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Water board terminates Green’s contract

Auditor’s report outlines how longtime Water Works GM swindles money out of Creston Water Works; Report scolds water board for failing in its fiduciary duties

Published: Monday, June 24, 2013 10:54 a.m. CDT • Updated: Thursday, June 26, 2015 11:53 a.m. CDT

RETRACTION:Former Water Works General Manager Steve Green recently demanded a retraction over terminology used in a headline the newspaper published on June 24, 2013, in connection with this news article about a report released by the state auditor. The newspaper has reported extensively on the auditor’s report, Green’s termination, his subsequent lawsuit against the Water Board, and the decision of the Iowa Attorney General’s Office to not pursue criminal charges against him. 
The newspaper regrets if any confusion arose from its description of Green’s activities and retracts the June 24, 2013 headline to the extent, if any, it may have unknowingly mischaracterized his activities or the auditor’s report. The auditor’s report can be read at http://auditor.iowa.gov/reports/1223-0848-BE00.pdf

Longtime Creston Water Works General Manager Steve Green was paid almost $90,000 in improper and unsupported disbursements between July 2005 and November 2012 — this according to a special investigation report released Friday by the state auditor’s office.

The majority of that $90,000 came from Green being improperly paid for performing inspections or attending meetings on two major projects including the Creston Water Plant expansion and Summit Lake project.

Those inspections happened between 2007 and November 2012

For those two projects, Green claimed an extra 962 hours of inspection and meeting time — totaling $49,720.42 in additional compensation and retirement contributions.

The problem though, according to the report, is those funds were dispersed improperly because both projects had separate inspectors. Therefore, there was no reason to pay Green for inspecting the project.

Additionally, the report states as general manager of Creston Water Works, Green is expected to attend meetings, oversee projects and perform inspections. However, Green is a salaried employee and his contract does not include any provision authorizing payments in addition to his base pay.

Two board members — Dennis Bailey and Ken Sharp — did sign off in 2007 for Green to work additional hours not to exceed three hours each week on either project. However, the report states board members who represent less than a quorum of the entire board do not have the authority to make those kinds of decisions.

Vacation payouts

This special investigation was launched after an accounting firm notified the Water Works business office Green’s vacation balance should be 80 hours rather than 532 hours recorded in the accounting service.

Green has been Creston Water Works general manager since April 1981. In accordance with his current contract, he’s entitled to five weeks of vacation on his April anniversary date each year.

However, his contract does not include any language allowing him to carry over his vacation balance or to receive a payment in lieu of taking his vacation. All staff at the water water department must use their vacation in one year or lose it — unless otherwise approved by the water board.

That being stated, the audit reveals Green was carrying over his vacation time each year, and there were 19 instances between 2005 and 2012 whereby Green’s payroll check included vacation payout. Those instances totaled $30,313.15 in unauthorized vacation payouts and FICA contributions.

The audit showed there was only one instance in March 2011 whereby the board approved a motion allowing Green a pay out on a portion of his vacation.

Meal reimbursements

The audit also found $3,223.68 of prescription and meal reimbursements from petty cash. The water works maintains a petty cash fund to reimburse employees who pay for postage for water sample testing. The fund is also used to reimburse employees for prescription co-payments and meals.

Green had 97 reimbursements totaling $1,846.41 for food claimed by Green for travel or meetings with staff. Some of the receipts had notations on them indicating meals were purchased for individuals employed by Iowa Department of Natural Resources (DNR), Federal Emergency Management Agency (FEMA) and Southern Iowa Rural Water Association (SIRWA).

However, auditors in this investigation state SIRWA officials told them, they never accepted an invitation from Green to go to lunch. Auditors also concluded there were instances where the amount paid for the meal would not cover the cost for multiple people to have lunch.

Auditors in this investigation also noted it’s not reasonable for the Water Works to purchase meals for the DNR and FEMA employees as it is likely their organizations pay for their meals when they travel to Creston.

Green was also paid out of petty cash for gas ($160.68), conference and meeting related expenses ($1,080.96), cab fees for a conference in Chicago ($81.85) and miscellaneous items not identified based on the supporting documentation attached ($86.73)

The audit also found $1,135 in estimated improper fuel charges.


Green was placed on paid administrative leave on Nov. 16, 2012. That day a search warrant was executed on Green’s garages and a Honda generator, pressure washer and two ladders were located.

All three items were later identified to be the property of Creston Water Works.

Then, on Nov. 17, 2012, Green contacted a Water Works staff person and asked that person to meet him at his garage so he could give him a rake and shovel that belonged to Creston Water Works.

When Green opened his garage, the two of them proceeded to load the staff member’s truck with four rakes, a shovel, push broom, bag of grass seed, various hand tools and a set of overalls. Total, equipment purchased by Waters Works found in Green’s garages totaled $2,317.27.

Other concerns

Among other allegations, it was brought to the attention of the auditors in this investigation Green periodically asked staff members to work on personal projects for him during normal business hours.

Also, Green stored personal items at the distribution center. Photos taken by staff show his boats being stored at the distribution center garage. Other personal items stored included a boat propeller, bathroom counter top, bicycle, pallets of bricks, mulch, fishing lures, etc.

Water board fails

The auditor’s report frankly states the water board failed to exercise proper fiduciary oversight. Members of the water board — when Green was placed on administrative leave — were President Dennis Bailey, Ken Sharp, Lee McNichols, Bill Stuart and Cathy Dryden.

The report states the board failed to periodically review payroll information. If the board had, it would have identified Green’s unauthorized payout of vacation. They would have also determined Green was carrying over vacation hours in violation of Water Works’ policy.

Most importantly, the report scolds the water board for placing Green on paid administrative leave instead of placing him on unpaid leave and allowing him to use his vacation balance. As a result, Water Works has paid Green a total of $78,385.41 over seven months.

(The report also notes, after being placed on administrative leave, Green requested the board reinstate him and he would then immediately resign under the terms of his contract. The board never acted on his request, subsequently paying Green more than $78,000.)

Worse news

Green’s contract signed by the board in December 2011 had an extra clause stating “upon the manager’s termination, death, retirement or resignation, the manager’s accumulated sick leave and vacation hours can be converted to wage equal to the wage at the time of separation and be used for reimbursement by payment or payment of annual insurance premiums at the discretion of the manager. The insurance provided will be equal to what is stated in this agreement for the manager and/or his spouse.”

The board members interviewed in this audit believe Green himself added this clause to his contract because he was planning to retire during the end of the current three-year contract.

However, no other Water Works employees have this clause in their contract or are entitled to use their sick leave and vacation to pay for insurance.

Green was terminated Friday by the water board. But, because the board approved the contract with this clause, Water Works may be required to pay up to $54,891.20 for insurance premiums for Green even though he’s been terminated.

Criminal charges

Union County Attorney Tim Kenyon could not be reached this morning. He’s currently on vacation. It will be up to Kenyon to determine whether criminal charges will be filed against Green.

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