Written by Marion Watch Investigates has completed its preliminary review of the City of Marion’s Single Audit for the fiscal year 2021, a report that was filed over three years late.
The findings, issued by the Ohio Auditor of State, paint a devastating picture of a city government in a state of severe operational failure. A predictable pattern based on decades of recurring financial and information technology control issues that have plagued Marion for decades.
The audit reveals multiple violations of state law (Noncompliance), critical information technology (IT) failures, and the most severe level of financial control failure (Material Weaknesses) by the former Schertzer Administration.
Today Marion Finance Chair Twila Laing advised Marion Watch Investigates teams that the Collins administration is doing everything in their power to rectify the financial catastrophe and Silent Sabotage of Marion’s information technology and financial controls but noted that they simply cannot divulge certain information due to the severity of the situation.
The City’s financial records were in such poor condition that state auditors issued a Qualified Opinion.
This is a serious red flag, which means the auditor could not confirm if the City’s year-end cash balances were accurate.
Our investigation into the audit’s findings is detailed below.
Illegal Spending Driven by IT Control Failures
In a severe breach of public trust and state law, several City funds spent far more than their legal spending limits. Ohio law forbids a government from making any expenditure unless it has been properly appropriated (budgeted) by City Council.
Auditors found this illegal spending was enabled by a critical information technology (IT) failure.
The City’s “New World” financial software had a permission setting that allowed users to simply “override budgets.” This issue is added to the long list of documented information technology issues Marion Watch Investigates has published on extensively. These issues spiraled out of control immediately after the implementation of the New World software.
What this means: This is not a simple error, but a profound failure of controls. The legal budget, set by City Council to protect taxpayer money, was rendered meaningless because staff had the technical ability to simply ignore it and spend anyway. This IT permission was not disabled until October 27, 2025.
This failure directly contributed to massive, illegal over-spending:
- General Fund-Transfers Out: Spent $1,150,886 over its legal budget.
- Fire Fund: Spent $625,738 over its legal budget.
- Police Fund: Spent $567,688 over its legal budget.
Furthermore, several funds were operated with illegal deficit balances, including a ($138,266) deficit in the Police Fund and a ($48,213) deficit in the Fire Fund. This means the City was improperly using money from other funds to pay its bills.
A Breakdown in Basic Cash Controls: $543,079 Unaccounted For
The audit reveals a stunning failure of the most fundamental accounting duty: matching the City’s bank statements to its own books (a bank reconciliation). This is the primary way an organization catches errors, fraud, or theft.
- No Monthly Review: The City failed to perform this basic check for each month of 2021.
- Years Late: The final 2021 reconciliation was not provided to auditors until March 13, 2024.
- The Result: $543,079 Unaccounted For: The audit found a $543,079 unreconciled and unsupported difference. In plain English, the City had $543,079 in its bank accounts that was not accounted for in its own financial records. The City did not know where this money came from or what it was for.
- “Off-the-Books” Account: Auditors also discovered a “Cashless Evidence Room” bank account. This account was not included in the City’s official financial report or its accounting records. An “off-the-books” account is a major finding because it operates outside of all public oversight and financial controls. There is no way to know if the money in this account was used legally, as it was hidden from the official accounting system and, therefore, from the City Council and the public.
Wasting Taxpayer Money: System Failures Lead to Penalties
The audit details a shocking pattern of incompetence, as the City repeatedly failed to pay its payroll taxes and retirement contributions on time. This is not optional; it is a basic, legally required function of any employer. This failure resulted in the City paying significant penalties using taxpayer money that could have been spent on services.
In 2021 alone, the penalties included:
- $31,698.27 to the IRS for late federal tax payments.
- $5,941.92 to the Ohio Police & Fire Pension Fund for late contributions.
- $1,676.41 to the Ohio Public Employees Retirement System (OPERS) for a late filing.
- $1,096.19 to the Ohio Dept. of Job & Family Services for late unemployment filings.
This operational failure highlights an inadequate payroll system. The City’s own corrective action plan confirms this, stating it has “started the process of converting to ADP payroll systems” to manage these critical payments, admitting the prior system was incapable of handling the task. The audit notes this was not a one-time issue, as the City has incurred an additional $279,036.80 in penalties from various agencies before and after 2021.
A Systemic, Years-Long Failure
The problems identified in this audit are not new. The state auditor’s report shows that identical findings from the 2020 audit—including the failure to reconcile bank accounts, the illegal over-spending, and the late payment of withholdings—were “Not Corrected” in 2021 and a long list of other control issues from the time of the New World software installation onwards.
What this means: This shows a persistent and systemic failure of leadership and management. The City was aware of these critical problems for at least a year and did not fix them.
The financial markets have already rendered their verdict. In April 2023, Standard & Poor (S&P) withdrew the City’s bond rating entirely. A bond rating is a city’s credit score. By withdrawing the rating, S&P is essentially stating that the City’s financial information is too unreliable to even assess. This is a complete loss of confidence that will make it extremely difficult and expensive for Marion to borrow money for essential projects like fixing roads or water lines.
This 2021 audit is not a snapshot of a single bad year. It is a documented roadmap of systemic failure, decades in the making.
The findings show a clear and persistent pattern: basic duties were not performed, state laws were violated, and taxpayer money was wasted on penalties while oversight was nonexistent. These are not isolated mistakes; they are the predictable, disastrous results of a system operating without transparency and without accountability. It is precisely this pattern of issues that led Marion Watch Investigates to request a full forensic IT audit of the New World software and applicable systems.
The most pressing question for the citizens of Marion is not just how this was allowed to happen, but who will finally be held responsible for this profound breach of public trust.