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Council members angry over lack of notice on salary overpayment

Thursday, May 29, 2014 by Elizabeth Pagano

Members of the Council’s Audit and Finance Committee expressed frustration and disapproval Wednesday over the city’s $239,000 overpayment to a city employee and the failure of City Auditor Kenneth Mory to tell them about it.


Mayor Pro Tem Sheryl Cole, who chairs the committee, said, “These are public funds and we didn’t have any knowledge that this was occurring, and this issue was being handled by” the city’s Law Department. “This is the first time other than through the media that this has come to light to Council.” The Austin Monitor revealed the information on its website May 14 and carried additional information May 23.


“The biggest concern is that this happened and we weren’t made aware of it,” said Cole.


The city overpaid the Emergency Services Department employee by about $239,000 beginning in 2004. In the end, the employee was required to pay back just $6,240 in a settlement made without City Council’s knowledge.


In addition, though the city returned the employee to the correct salary, he was transferred to another position in Homeland Security with a salary similar to what he was mistakenly receiving.


Council Member Bill Spelman expressed anger that he had read about it in the news story instead of being told about it by the auditor or city management.


“It seems to me that it rises to the level of something the public ought to know about, and no one told anyone,” said Spelman. “Why not?”


Mory explained that his office had received an anonymous tip about the overpayment in February 2013, and opened an investigation that same month. After other departments got involved, Mory made the decision to terminate the auditor’s portion of the investigation.


Mory accepted responsibility for not informing Council about the situation, and acknowledged that it was his job to do just that.


“It’s not that I didn’t feel the need. I just didn’t think of it at that point in time,” said Mory. “To put it bluntly, I didn’t want to waste the funds of the city. Right or wrong. whether you agree or disagree with that, it was my rationale at the time.”


“If I were to go back now, I would issue a report,” said Mory.


Other city management offered their own defense for the perceived lack of transparency.


“Because there was no fraud we could see – nothing criminal – that was the reason that we did not bring it directly to Council,” said Deputy City Manager Michael McDonald. “If we would have thought there was something along those lines, we would have absolutely brought it to Council. Because it was administrative – that was the reason it was not brought to Council.”


Cole pointed out that they often heard audits that were not “criminal in nature.”


Council Member Kathie Tovo said that since the overpayment had been brought to the attention of management and the auditor by peers of the overpaid employee, it seemed especially important that Council should have been informed about the matter. She noted . . .”We had members of our community…who frankly deserved a response back about what was going to be the disposition. And we were not able to assist them….they needed a response and we needed to be kept in the loop as well.”


In addition to the settlement, the overpaid employee was also ultimately offered a position as with Homeland Security. That position pays a base salary of $77,000, which is closer to the salary he was mistakenly getting than what he returned to after the mistake was corrected.


City management explained that the position was not a new one but one that had not been filled. That would require Council approval. Rather, explained McDonald, they “looked for an opportunity” for the employee. That involved reclassifying a vacant position.


“The employee, through no fault of his own, was accustomed to making that amount,” said McDonald. “Although it was certainly not owed to the employee – we took him back to the base salary that he needed to make – we thought it was the right thing to do.”


Accompanied by assurances that this would not happen again, Council Member Laura Morrison suggested a process that would allow Council members to review smaller settlements that the Law Department now approves without Council approval or knowledge.


It seems likely that the matter will come up again, perhaps when Council members review Mory’s performance on June 26.

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