MUNCIE, Ind. — The Indiana State Board of Accounts (SBOA) has recommended that former Sanitary District Administrator Debra "Nikki" Grigsby pay back nearly $60,000 in compensation she received while on unpaid administrative leave.
The SBOA's focus was primarily on compensation paid to the former district administrator, who was indicted in July 2019 on charges of conspiracy to commit wire fraud, wire fraud, making false statements and falsification of documents.
The SBOA also expressed concern over leave time being accumulated by Joseph Evans, William "Bill" Smith, and Michael Cline, the Muncie Sanitary District’s three board members at the time of the investigation.
The leave time was not being used by the board members, but instead being donated to Grigsby in an effort to compensate her despite her being on "unpaid administrative leave."
Grigsby was placed on unpaid leave by the sanitary district on July 16, 2019, the day she was arrested by the FBI. The Sanitary District issued an official statement on March 27, 2020, stating that she had been on unpaid leave pending the outcome of the FBI investigation.
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The problem according to the SBOA is that Grigsby was technically compensated through the use of medical leave, sick time and vacation time. Other compensation like her health insurance premiums also were paid while she was on suspension.
MSD’s response to the SBOA’s position was that many of the allegations made in the report represent a radical departure from their previous audits over the past 20 years.
The state report showed Grigsby continued receiving pay through April 24, 2020, by using paid time-off hours and paid holidays, some of which had been donated to her, effectively making her suspension with pay.
Smith donated 919 hours to Grigsby, with Cline donating 480 and Evans donating 344, according to the SBOA audit.
Evans also donated 240 hours to district employee Angelica Nichols, which the report also cited as a violation.
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Totaling up different aspects of compensation, the SBOA requested that Grigsby pay back to the district nearly $60,000 in unearned compensation. That includes the cost of the investigation (around $25,000) by the SBOA.
The SBOA also requested Evans and Nichols reimburse the sanitary district nearly $6,000 for leave time earned as a sanitary district board member, donated, and used by Nichols. That total also included part of the SBOA's investigation costs.
Grigsby provided MSD a letter as notice of resignation dated Jan. 27, 2020, with a noted last date of employment of Feb. 29, 2020. The city was not given a copy of her resignation letter until April 22.
On Feb. 26, Grigsby signed a plea agreement that was filed in U.S. District Court in which she agreed to plead guilty to the charge of conspiracy to commit wire fraud.
The sanitary district failed to terminate Grigsby on that date, as stated in their personnel policy, which states that she should have been terminated immediately.
The official hearing at which Grigsby would enter the guilty plea and be sentenced has not yet been scheduled.
Are MSD's board members considered full-time employees?
One fundamental issue the SBOA took with the donation of leave time to Grigsby was that the board members shouldn't have sick time to give in the first place. This was, according to the auditors, because the SBOA determined that the MSD board members don’t meet the definition of full-time employees, so they can’t accumulate leave time.
The SBOA said that comments by Smith during a Dec. 20, 2019. meeting of the board proved that there wasn't an accurate account for how many hours the board was actually working.
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MSD's lawyer Mark McKinney disagreed that the board members are not considered full-time employees and claimed that the state board of accounts was trying to “weaponize a portion of an offhand comment by William (Bill) Smith.”
MSD also attested that time sheets are maintained for the board members' hours through the controllers office. The SBOA report, and later city officials, said that isn’t the case.
Sanitary district contests SBOA findings
City officials including Muncie Mayor Dan Ridenour agreed with the SBOA's findings, though the sanitary district did not.
The mayor, two members of his administration and other city officials have been under strict “non-disclosure” agreements with the State Board of Accounts, which is why city officials hadn't commented on the issue until now, according to an emailed statement from Ridenour's office.
The biggest point of contention between McKinney's official response to the SBOA investigation on behalf of the sanitary district was regarding Grigsby being on “unpaid leave” even though she was still receiving compensation from the district.
“MSD’s treatment of Grigsby’s requests were ordinary and customary, and in no way deviated from its standard procedure, which has not been challenged by the SBOA in the last 20 years,” the response from McKinney said.
When it came to the donation of additional leave time, McKinney argued that all employees are able to voluntarily donate their accumulated leave time to “assist an employee in need”.
“It has been MSD’s policy to pay employees who were on unpaid leave for their accumulated leave time and holiday time during that period. Nothing in the (MSD) handbook prohibits this practice nor does the handbook prohibit board member or other employees from donating their leave to assist an employee who is currently on unpaid leave,” McKinney argued.
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MSD also contested the SBOA putting the cost of the investigation onto Grigsby.
The SBOA said the report was forwarded to the Indiana attorney general and the local prosecuting attorney for possible criminal charges.
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State Board of Accounts asks ex-MSD administrator to repay $60,000 paid while on 'unpaid leave' - The Star Press
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