Great Lakes Water Authority manager says she was fired days after calling out CEO perks

A human resources manager at the publicly funded Great Lakes Water Authority has filed a whistleblower arbitration case against the agency, claiming she was fired only days after raising concerns about lucrative new retirement benefits for authority CEO Sue McCormick, and how they were handled.

The benefit netted McCormick, a former manager of the Detroit Water and Sewerage Department, more than $90,000 in additional retirement money in 2018 — an amount so large, it had to be split over two years to conform with Internal Revenue Service maximum retirement contributions by an employer.

Though other GLWA employees also received the benefit — designed for former Detroit water department employees who left city employment to come to GLWA before becoming vested in the city's pension system — McCormick's bonus under the program was, by far, the largest, said Stephanie Stevenson, a human resources manager with the agency whose job included oversight of employee benefits.

The lump-sum bonus payment into McCormick's retirement account maxed out her ability to contribute to her retirement savings paycheck-by-paycheck in 2019. That meant, under authority policy, she would miss out on employer matching money, which is based on employee contributions each pay period.

But the water authority offered up another perk, a "one-time true-up" allowing authority matches on employee contributions based on 3% of their full year's pay, regardless of pay period contributions — "for 2019 only," a Dec. 20 GLWA memo to all employees stated. Agency officials declined to state how much additional money that meant for McCormick, but said the total for 200 eligible GLWA employees together was $43,000 from the one-time true-up.

Stevenson said it seemed as if policies were being created specifically to assist McCormick with her predicament — and were being made without consulting Stevenson, who oversaw benefits.

"This was unfair. It was like an abuse of power — corrupt," Stevenson said.

"You’re just making up a benefit."

Stevenson said she expressed her concerns to her direct superiors for weeks last spring and summer. On Thursday, Sept. 5, she outlined her objections to GLWA board of directors member Gary Brown, who represents the city of Detroit.

Four days later, on Monday, Sept. 9, Stevenson was fired.

Authority officials denied that there was anything improper about their retirement benefit bonuses. They also denied that Stevenson was fired over expressing concerns about the perks, but declined to state a reason for her dismissal.

Stevenson's complaint against GLWA was filed with the American Arbitration Association, per agency policy.

"This is a classic case of a violation of the Whistleblower Protection Act," said Stevenson's attorney, Shereef Akeel of Troy.

"The whole purpose is to encourage employees to speak out and to point out something they see as irregular or wrong — whether it turned out to be wrong or not. ... They are allowed to question things that they believe are irregular, or that do not conform with acceptable conduct."

The Great Lakes Water Authority was created in 2014 under a United States bankruptcy court order issued as part of the City of Detroit's bankruptcy proceedings. It assumed operations of the Detroit Water and Sewerage Department on Jan. 1, 2016. The regional authority serves eight counties: Wayne, Oakland, Macomb, Washtenaw, Livingston, Genesee, Lapeer and St. Clair. Its 3.8 million residents served are nearly 40% of the state's population.

The "makeup retirement benefit" was an incentive program GLWA designed to attract Detroit water department employees, who had the needed skills and experience, to the new regional authority, said GLWA board president Brian Baker, who represents Macomb County.

For Detroit employees who hadn't yet worked 10 years for the city to vest in its pension program, the authority would place whatever they had built up toward that pension into a 401k-type account at GLWA.

"There was a disincentive to come over to the Great Lakes Water Authority because we weren't offering defined benefit pensions," Baker said. "So, in order to incentivize those former Detroit Water and Sewerage Department employees to come over to the GLWA, we gave them the present value of whatever pension they would lose if they weren't vested." A contracted actuary was used to determine the amounts, he said.

As prior director of the Detroit Water and Sewerage Department hired in 2012, McCormick had four years in with the city's pension program. Her larger perk via the makeup retirement benefit was based on her larger pension, which, in turn, was based on her larger salary. While McCormick's pay with the city was not immediately available, her pay with the Great Lakes Water Authority is just under $251,000 a year.

Some 150 authority employees, formerly with the city of Detroit, were eligible for the benefit, Baker said. Stevenson, in her arbitration complaint, stated 38 employees participated in the makeup contribution in October and November of 2018. The water authority employs about 1,000 people.

After learning of Stevenson's allegations from fellow board member Brown, Baker said he called for a closed-session meeting of the board "to understand these allegations." After water authority management and the agency's attorney briefed the board, "I think the board felt everything was done properly," Baker said.

"But because of the public allegations, and out of an abundance of caution, we sought a second opinion."

The board hired law firm Clark Hill PLC to evaluate the incentive program and Stevenson's allegations. In a report provided to the board Thursday, the firm found "nothing improper was done — everything was legal," Baker said. Baker did not provide the Free Press with the report, calling it "privileged and confidential."

"Employees were notified and informed (about the benefits), and the information was sufficient," he said. "It was not just a benefit for top management; it would apply for all other (qualifying) employees."

Water Authority attorney Randal Brown, in an emailed response to the Free Press, said the one-time true-up perk also didn't apply just to McCormick — "approximately 200 GLWA employees received a one-time adjustment for calendar year 2019, totaling approximately $43,000, to ensure GLWA accurately matched an employee's contribution to his/her retirement account," he said.

He said he could not provide information on how the perks augmented McCormick's retirement account. "Michigan retirement laws do not permit the disclosure of an employee's actual or estimated retirement benefits," he said.

He also declined to discuss the circumstances behind Stevenson's termination. But when asked whether Stevenson was discharged for raising concerns about the benefits, he offered a one-word response: "No."

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Stevenson said that the water authority typically had a strict expenditure process, and she was frequently called to defend the use of outside vendors and purchases. But she saw the makeup retirement benefit window extended for months, the actuary updating the amount it would cost the agency, as the authority seemed to seek out employees who could qualify for it.

"We're stewards of the public's money — we don't want to be frivolous with it," Stevenson said. "That was a statement my boss, Terri Conerway, made all the time and that she preached.

"So, in my mind, as I watched this drag on, and the number grow, and I didn't really see any good reason about why it didn't get cut off."

As the one-time true-up was discussed last spring, Stevenson said she questioned whether it was legal or in-line with agency policy.

"I didn't realize until later, but they stopped including me in meetings about this," she said. "I wasn't on emails anymore."

In August, a co-worker shared with Stevenson a copy of a draft letter explaining the one-time true-up to GLWA employees. She said she was "livid" that it had been devised without any consultation with her, as her job included oversight of employee benefits.

Later that month, Stevenson's annual performance review went from "exceeds expectations" the previous year to "meets expectations." Stevenson said she was told it was because a state grant she was pursuing fell through; she countered that the state, after initially inviting GLWA to seek the grant, later told the agency it was not eligible.

Stevenson said a co-worker who knew board member Gary Brown helped Stevenson arrange a Thursday meeting with him, where she outlined her concerns about the makeup retirement benefit and one-time true-up. The following Monday, she was fired.

"It's unfair," Stevenson said. "I care about my reputation, and for me to be terminated so abruptly, I'm sure people have questions.

"(I tell people), I was privy to information that I did not agree with professionally. And if you are in human resources, and you're trying to recruit people, trying to engage with people, retain them, if you are not aligning with the company's values, you shouldn't be there.

"If those are their values, I shouldn't be there."

Stevenson's arbitration case is awaiting a response from the water authority.

Contact Keith Matheny: 313-222-5021 or kmatheny@freepress.com. Follow on Twitter @keithmatheny.