Seal Beach May Relax Rule on Nepotism : Regulations: Despite grand jury criticism, the City Council may change its policy and allow the police chief and his wife to continue working together.

About a month after the Orange County Grand Jury rebuked the city for allowing nepotism in the Police Department, the City Council on Monday will consider changing the rules to allow the police chief and his wife to continue working together.

The grand jury report said the hiring of a department head’s spouse had violated city rules and created an atmosphere of favoritism that harmed morale and intimidated some employees.

City officials have acknowledged that the allusion to nepotism in the grand jury’s report was a reference to Police Chief Bill Stearns’ wife, Michele, who was moved from animal officer to court liaison with no attempt to interview other candidates for the new job soon after Stearns became acting chief in 1987.

They added, however, that since the job change was a “reclassification,” no open recruitment was required, despite grand jury assertions that five other people appeared qualified and said they would have liked a chance to apply.

The report cited the city’s personnel rules, which state that “no husband and wife . . . shall be employed in the same municipal department.”

The proposed changes, which will go before the City Council for approval Monday along with unrelated revisions to the city’s personnel rules, relaxes the prohibition.

Under the proposed rules, two relatives would be barred from working in the same department only if one relative would directly supervise the other or if the city determined that for other reasons the potential for conflict of interest would be greater than for two unrelated persons.

Police Capt. Gary Maiten said two tiers of management, a lieutenant and a captain, stand between Michele Stearns and her husband in the department’s chain of command.

In addition, “we took the chief out of that line, and the captain in the operations division reports directly to me with regard to Michele” Stearns, City Manager Robert Nelson said.

City officials deny that the proposed changes are a response to the grand jury’s investigation. Nelson said he ordered an overhaul of the city’s personnel rules soon after he started working as city manager in 1986.

“I found that in fact the personnel rules had not been updated since 1969,” Nelson said. “I knew of a number of court cases and rulings which made those rules out of date.”

He said a strict nepotism clause may discriminate against married couples, which is an increasingly important issue as a growing number of women enter the work force.

Carol J. Duensing, who headed the grand jury committee that prepared the report on the Police Department, said she is pleased that the city appears to be moving to remove the discrepancy between its rules and department practices.

But she said such a rule change alone “appears not to resolve the conflict of interest.”

The grand jury report also said the nepotism issue had hurt morale in the department.

City Councilman Frank Laszlo said that he had not yet seen the proposed revision but that “I’m a little leery of it. According to what I see, the City Charter is saying, there is a problem here.”

The City Charter prohibits nepotism, but this does not apply to Civil Service positions. City officials have said Michele Stearns was hired and reclassified under the civil service system.

The city is conducting its own investigation of the grand jury’s criticisms of the department, which also include concerns over a high rate of stress-related disability retirements and citizen complaints alleging “harassment, favoritism and discrimination in the enforcement of the law.”

Duensing said that during her one-year term, which ended July 2, the grand jury received more complaints about the Seal Beach Police Department than any other issue in Orange County.