Two new pacts emerge as Whitmer defends separation deals

Lansing — Michigan Gov. Gretchen Whitmer's administration reached separation agreements with at least three departing state officials, a practice the Democratic governor defended Tuesday as Republicans vowed to investigate as an abuse of taxpayer money.

Steve Gray, the former director of the state Unemployment Insurance Agency, and Sarah Esty, who served as a deputy director while Robert Gordon led the Michigan Department of Health and Human Services, reached separation deals with the state in addition to a pact with Gordon.

Gray received $85,872 as part of his deal with the state when he resigned on Nov. 5, according to a document released Tuesday night by the Michigan Department of Labor and Economic Opportunity. He resigned after months of record jobless filings and complaints about his agency's ability to handle them. 

Like the agreement with Gordon, Gray's deal also requires both he and the state "maintain confidentiality" regarding his employment and his departure.

According to Esty's agreement, which was dated Jan. 29 and doesn't include a confidentiality pledge like Gordon's, she received four weeks of pay while on "administrative leave" from Jan. 31 through last Friday.

Four weeks of pay for Esty would amount to about $11,600. The acknowledgment of her agreement came a day after The Detroit News reported Gordon, who abruptly stepped down on Jan. 22, agreed to a $155,506 deal with Gov. Gretchen Whitmer's administration that required the two sides to maintain confidentiality about the circumstances that led to his departure.

The pacts, which were reached quietly and released only under media scrutiny, undercut Whitmer's campaign promises of transparency. On Jan. 3, 2019, two days after taking office, the governor said state government must be "open, transparent and accountable."

It remains unclear how many have been reached during her tenure but Whitmer defended the arrangements Tuesday. The governor argued separation agreements are used often in the public and private sectors when someone leaves a leadership position. Experts have said they are used less frequently in government. 

"Due to the nature of the agreement, there's not a lot more that I can say on the subject," Whitmer said. "However, I do want to say this: There were not any improprieties with Director Gordon’s work.

"It’s simply that he tendered his resignation. And I accepted it.”

Asked about claims the severance pay was "hush money," Whitmer responded, "I really bristle at that characterization."

Esty didn't respond to a request for comment. But under the terms of her deal, the state agreed to provide a "neutral reference" when potential employers asked about her, and Esty gave up any potential legal claims she could make against the state.

Gordon, who joined the Whitmer administration in January 2019, had been a central figure in Michigan's response to COVID-19, a virus linked to 15,534 deaths in the state. The News obtained Gordon's separation agreement through an open records request. The arrangement spurred criticism about the use of taxpayer funds and growing calls for investigation.

The former health director, who had remained quiet since his departure, posted a four-paragraph statement on social media after Whitmer's Tuesday press conference. He revealed that his father, Alan, died on Saturday.

"I’ve served in government a long time, and I believe that elected chief executives need to make final decisions about policy with confidential advice," Gordon said. "They also need to be comfortable with their agency heads.

"Since the pandemic began, many leadership changes have happened in other states. It’s no surprise they would happen in Michigan."

Rep. Steven Johnson, R-Wayland, chairman of the House Oversight Committee, said Tuesday that House Republicans are having discussions about subpoenaing Gordon to testify before the panel. The fact that Gordon wasn't the only health official who received a separation agreement "highlights the need for more transparency," Johnson said.

The Oversight Committee is planning later this week to consider legislation to expand Michigan's open records law to encompass the Legislature and governor's office. Johnson said the committee also plans to examine Whitmer's use of separation agreements. The deals should be put out in broad daylight because they use taxpayer dollars, he contended.

"There has been no transparency from this administration," Johnson said at a Tuesday afternoon Republican press conference. "They have failed the people of the state of Michigan."

A Senate committee plans to press Elizabeth Hertel, the new director of the Department of Health and Human Services, for more answers during a Thursday advice and consent hearing, said Sen. Jim Runestad, R-White Lake Township.

Other separation deals

Whitmer's office announced Gray's resignation on Nov. 5. He was previously the director of Michigan Law's Unemployment Insurance Clinic and has spent much of his legal career helping get people financial assistance.

Gray, who didn't immediately respond to a request for comment, left his job with the state after unemployment surged because of the pandemic and the rush overwhelmed the state's online filing system last year, leaving some residents waiting months for their benefits. A state-commissioned report by Deloitte found in November that the state's attempts to speed unemployment payments — including personnel moves, policy changes and technological shortcuts — likely exposed the system to fraud amounting to "hundreds of millions" of dollars.

Jason Moon, spokesman for the Michigan Department of Labor and Economic Opportunity, acknowledged the department had an agreement with Gray but said the document would only be released through a Freedom of Information Act request.

As for Esty, she was one of Gordon's top aides, working as the senior deputy director of policy and planning administration for the Michigan Department of Health and Human Services. She made $151,620 in 2020, according to a database of state government salaries.

A close ally of Gordon, Esty previously worked as a consultant focusing on health care and government projects before joining Gordon's team at the department, according to her official state biography. She also studied at Yale University, where the former director got his law degree.

According to a biography page on the website of the University of Michigan law school, where Esty serves as a lecturer, her duties at the health department included overseeing "the epidemic order drafting and issuance process."

"During the COVID-19 pandemic, Professor Esty has taken on a senior leadership role for the state’s response," the website says.

The law school is paying Esty $6,000 to teach a two-credit class during the winter term, university spokesman Rick Fitzgerald said Tuesday.

Esty had been expected by some to leave the department when Gordon resigned on Jan. 22. She stepped down Friday, said Bob Wheaton, spokesman for the Michigan Department of Health and Human Services.

3 health officials depart

Gordon's resignation came less than eight hours after he signed a Jan. 22 epidemic order allowing restaurants to reopen at 25% capacity at the beginning of February. The order was announced by Whitmer at a press conference at 9:30 a.m. Gordon didn't attend the briefing.

At 7:49 a.m. Jan. 22, Esty sent Gordon an email asking if she had his "approval to sign" the order, according to messages obtained by The News. Gordon responded "yes" at 7:52 a.m.

Seven hours after sending that email, Gordon tweeted he had resigned from the Whitmer administration. Within 20 minutes, Whitmer announced she had picked Hertel, the department's senior chief deputy director for administration, to take his place.

"Robert Gordon has resigned from his position, and the governor has accepted his resignation," the press release from the governor's office announcing Hertel's promotion said about the former director.

As part of the Feb. 22 separation agreement, both Gordon and the Whitmer administration pledged not to discuss the details of the resignation "in the interest of protecting deliberations among government officials," according to the deal obtained through an open records request.

"In response to any inquiries from prospective employers, employer will state that employee voluntarily resigned," the agreement says.

Jonathan Warsh, who served as Gordon's chief of staff, also doesn't work for the department any longer, Wheaton confirmed Tuesday. Warsh's last day was in late February, the department spokesman said.

"There is no separation agreement with him," Wheaton said.

Warsh made $152,335 in 2020, according to a database of state employee salaries.

cmauger@detroitnews.com