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The state inspector general’s office said Friday that Methuen officials should rescind a pair of controversial salary pacts with a police union that has created a financial crisis threatening to bring dozens of layoffs to the Police Department.

Inspector General Glenn A. Cunha also questioned the validity of a contract that on average would have paid captains more than $400,000 per year and a second pact that sharply reduced the eye-popping sums, but still contained costly figures, according to the report.

The office found that former mayor Stephen Zanni and the Methuen City Council in 2017 likely violated state laws, failed to comply with the city’s regulations, and breached their fiduciary duties to residents through the negotiation and approval of a contract with the Methuen Police Superior Officers Association, a group of about two dozen higher-ranking officers, including sergeants, lieutenants, and captains.


The contract in question would have seen police captains make a whopping $432,295 a year. The pay bumps would have “far exceeded the Police Department’s budget,” according to state investigators.

The inspector general harshly criticized the contract, saying that funding it would “. . . constitute a waste of public funds.”

Specifically, the inspector general’s office, which prevents and detects the misuse of public funds and property, found that Methuen officials failed to analyze the financial impact of the contract as mandated under city rules. Investigators also found the City Council improperly invoked a procedural rule to allow councilors with conflicts of interest to vote on the contract. Additionally, the office found that city councilors and the former mayor “neglected their obligations as public officials to exercise care and due diligence on behalf of Methuen’s residents.”

“The big takeaway here is that we had a contract that was not affordable,” said City Councilor Steve Saba during a phone interview Friday night. “It was way too expensive.”


After the raises came to light, the office of Methuen Mayor James P. Jajuga, who succeeded Zanni, signed a memorandum of understanding that outlined smaller raises for superior officers “but still well above the level the department’s budget can support,” according to Friday’s report.

Jajuga, whose son is a police captain, did not participate in negotiations with the union that led to the memorandum of understanding.

The state office found that even though the mayor’s office has been paying the superior officers salaries outlined in the memorandum of understanding, the City Council never approved it “as required under local and state law.”

“Therefore, the contract may not be enforceable,” read a statement from the office. The inspector general’s office recommended that the “City Council seek to rescind the Superiors’ Contract and the MOU.”

Paul J. Fahey, chief of staff for Jajuga, said his office was not surprised by the report’s findings. Fahey said the mayor’s office had asked the inspector general’s office to take a look at the circumstances surrounding the contract that contained the hefty salaries. That contract, Fahey said, was never honored. “We’re reviewing it with legal counsel,” said Fahey of Friday’s report. “We think it raises a number of issues that frankly we explored previously with legal counsel.”

Captain Gregory J. Gallant, the president of the Methuen Police Superior Officers Association, said Saturday that the union negotiated in good faith with the city for the original contract and for the later memorandum of understanding.


Gallant said the memorandum of agreement included concessions from the union.

“The City Council and the mayor may have a disagreement over whether the City Council can vote on the MOU, or whether or not the MOU is acceptable to the City Council; however, from our perspective, the mayor is honoring his end of the agreement as long as he continues to pay the MOU rates,” Gallant said.

Despite the inspector general’s criticism of city officials and recommendation that Methuen officials rescind the memorandum of agreement, Gallant said he doesn’t think the report will affect the union’s agreements with the city.

Zanni, in a phone interview Saturday afternoon, said he had relied on the expertise of the city’s solicitor and auditor in hammering out the deal and worked with city attorneys during negotiations with the union, he said.

Zanni said he had not yet read the inspector general’s report, but was aware of it from news coverage. He was not interviewed by state officials for the report, he said, but will meet with the inspector general’s office later this month.

No one raised concerns about the original contract before it was signed, he said, and he would not have presented it had he known about its impact on the city’s finances.

“Not one person came to me . . . to say this contract was out of whack,” Zanni said.

The contract turmoil has triggered a political impasse that could lead to scores of patrol officers being laid off from the Police Department in the city of 50,000 on the New Hampshire border. Last month, 50 Methuen police officers, more than half the city’s force, were given layoff notices.


The predicament, according to Fahey and Methuen police Chief Joseph Solomon, stems from disagreement over the superior officers union contract that led to the Police Department being stripped of $1.8 million this fiscal year.

However, a statement from the inspector general chalks up the city’s public safety dilemma to the salaries it is paying superior officers. Because of those salaries, the report said, the department “is currently projected to exceed its budget appropriation sometime in March, and has informed 50 patrol officers of impending layoffs.”

Fahey has said that the City Council, in not approving the new agreement with the superior officers’ union, pulled $1.8 million out of the police budget for this fiscal year because the council did not get concessions from the mayor’s office. Layoffs could be avoided if the council reinstated that funding, according to Fahey.

To make matters more dire, officials said last week that an additional 21 patrol officers could receive pink slips if no action is taken. That would be all the patrol officers in the department, according to Fahey.

Fahey said a resolution on the City Council’s Monday agenda would restore funding to the Police Department.

Gallant, the union president, said the money being withheld from the police budget would fund raises for the superior officers, avoid layoffs in the Police Department, and would not result in increased taxes for city residents.


“They are attempting to use the layoffs . . . to try to force us back to the table,” Gallant said.

Saba, the city councilor, said he is interested in finding a solution that would help “move the city forward.” He said he does not want to see “one patrolman laid off.”

“In the end we’re going to have to figure out how much money we need to keep the 71 patrolmen working,” said Saba. “We still have a lot of work to do. This isn’t over.”

Danny McDonald can be reached at daniel.mcdonald@globe.com. Follow him on Twitter @Danny__McDonald. John Hilliard can be reached at john.hilliard@globe.com.