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MARIETTA -- Nearly $157,000 in employee vacation and holiday payments is being questioned in an active state investigation, while a former Marietta finance chairman is warning a notice sent to the city's surety company could increase bonding costs or jeopardize future coverage.
Letters from City Council leaders identified $156,881.50 in alleged overpayments. The figure does not include uncalculated amounts related to vacation proration or questions about $68,186.37 in overtime paid to one employee.
During an Aug. 6 Marietta City Council meeting, former Councilman and Finance Committee Chairman Mike Scales told council that Auditor of State Keith Faber sent a letter June 10 to Western Surety, an insurance company for the city, concerning errors and omissions related to the city auditor's office.
Scales told council the letter put the company on notice that 19 former employees had been overpaid in their final city paychecks.
"My concern is that this letter could significantly increase the city's future bonding costs and affect its standing with creditors," Scales said.
The letter from Faber listed amounts suggested for a "Finding for Recovery of Public Monies Illegally Expended" involving 19 individuals. The individual amounts ranged from $62.60 to $8,629.17.
Scales said the surety company could request additional information about how the overpayments occurred and why the issues were not addressed sooner. He said underwriters could also examine whether other unresolved financial problems exist.
If coverage was to be denied, Scales said the city could have difficulty securing a replacement bond or be forced to consider self-insurance, creating additional financial risk.
Scales urged council to hire a forensic accountant to conduct an independent review of the city auditor's office dating to 2016.
"This step would demonstrate to the bonding company, creditors and the public that City Council is taking the matter seriously and is committed to correcting the problem," Scales said.
City Law Director Paul Bertram confirmed the state investigation remains active and is “part and parcel to” the unfinished 2024 audit.
Finance Committee Chairman and Councilman Jon Grimm said the city was initially told it could expect the audit by the end of September 2025. Officials were later told that it could be completed by the end of that year due to the investigations. Nearly a year after the first projected completion date, the city has not received the audit or been given another timeline, Grimm said.
"I'm very frustrated with the auditor's office -- extremely frustrated with the auditor's office," Grimm said.
Grimm said the delay could affect the interest rate the city pays when it borrows money. One of the largest upcoming projects is a water treatment plant expected to cost nearly $40 million.
"When you're talking about a nearly $40 million project, that adds up to a lot of money just in that," Grimm said. "Every time you hear us talk about borrowing money, it will make that more expensive."
Council members have been aware of concerns to some degree for the past few years.
Scales pointed to the city's response on page 145 of its 2023 audit, which said, "Both the council and the city administration are hopeful that all funds paid outside of the authority of the Marietta Codified Ordinances will be promptly recovered through established legal processes."
The investigation stems in part from a March 28, 2024, letter in which Council President Susan Vessels and then-Employee Relations Committee Chairwoman Cassidi Shoaf referred seven areas of concern to Faber's Special Investigations Unit.
The letter alleged the city paid a total of $69,253.24 in vacation benefits above the limit for retiring employees beginning in 2016. It identified another $44,620.98 in alleged overpayments to employees who were fired or resigned.
Marietta Codified Ordinance 161.01 limits vacation payouts to 320 hours for retiring employees and 120 hours for employees who are fired or resign, according to Faber’s notice of proposed finding.
Among the payments questioned was one made to Christopher Hess, the husband of City Auditor Sherri Hess. In a March 28, 2024, letter to Faber, Vessels and Shoaf allege Christopher Hess received a $44,633.66 payout on Nov. 30, 2021, including payment for 298.9 vacation hours above the ordinance limit. The council calculated the alleged excess payment at $8,354.26.
The letter also questioned the circumstances surrounding Christopher Hess’ retirement and rehiring. It said the mayor and safety-service director reported first learning of the arrangement in early 2024, although the mayor is responsible for hiring the position.
Sherri Hess could not be immediately reached by deadline Friday.
Discussing retirement-and-rehire cases, Mayor Josh Schlicher said the administration was aware there had been a handful of such cases in recent years.
"We were not aware (of Hess’ rehiring). There's been a handful of those in the last few years," Schlicher said. "There is a procedure. In the past, they've only happened under certain circumstances."
Council leaders alleged the city's practice of crediting employees with their full annual vacation allowance Jan. 1 could result in employees being paid for vacation they had not earned if they left before their anniversary dates. The city ordinance states vacation due upon termination must be prorated from an employee's anniversary date.
Bertram said retirement and anniversary dates are among the matters under investigation. Bertram said some circumstances could warrant a discussion about allowing vacation time to carry over.
"If one of my attorneys has a wife in the hospital or has an issue, it may be such -- that would be a circumstance I would have a discussion with (Safety Service Director) Steve Wetz or may authorize the carryover," Bertram said.
Bertram emphasized the example he offered was hypothetical and did not describe any employee named in the audit.
In one letter, 38 employees who retired and 70 others who left city employment between Jan. 1, 2014, and March 2024 were identified. The letter said the amount potentially overpaid due to a failure to prorate vacation was likely substantial, but it did not provide a total estimate.
The referral also raised questions about overtime payments made between 2014 and 2017. Records cited in the letter showed one unnamed administrator received $68,186.37 in overtime during that period. The council questioned portions of the employee's work records but did not allege that the entire amount was improper.
Vessels sent an additional letter in June 2025, alleging Teamsters employees had also been paid more than their base hourly wage for vacation and holiday leave because certification-related wage enhancements were included.
"The council has recently learned that some overpayments were not just for a number of hours, but also for the amount authorized per hour," Vessels wrote.
The letter identified $29,246.48 in alleged vacation overpayments from 2016 through 2024 and $13,760.80 in alleged holiday overpayments from 2017 through 2024.
Grimm said he believes approximately 54 employees were originally identified, meaning the state did not recommend recovery for everyone whose payment records were reviewed, referencing the letter from Faber’s office.
Grimm said he learned through an email from Wetz that the state had been selective in determining who received recovery letters.
"Union members did not receive the letter," Grimm said. "There were also a few non-union that didn't receive the letter."
According to Grimm, the state told city officials union employees did not receive letters because of ambiguous language in either the city ordinance or union contracts. Grimm said the state has not identified the language it considers ambiguous.
"I would say that's fair enough, but tell us what it is so that we can correct it," Grimm said. "We've got labor negotiations coming up."
The city's union contracts are scheduled for negotiations later this year. Grimm said knowing what language the state considers unclear would give officials an opportunity to address it during negotiations.
"They will not tell us what that issue is," Grimm said.
Bertram explained that once the audit is completed, it will first be provided to the city for review and comment before becoming publicly available.
The investigation remains active, and documents received by The Marietta Times do not include a final audit determination.