of her duties. Listed below is a summary of some of the more significant issues that were brought to the attention of this investigator and the relevant facts that were identified during the investigation of each issue. Please be advised that to conduct this investigation I did not have access to her city-issued cell phone. In addition, I was allowed access to record of other city officials (City Clerk and City Treasurer). 

Revenue Sharing Report: 

On November 6, 2020, an email was sent from the state of Michigan to City Manager Magaluk reminding her to submit the application for revenue sharing that was due on December 1st, 2020. It does not appear that any action was taken by Magaluk in response to that reminder email. 

On November 25, 2020, there is a record of a telephone call from the state of Michigan to remind City Manager Magaluk of the upcoming due date. It was determined that in response, City Manager Magaluk contacted City Treasurer Shafer and asked her to follow-up with the state to see what needed to be done. 

City Manager Magaluk started an extended maternity family leave on November 26, 2020. There is no record whether City manager Magaluk had made any provisions before her leave, to start the process to file the requested report and apply for revenue sharing. Nor there is evidence that she would have made City Treasurer Shafer aware that the report needed to be turned in before December 1, 2020, should the state had not called on November 25, 2020. 

Due to the Thanksgiving holiday, the only “working” days left to complete the application were the 25th (the day the reminder call was received) and November 30th. 

Scottville’s revenue sharing funds are approximately $47,000. Those funds are paid in four monthly increments from December to March. If the deadline would have been missed, Scottville would have potentially missed out on the first payment. 

Magaluk’s Response: It is correct that I received a voicemail on November 25, 2020 regarding a December 1, 2020 reporting deadline from the State. I was working from home that afternoon (handling a toddler that had been sent home from daycare due to fever) and could not immediately make a phone call back, so I asked the Treasurer to follow-up on my behalf. Within this e-mail to the Treasurer, I directed her to let me know what was required. I also specifically stated that I would be available to address what was needed, including working the following Monday, as needed. Sailor’s statement that my leave started on November 26, 2020 is incorrect. My approved FMLA did not start until the following Monday, November 30, 2020. Everyone in the office was also aware that my actual delivery/surgery was not scheduled until December 2, 2020, and I had made clear I was available for any last-minute questions that may come up. So, to be clear, at the time of this direction and the subsequent actions by both the Treasurer and Police Chief, I was still actively serving as City Manager. The Treasure failed to follow the direction I provided, which I believe was done deliberately. The Chief, upon hearing about the report from the Treasurer, also failed to follow up, despite my repeated urgings to contact me if needed and fact that he was not yet officially acting Manager. 

HAD THESE INSTRUCTIONS BEEN FOLLOWED, THERE WOULD HAVE BEEN NO ISSUE COMPLETING THE REQUEST. Instead, he and the Treasurer set about on trying to complete the report themselves. The Chief did finally call me late morning on November 27, 2020; I am assuming after he hit a roadblock and was already at a high level of frustration. I explained to him that I had not heard back from the Treasurer, and needed to be caught up on what was needed. While he was unwilling to reach out to me before this point, my understanding is that he reached out to the County Administrator and others seeking guidance. I again offered my help and let him know that I already planned to be in Ludington that afternoon and could come sooner as needed. Within minutes of this phone call, I sent the Chief a copy of last year’s submittal as well as a link to the blank forms so he would have these as reference and ensure that if I was not given an opportunity to contribute that we would at least have year-to-year consistency and not raise a red flag with the State. I then reached out to the Chief again early Friday afternoon, when I was on my way to Ludington, offering to stop in the office to discuss the report. I also let the Chief know that the report would require my signature. He said the form was not ready, but I knew it would take less than five minutes to complete, so I decided to stop in the office to ensure this wouldn’t cause a hold-up. 

When I arrived at the office, I then discovered that the Chief had called in the staff for the day to work on the form. I was taken aback, as it was clear I was intentionally not informed of what was happening. Also, he didn’t have the authority to do so without my knowledge as he was not yet acting Manager. When in the office, I questioned the Treasurer why she hadn’t reached back out to me on Wednesday, as requested. She told me to “take it up with Matt, he just went to his office.” I spoke with the Chief in his office and apologized that this came up, but also clearly expressed my concerns about how it was handled. I then attempted again to make sure they had everything they needed and offered to answer questions. Based on a clear unwillingness to accept my help or involvement, I left the office. I also asked to be copied or forwarded the submittal to make sure I had it for my records and have the personal knowledge that the loop had been closed with the State. This also was not provided. 

While I don’t doubt that they spent a substantial number of hours trying to complete the report, with my knowledge and experience from last year’s report, our budget, and areas of change between the years, I am confident that I could have accomplished the report in a matter of hours and would not have needed to bring in staff on what should have been their holiday. I take my commitment to the job and my staff seriously, and would have preferred to be the person working through the holiday or weekend. Not to mention, I am a salary employee, and my doing the work would not have come with the cost of overtime and staff discontent created. 

It is true that there was an exposure to potential loss if the State Revenue report had not been completed. If handled as directed, this could have been quickly closed. It should also be noted that this potential loss was overstated when presented to the Commission on December 7, 2020. At that time, it was alleged that the City could have lost the full $47,000 annual allocation. In this report, Sailor says only that the City may have lost one quarter’s payment. Reasonably, it may also have only been delayed until the report was received. 

MDOT: 

I discover that on August 15, 2019, an email was sent from the Michigan Department of Transportation to City Manager Magaluk reminding her of the deadline to file an application for a trunk line contract with the state. The trunk line contract provides the city of Scottville with reimbursement for expenditures by the city to maintain the portion of US-10 that runs through Scottville. There is no record of any action being taken in response to the email that was sent in August. 

A second email dated January 29, 2020, was received by City Manager Magaluk reminding her to submit the MDOT Trunk Line Contract application. The email in August and the email in January both explained the process for completing the application. 

There is no record the application was ever completed. While I was unable to establish whether there was a financial loss as a result of the contract not being applied for, I discover that MDOT advise City Manager Magaluk that in the event of an audit this failure to submit the contract application could result on consequences. 

I also discovered a second incident involving MDOT. The record shows an email from MDOT received by City Manager Magaluk on August 18, 2020, requesting that the city submit a Title VI certification form. The form and certification was never completed nor sent back to the state. My research shows that this is a significant issue because the Title VI form certifies that the City of Scottville is in compliance with Title VI of the Civil Rights Act of 1964, which provides a shield against possible liabilities for noncompliance. 

Magaluk’s Response: The MDOT Trunkline Contract was completed after the January reminder. I cannot provide an exact date, as the contract is supposed to remain undated per the instructions for completion. In addition, regular trunkline quarterly reports, which are the mechanism for reimbursement under this contract, are current except for the quarter that just ended last week. As everything is current, there is no lost revenue as speculated by the Sailor. In the limited time I had to review my computer files, I did not locate a signed copy of the Title VI certification form, so this could potentially be an outstanding issue. The City does have our Title VI policy in place, so it is simply a matter of completing this certification. 

Abatement (Barb King): 

The third incident investigated involves the abatement of a property in S. Reinberg. The city received a judgement in November 2019 from the 51st Circuit Court. The judgement authorized the city to conduct clean up at a property on S. Reinberg St. This property is owned by Barbara King. The judgment authorized the city to add any costs for clean-up and any attorney fees as a special assessment onto the tax roll for the property for the city to recover its costs. 

Since the judgment, the clean-up costs and attorney fees have not been added to the tax roll by City Manager Magaluk. The total costs for the cleanup and attorney fees was over $4,300.00. The city still has not recovered that money at this time and has not taken the proper steps to add the costs to the tax roll to attempt to recover the money. 

Magaluk’s Response: Although final judgement was received in November 2019, actual clean-up of the property took place in February 2020 when weather permitted. The property, at time of the abatement action and order, was subject to a Poverty Exemption from Property Taxes. Because of this, it was legally unclear as to whether or not collection could be made on a Special Assessment of this type if the property was otherwise exempt. If it was placed on the tax roll but waived, the City could lose the ability to collect this revenue. This issue was raised with the previous City Attorney (Thompson), but a final recommendation was not received before his retirement in order to place it on the Summer 2020 tax roll (the first that would have been available). This, admittedly, was not revisited for the Winter tax roll, and the issue of collection under exemption will need to be revisited with our current City Attorney. 

Resolution for Delinquent Water Bills: 

The fourth incident investigated refers to delinquent water bills. On November 19, 2020, Kay Howell of the Mason County Equalization Department contacted the city stating she had not received the special assessments for the city’s delinquent water bills. Howell was advised that city would send that information over that afternoon. 

The information was sent to the county, but Howell was advised to wait before processing it because it was believed a resolution was needed to be presented and passed by the city commission before the water bills could be added to the tax roll. City Treasurer Shafer stated she had communication with City Manager Magaluk, who told Shafer to have the tax roll information processed by the county because the resolution would be passed anyway. As a result, the information was added to the tax rolls on November 19, 2020, but a Resolution was not presented to the City Commission and passed until December 7th, 2020. The investigation shows that the City Commission was not made aware the tax roll information had already been added, prior to the time the Resolution was passed. In other words, an action which would require City Commission approval was done without said action, and when the action was taken by the Commission, it was not made aware that they were ratifying something that have already taken place. 

Magaluk’s Response: The findings of this section are almost entirely accurate, except that they have been twisted to sound like a wrong-doing, rather than an attempt to assist the Treasurer in a missed deadline and ensure that special assessments could be applied. Based on the phone call received from Howell and my follow-up discussion with the Treasurer, I instructed the Treasure to send this information as a draft to the County on November 19, 2020. I ensured that the Clerk received the copy of the Resolution and was instructed to add it to the draft agenda for the December 7, 2020 Commission Meeting. I also followed up directly with the Mayor to let her know it was coming to the next meeting. I did state that I was confident that it would be approved by the Commission, as it is routine business. The fact that the Resolution was a draft and scheduled for December 7, 2020 meeting should have been noted in the transmittal that the Treasurer made to the County, and then followed up with a signed copy of the Resolution after the meeting. It is unclear if this was done. The Treasurer could have appeared at the meeting to explain how she nearly missed the deadline and let the Commission know that a draft had been sent in advance, or asked the Chief to do the same. As I was five days past delivery of a child, I was not available to make that report myself. 

Electrical Work to City Hall: 

The fifth incident investigated involves the electric work at Scottville City Hall. City Manager Magaluk knew the electric wiring at the City Hall building is outdated and she has been informed of several electrical issues recently. In November 2019, the City Commission passed a Resolution authorizing City Manager Magaluk to get bids for electrical work and to present the bids to the City Commission so a decision could be made as to whether or not to move forward with the work. Bids were received on the same month (November 2019). No action was taken regarding these bids sought. The city continued to have electrical issues and City Manager Magaluk was reminded of the need to present the bids to the City Commission, but she has failed to do so. City Treasurer Shafer reported that one of the electricians, Mike Drier, made the comment that an insurance company may not approve a claim if there was an issue with the electrical, as the city is aware of a problem and has not resolved it. As of the date of this report the electrical work bids still not being presented to the City Commission and the electrical work still has not been completed. 

Magaluk’s Response: The allegation here is that no follow-up was taken on City Hall electrical issues. In fact, the issues have been a standing item of discussion with the Building & Grounds Committee, including discussions on 2/21/2020, 6/9/2020, and 6/30/2020. These issues were also discussed with the Mayor (Krieger) and Mayor Pro-Tem (Spencer). It is unclear who “reminded me of the need to present the bids” however this direction would generally have come out of Building & Grounds, been passed to the Finance Committee, and had action taken by the Finance Committee before the bids and a recommendation were presented to the Commission. The reason this work has been held back is two-fold. First, the most immediate electrical needs that were causing issues at City Hall (such as blowing the fuse) were actually repaired by the electrician, who ran a new line and outlet to correct the area of overload. This reduced the urgency of the full repair work. Secondly, the repair work is a large-ticket expenditure, including new electrical service to the building, new panels, and likely substantial rewiring of City Hall. This is simply not financially feasible within the existing budget, especially given the uncertainty this year with COVID and its impacts on revenue generation for the City. For these reasons, it has not moved out of Committee; not due to an inattentiveness or forgetfulness on my part. 

Copier/ Printer Contract: 

The sixth incident investigated arose as a consequence of the City changing companies for their copying/printing services. It was explained to this investigator that one of the incentives to change to a new company, was their offer to pay the remaining portion of the lease with the old company. However, 

to do that the City agreed to send a release to the old company, at which point they would send a shipping label and their printers wouldrequest be returned to them by the new company. 

City Manager Magaluk was heading this project and never sent a release to the previous company. As a result, the City of Scottville is currently paying for service for printers/copiers that they are no longer using, in addition to the printers and copiers they are using. 

At this time, the cost paid for the machines that are not in use is approximately $1,200.00 

Magaluk’s Response: This allegation is false. The request for release of the equipment was sent to MOS-Xerox and US Bank (the “old company”) on September 1, 2020. This was approximately three weeks before the new equipment was delivered to City Hall, with the intent being that the return authorization would be complete for immediate return. We did receive a bill for October, however as this was only a week or two after the equipment change-out, and we assumed that it would be the final invoice. When an additional invoice was received in November, I immediately reached out to our contact at Applied Imaging, who indicated that the companies had been slow to respond. As this was nearing my planned leave, I assigned follow-up to the Treasurer (by written e-mail) to continue to reach out to these companies until we received the needed release. I followed up at least once verbally to remind her of this task. 

Conclusion: 

As stated above, this is not an exhaustive investigation of all the issues brought up by the Committee to focus the investigation, but the investigation of the incidents above serves to establish that there is a pattern showing City Manager Magaluk’s inefficiency in performing her job duties, which has created some financial loss for the city and has led to other situations where there was an exposure to potential loss and liability to the City of Scottville. 

Magaluk’s Additional Comment: I am more than willing to admit my mistakes and shortcomings when they occur. I am not perfect. I would like to believe that a two-way honest conversation regarding what occurred with the State report would have substantially changed how this process unfolded. Unfortunately, I think there was deliberate hyperbole intended to advance personal agendas. As a result, the investigation has lacked balance. I have also been treated more like a wanton fraudster than the committed professional I strive to be. 

I think it is important to note that two of the items in this report relate to Special Assessments. While I fully accept my oversight role as City Manager, these also fall squarely within the duties of the Treasurer, including tracking relevant deadlines as established by the County or State. The Treasurer is also the staff person most directly responsible for receipt and payment/collection of the relevant invoices that need to be compiled for these assessments. My expectation is that City staff, particularly the Treasurer and Clerk, work with me as a team and clearly communicate questions they may have or concerns that arise. The Treasurer has received verbal counsel on this after it was discovered she was approaching both individual Commissioners and the previous City Manager without first directing questions to me. I have also tried to informally encourage this on an ongoing basis. When also considered with the deliberate choice not to follow my direction to report back regarding the State Revenue Sharing report, it is clear to me that she continues to fail in this regard, whether deliberate or indeliberate. 

I don’t feel that I should need to explain the complications of this last year, but I will as they are directly related to the “efficiency” that seems to largely be a focus of this investigation. COVID-19, with nearly 100 various executive orders and state actions, required delays, implementation of mandated policies, and a complete shift in the ways in which we conducted businesses and meetings. It was disruptive and time-consuming to City business, not to mention the personal burden and emotional impacts on each of us. Add to this, every state office and other agency we work with was dealing with the same struggles, further hampering normal processes, timelines, and communications. 

Added to the larger global issues, I also had to work through staff members whose personal issues directly affected our office operations. This included one staff member with frequent absences over family emergencies that spanned multiple months and another who took frequent breaks throughout the day to deal with their personal issues. Neither operated at their optimal level, even if they retained their commitment to the job. This also required me to take a much more hands-on role in front officer operations, often having to cover the front office to handle phone calls, processing of payments, and other daily operations. This directly took away from time needed for my routine tasks. 

I will also point out that the need for additional assistance to allow me time to tackle Commission goals had been discussed with the Personnel and Finance Committee, and we even proceeded to interviews for a part-time person. Unfortunately, this goal ultimately had to be abandoned based on other decisions made to significantly adjust the planned compensation of the School Resource Officer (immediately before hiring, not when it was conceptualized or budgeted), as well as a more than 25% increase in pay for our other police officer (which is an unprecedented raise for the City). I’m not arguing that these were the improper decisions given the progress made with our Police, however these decisions come with both financial and operational impacts that must be recognized. 

The City Attorney has competently done his job in ensuring the language used at the Commission meetings didn’t blatantly violate the Open Meetings Act by directly naming me in discussion, however it is a connection that anyone could readily make, made even more apparent by the media’s coverage. Regardless of the outcome of this process, this does impact me professionally. While I understand this is unavoidable to some degree, advanced warning and clear communication from the City would have been appreciated as a professional courtesy. 

More concerning, this investigation has not been conducted in accordance (or even the spirit of accordance) with the City’s Personnel Manual. Section 7.3 of the Manual discusses the way in which any potential disciplinary action should be investigated, including a requirement to “conduct the interview with the employee in such a way as to avoid embarrassment or humiliation (in private whenever possible and maintain objectivity).” As stated, I received no notice of the complaint received or the Commission’s intent to begin an investigation, and only learned of the action from reading an article from the Mason County Press published after the December 7, 2020 Commission meeting. You cannot imagine the distress this caused, moreso for the way it was handled. After speaking with the City Attorney, I received a follow-up e-mail from the Mayor informing me of the investigation, but providing no detail on how it would be handled. It is completely ridiculous that Sailor would declare his investigation complete and report his findings back to the Committee without a single question to me, or even consideration of the immediate response provided back to the Committee as soons as I learned of the complaint. 

Also related to the Personnel Manual and conduct of this investigation, I wish to express my objections to the after-the-fact changes made to my leave schedule. My FMLA leave was approved as an intermittent leave, which specifically allows for the employee to work reduced hours during the leave period as necessary to deal with the medical condition of the FMLA. It is not the City Commission’s right to make this determination; it is mine and my doctor’s. However, the City has attempted to exploit my maternity leave to force me into disciplinary unpaid leave during the course of the investigation. While the City’s Personnel Manual (Section 7.5) allows suspension as “a temporarily enforced absence from duty on a nonpay status, which may be imposed upon an employee as a penalty for significant misconduct or repeated lesser infractions” the process to enact this was not followed. Specifically this Section requires a “complete and documented report” prior to imposing suspension as a disciplinary action. You have done the opposite, instituting an unpaid suspension prior to completion of the investigation, let alone any final findings. 

This imposed leave has also hamper planned work, which in turn has generated additional doubt with the Commission. As an example, the contract for mowing services was one of the items that I had planned to tackle as soon as I started working from home on December 14, 2020, and I had communicated this specifically to Todd Sorensen in early November. As I have been kept in the dark regarding any activities at City Hall, I was not able to provide this detail to the Commission when scheduled for discussion, and instead an open-ended comment was made regarding why this hadn’t already been done. Other priorities included making sure that the City was prepared for the anticipated departure of one of our Public Works staff. This was discussed several times before my planned leave. I also alerted Chief Murphy, the Mayor, and the Chair of the Personnel Committee when this timeline became even more urgent with advertising of the position they were seeking. Similarly, I planned to tackle work that was extremely difficult with the continued daily interruptions at City Hall, namely beginning work on updates for the DDA Plan, working on a potential grant opportunity for Parks & Recreation, and creating a timeline for completion of the City’s needed Capital Improvement Plan. 

Although the investigator has attempted to allege lost revenue in these findings, most was based on false information and no actual loss was documented. The only actual risk was related to the State Revenue Sharing report, as addressed under that section of this report/response. 

I hope my responses provide additional, balanced information for your consideration. As I have separately stated to the City Attorney in writing, I request that any review of this report with the Committee remains confidential, and that any review or discussion by the City Commission be conducted in a closed session. I would also request that this be done without significant delay, as I would like final direction of the Commission and closure of the matter so that I can go back to concentrating on my healing, care of my infant, and whatever “moving forward” entails. 

End of Detective Sailor’s Report 

Submitted to City Manager Magaluk on December 21, 2020 for review, comments, and response. The response is expected to be received no later than January 4, 2021, so the Committee can prepare its recommendations to the Commission. City Manager Magaluk is advised that the Committee guarantees confidentiality of the information submitted up to the time the report is presented to the City Commission. However, if City Manager Magaluk opt for requesting the review of the report and her review, comments and responses be discussed in closed session, she must make sure is requested, otherwise, based on current OMA provisions, the City Commission cannot call to a closed session and the matter will be deliberated in open session. 

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