Time Machine Permissions with Server Update 2.2

I rebuilt our Mac Mini server and did it using the latest version of Server (v. 2.2) just released. I noticed that when I activate the Time Machine service on OS X Server that my clients could not connect in (receiving OSStatus Error (5) on those machines). So, when looking at the permissions for the "Backups" share in File Sharing on the Server (using the Server app), I noticed that there were no permissions for anyone other than the Administrator.
I added a group of employees and then those machines are able to successfully use Time Machine and backup to the server's external Time Machine disk. The problem is that those backups do not appear with the little red "minus" sign next to them. So, someone could grab someone else's backup and copy it.
It seems this new version of Server Update may have changed the way permissions are provisioned for clients to be able to backup to.
Anyone else seeing this behavior or have any thoughts on this?
Thanks,
Bob

Solved this permissions issue. Use the Mac's Disk Utility to format the backup drive - do not use the vendor's supplied disk management utility to format it. I am running a thunderbolt Drobo now and had the same issue using Drobo's software. Once you format the drive using the Mac's Disk Utility, you will see a group of "staff" with read/write permissions. Other network users will not have access to other time machine backups.

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