Keith Hickey

SALEM, N.H. — Town Manager Keith Hickey has resigned from the Local Government Center’s board of directors, saying there were too many conflicts between his two positions.

Hickey’s resignation came only days after selectmen voted unanimously to join a dozen other New Hampshire communities in a battle with the center over refunds.

The New Hampshire Bureau of Securities Regulation has ordered the LGC to refund $52 million to communities, including Salem, that participated in the municipal organization’s health insurance pool for public workers and retirees.

The bureau found the LGC violated state law by improperly collecting money and retaining unnecessary surplus funds.

The organization also improperly transferred assets, subsidizing one insurance pool at the expense of the others, the bureau said.

Millions of dollars were spent on unauthorized items, according to the bureau’s report.

The controversy prompted selectmen to consider severing ties with the LGC in August 2011. Selectman Stephen Campbell accused Hickey, hired only five months earlier, of having a conflict of interest because he served on the organization’s board of directors.

Other selectmen, including former member and Chairman Elizabeth Roth, said the former Bedford and Merrimack town manager’s experience as an LGC board member was a key reason why he was hired.

Hickey, who said he has been on the board for about seven years, also served as the LGC’s vice chairman.

But shortly after becoming town manager, Hickey said, he began looking at ways to save money while improving service to the public and town employees.

That included a review of health insurance plans and a switch to those offered by companies such as Cigna because it provided better coverage for the cost.

Selectmen also agreed with Hickey’s recommendation to buy property liability insurance from another company. Salem no longer relies on LGC for any insurance coverage, making it difficult for him to continue serving as a board member, he said.

“There are too many conflicts,” he said. “My loyalty is to the town of Salem ...”

Salem and other community officials are upset that the LGC contends refunds would be limited to those enrolled when they are finally issued. The LGC appealed the bureau’s ruling to the state Supreme Court, but announced this fall it would deal with the surplus problem by giving credits against future payments.

Although Hickey said it has not been determined how much money should be refunded to Salem, Selectmen’s Chairman Patrick Hargreaves has estimated it should be about $250,000.

Hickey said he still maintains a positive relationship with the LGC, which he called a “great organization” that has advised and provided help to communities for years. He said the action taken against the LGC was politically motivated, but did not elaborate.

Hickey’s resignation was announced on the organization’s website by LGC board Chairman Tom Enright.

He thanked Hickey for his service to the LGC.

“I will greatly miss Keith’s counsel and long loyalty to LGC, and we wish him well as he continues his career in public service to local government,” Enright said.

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