Wednesday, August 5, 2020 by Jo Clifton

Audit accuses parks department leaders of waste

The Office of the City Auditor released a report Tuesday accusing Parks and Recreation Director Kimberly McNeeley and Assistant Director Liana Kallivoka of giving another employee a “special privilege,” improperly using more than $22,000 worth of sick leave and wasting $39,000 of city funds.

Both McNeeley and Kallivoka strenuously defended their actions in continuing payments to a division manager who had the expertise they believed was needed to complete an assignment.

According to the audit, in November 2018, an employee who reported to Kallivoka told her he had found a new job out of state and would be leaving the city. Despite the fact that the employee had given PARD nearly six weeks notice, Kallivoka and McNeeley “wanted the employee to continue working for the city as a full-time employee after moving out of state to limit disruptions to the project” he was managing.

Kallivoka cited the man’s dedication and skill, as well as his management of “all PARD-related aspects of the $300 million, high-profile, highly complex and time-sensitive Waterloo Greenway restoration in downtown Austin.” The restoration is being carried out through a public-private partnership between the city and the Waterloo Greenway Conservancy. The former employee was responsible “for the development and management of the spending plan for PARD’s Capital Improvement Program and for the establishment of PARD’s asset management program.”

The audit says that Kallivoka and McNeeley “arranged for the employee to remotely work roughly 10 hours per week.” However, because he was expected to work 40 hours a week as a full-time employee, his supervisors allowed him “to use accrued leave, including sick leave, to make up the remaining 30 hours per week.”

This arrangement violates city sick leave policy, which prohibits using sick leave for nonmedical reasons.

“Although PARD’s HR team appears to have reviewed the arrangement, the team, including the HR manager, ultimately reported to McNeeley, PARD’s director when the arrangement was approved.” Auditors said that Kallivoka instructed the HR staff on how to record the employee’s time. In addition, Kallivoka instructed the employee not to submit a form acknowledging his other employment. Auditors noted that neither the director nor the assistant director consulted the Law Department or the city’s Human Resources Department about the arrangement.

Auditors reported that they spoke with several city attorneys about the matter, all of whom said they would have advised against the arrangement.

The audit was started because someone contacted the Office of the City Auditor with an allegation that the former parks department employee “was inappropriately allowed to stay on the city payroll” in order to reach some retirement milestone. However, the audit team, led by Chief of Investigations Brian Molloy, reported that the allegation concerning retirement benefits was untrue.

During the investigation, Kallivoka told auditors that the employee in question “was willing to continue working for the city …  as a temporary employee earning $70-$75 per hour.” But Kallivoka said she was unwilling to pay that much per hour. When auditors did the math, they found that the city would have spent a total of $16,000 if the employee had been paid $75 an hour as a temporary employee. But Kallivoka and McNeeley’s arrangement with the employee cost the city $55,000 – wasting $39,000.

Auditors concluded, “By allowing a part-time employee to improperly use more than $22,000 worth of sick leave, and costing the city at least $39,000 more than alternative arrangements, McNeeley and Kallivoka appear to have violated” two portions of the city code, one related to not allowing special privileges or exemptions, and one prohibiting waste. The code sections are 2-7-62 (I) and 2-3-5(A)(3).

Auditors did not name the former city employee in the report, Molloy said, because he did not violate the city code even though he was the beneficiary of the violations.

McNeeley and Kallivoka both filed lengthy written responses to the auditor’s findings. They emphasized their need for this particular employee with his “specialized skills, historical operational knowledge and expertise related to a complex multifaceted partner project. The sole objective for retaining the employee was continuity of operations and preservation of stability. At the time of the employee’s resignation, no other individual had the knowledge, skill or ability to achieve the objectives,” McNeeley wrote.

However, McNeeley said, “at no point (as I transition from Acting Director or after my assignment as Interim Chief Animal Services Officer) did I have knowledge of the exact implementation.” She added, “I regret not following my typical work practices.” In addition, McNeeley said she had been preoccupied by her father’s serious health issue as well as her transition into the job of Interim Animal Services Officer at the time the deal was arranged.

“Because I incrementally ceased operational oversight of PARD in January 2019, I had no reason to believe or know the specific timesheet coding related to sick leave. The timesheet coding was brought to my attention during the audit,” she concluded.

In her response, Kallivoka said the employee was unusually dedicated, well organized and an “inspiring public servant,” with “an uncommonly broad, diverse, and complex set of responsibilities.”

Kallivoka stressed the need to keep the employee on the job because “there were critical business needs, harboring potentially substantial financial losses that, in my opinion, mandated that continuity of tasks and responsibilities be maintained.”

According to Kallivoka, the department’s HR manager gave her three options for continuing the employee’s work with the city after his employment would have officially ended. One option was to rehire him on a part-time basis, but that required a mandatory 30-day separation period. The second option was to rehire him as a contractor, but that “involved a lengthy process that could take at least a couple of months to conclude,” she wrote. The third option, to keep the employee on the payroll using vacation and sick leave, was the one she chose, with the blessing of McNeeley and the HR manager.

Kallivoka said she was aware of cases where the city negotiated employment separation agreements and paid departing employees their accrued sick leave. “Given what I knew then, nothing in the HR manager’s plan sounded odd or inappropriate,” she wrote.

Kallivoka also made her own chart of payments based on her knowledge of what contractors might charge the city and the possibility that the city would lose $100,000-$600,000 in grant money if there was not continuity on the Waterloo Greenway Project. She concluded that the city did not incur a loss of $55,000, as auditors claim, but avoided losses ranging from $86,000-$619,000.

Auditors, in their response to Kallivoka, said the hourly rates that the assistant director cited in her response “are 2 to 3 times larger than those that accurately reflect the situation involving the waste at hand. In particular, Kallivoka suggested that our rate of $75 per hour was below the market rate for a contractor. However, when speaking with the employee in question, the employee said they would’ve been willing to work for the city for $50 per hour as a temporary employee without additional benefits from the beginning. This is supported by a May 2019 email from Kallivoka to PARD’s HR Manager in which she said” that she and the employee “‘agreed on $50 for his temp pay rate’ through December 2019. However, as noted in our report, Kallivoka told us the deal fell through when the employee later asked to be paid $75 per hour instead.”

Assistant City Manager Christopher Shorter, who oversees PARD, responded to the audit by saying they would work with Corporate Human Resources “to determine the appropriate next steps in this matter.”

“Rest assured,” he concluded, “our response will include a comprehensive review of city policies and procedures related to the use of sick leave and other city benefits. CMO management will communicate expectations regarding adherence with these policies/procedures to all CMO employees. At the same time, we will assess the need for strengthening controls to ensure full departmental compliance.”

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Rendering of the Waterloo Greenway by Thomas Phifer and Partners.

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Key Players & Topics In This Article

City of Austin Parks and Recreation Department: The city department responsible for the city's park system, rec centers, and associated infrastructure.

Office of the City Auditor: This city department is created by the city's charter in order to establish and ensure "accountability transparency, and a culture of continuous improvement in city operations."

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