Gov. Bill Haslam fielded several questions about state government outsourcing contracts Monday, insisting that a few mistakes might have occurred but that the public’s interest was his only motivation.
From WTVF’s report: Surrounded by reporters, the governor was emphatic about his administration decision to outsource large chunks of state government — the most recent being a $330 million contract to manage all state buildings.
“This is a contract that’s going to save the state a hundred million dollars over the next years,” Haslam said.
That contract went to Jones Lang Lasalle — a company that candidate Bill Haslam listed among his investments.
“Is there any sense in which you stand to gain personally from that contract?” NewsChannel 5 Investigates asked.
“Absolutely zero,” the governor answered.
…The governor did acknowledge that a meeting with JLL officials at the Governor’s Residence in April 2012 was about more than just the $1 million consulting contract they had at the time to study the condition of the state’s buildings.
After that meeting, the administration began pushing a string of amendments to extend the JLL contract — without any bidding.
“Were you involved in those conversations about those extensions?” NewsChannel 5 Investigates asked.
“No,” the governor said.
“We had the dinner because at this point in time we were thinking about them obviously managing a big chunk of the state’s business, and I wanted to have a face-to-face conversation just like I was if I going out to hire an individual to do something. To me, there’s nothing extraordinary about that at all.”
But when the facilities management contract was put up for bids, two of the three members of the selection committee came from the governor’s own staff.
“Did you interview any of their competitors?” we asked.
“I didn’t,” the governor admitted, “because I wasn’t part of the selection process.”
Still, Haslam insisted that he believes taxpayers will be the winners.
“Look, anytime you make a big change in state government, does everything in the process go about properly? No. This is new territory we’re in. There’s literally no other states who have done what we’ve done.”
See also the Commercial Appeal, HERE
Two companies are battling for a $200 million-plus contract to provide health care to Tennessee’s prison inmates, reports The Tennessean, and one of them employs the state correction commissioner’s wife. One came in almost $16 million cheaper and has a long but controversial history of providing those services. The second, more expensive company has struggled to explain how it has enough experience to do the job. It also happens to employ the wife of the head of the Tennessee Department of Correction.
The second company, called Centurion, won.
Department of Correction Commissioner Derrick Schofield’s wife, Latrese, works for the company as an inmate re-entry coordinator in Georgia. But that fact was never disclosed in Centurion’s bid, nor was it mentioned at a protest hearing by the losing bidder last week, whose executives were confused about losing out on a job they had already been doing for more than two years.
Only two companies submitted bids, Centurion and Corizon. Corizon’s bid came in at about $226 million while Centurion came in at about $241 million.
The Department of Correction maintains that there is no conflict and that Derrick Schofield recused himself from having any say in the awarding of the contract.
“We’re confident that the process was appropriate and fair and resulted in the selection of the best-qualified bidder,” said TDOC spokeswoman Dorinda Carter. “Ms. Schofield is not in a position of making decisions regarding the contract and she’s not an executive-level employee.”
Derrick Schofield has disclosed his wife’s employment on ethics disclosures for the past three years. He declined to respond for this story through the agency spokeswoman.
…The losing bidder, Brentwood-based Corizon, had held the $219 million contract since 2010, handling health care services for the state’s prison inmates. The company handles mental health care for Tennessee inmates as well.
But Corizon in recent years has been dogged by accusations of poor inmate health care, particularly after a Kentucky inmate died while under the company’s care….In Tennessee, Corizon also was docked millions in penalties over the past few years for at times not meeting all the standards of the contract.
Even still, the state’s Fiscal Review Committee in November voted to extend its contract an additional six months.
By that time, the state had already put out a request for proposals a new contract that would run through 2015.
Corizon is protesting the contract award, arguing that Centurion doesn’t have the five years of experience the state required in its request for proposals.
Centurion, a company that was formed just last year, is made up of two other companies, Virginia-based MHM Services Inc. and St. Louis-based Centene Corp. While MHM has handled inmate health care services for years, the closest it comes to handling an entire prison system of Tennessee’s size was handling health care services for Florida’s prison system. But it held that contract for only three years.
Despite that possible problem, TDOC evaluators gave Centurion perfect marks when evaluating how it meets the contract’s experience requirements.
Latrese Schofield has been employed by MHM since 2005.
Saying more openness is needed on the part of Tennessee policy makers, Rep. Susan Lynn has introduced legislation that would require the disclosure of all real property they own other than their primary home, according to TNReport. The Mt. Juliet Republican’s HB 1063 would require all elected and certain appointed public officials, such as those on local and regional planning commissions or state boards, to disclose any real property owned by them, their spouses or any minor children living at home.
“Back in 2006, when we did the ethics reform, we wanted this to be part of the disclosure and simply couldn’t get it done at that time,” said Lynn, who served in the House for eight years before running for state Sen. Mae Beavers’ seat and losing in 2010.
“Leaving the legislature for two years, like I did, you start thinking about the things you wish you’d done or could have done, and this was one of those things.”
…Lynn’s bill would require the disclosure of the address of the property and the month and year of its acquisition, but not everyone in the General Assembly is in favor of it.
Many have told her that the information is a matter of public record, and that should be sufficient. Her argument is that since it is public record, “What’s wrong with putting it all in one neat, consolidated place to make that disclosure?
“I’m not feeling a warm breeze right now from the [Local Government] committee,” said Lynn, who postponed a vote on the bill until March 12. “I really feel like I’m standing out there alone. I know it’s the right thing to do, and I hope they will be amenable.”
She said she would entertain an amendment excepting state legislators from the new disclosure requirement, if it’s the only way to make it a requirement for local government officials.
A bill that could exempt planning commission members in six East Tennessee counties from disclosing their financial interests has been introduced by Sen. Ken Yager and Rep. Kent Calfee.
Calfee, a freshman Republican lawmaker from Kingston, said HB15 was introduced at the request of Roane County Mayor Ron Woody.
The measure also would apply in Campbell, Fentress, Morgan, Pickett, Rhea and Scott Counties which are included along with Roane in Yager’s state Senate district. Yager said the other counties were added because of a “communications error.” The senator said he has written officials in the other counties and will amend the bill to delete those counties where an objection is raised.
Planning commission members were not required to file the disclosures until last year, when the Legislature enacted a bill adding them.
The disclosure statements in question require public officials to list their financial holdings and sources of income, but not the amount of income. Planning commission members were not on the list of those required to file the statements until the General Assembly added them in legislation approved last year with little debate and by almost unanimous margins.
The first disclosure reports since the new law took effect are due on Jan. 31, according to the Tennessee Ethics Commission.
Woody said in an interview that the new law is “kind of intrusive” and a deterrent to finding people to serve on the commissions, which typically pay very little or nothing for their services. They are in a different situation than elected officials such as himself, he said.
“It may have been adopted for good reasons and this is an unintended consequence. Or it may have been adopted for bad reasons… (with the intent of) killing our planning commissions. I don’t know. But I’m a firm believer in the need for planning commissions,” Woody said.
The bill approved last year was sponsored by Sen. Jim Tracy, R-Shelbyville, who was not available for comment. A spokeswoman, however, said it was the senator’s own idea. In a committee meeting last year, Tracy said the bill was “just common sense” and that those overseeing development should have to disclose potential conflicts of interest.
Woody said the Roane County Planning Commission has “ethical members,” including some who retired in the area after a business career “up north” and who may have substantial stock and real estate holdings.
By making their holdings public, he said, “you get to the point where people don’t want to serve.”
Yager said he basically agrees with Woody.
“In these rural counties, they (planning commissioners) are essentially volunteers – in Roane County, I think they get $50 a month – and it’s hard to attract people anyway,” Yager said.
News release from state comptroller’s office:
A former Tennessee Department of Veterans Affairs (TDVA) benefits representative was doing paid consulting work for a Memphis area assisted living facility and performing many of the same tasks she was being paid to perform as a TDVA employee, a review by the Comptroller’s Division of Investigations has found. The investigation revealed that the former employee, Julia Brown, had a private consulting agreement with the facility in which she referred veterans to the facility and helped them get financial assistance to move there.
“There was an obvious conflict of interest between Ms. Brown’s duties as a state employee and the work she was doing on the side as a consultant,” Comptroller Justin P. Wilson said. “It is not proper for someone involved in managing state-administered benefits to steer the recipients of those benefits toward a particular private facility that was compensating her for doing so.”
Between January 2009 and November 2010, Brown requested and received more than 40 hours of overtime pay valued at more than $700 from TVDA for consulting work performed at the assisted living facility after regular work hours. Brown also requested and received more than $200 in reimbursements from TVDA for mileage driven while performing work as a private consultant. Additionally, she used her TDVA e-mail, department fax machine and office computer to create invoices while conducting business as part of her outside consulting agreement.
To view the full report online, go to: http://www.comptroller.tn.gov/ia/
If you suspect fraud, waste or abuse of public funds in Tennessee, you may contact the Comptroller’s hotline toll-free at 1-800-232-5454 or file a report online at: http://www.comptroller.tn.gov/shared/safwa.asp
News release from comptroller’s office:
The State of Tennessee refinanced $456 million in general obligation bonds last week that will save taxpayers more than $34 million in interest costs. Refinancing the bonds in this fiscal year created $34,031,900 of present value savings that will be realized over the life of the bonds, which mature annually through fiscal year 2028. The state also refinanced debt last fall that will produce $3,287,600 in present value savings over time. The actual amount of savings is higher overall in comparison to the amount of present value savings.
“Just as it sometimes makes sense for homeowners to refinance their mortgages when interest rates are low, we look for opportunities to refinance portions of the state’s debt when market conditions are advantageous,” Comptroller Justin P. Wilson said. “I am very pleased that we were able to refinance these bonds and create a significant savings for our taxpayers. This is one example of how Tennessee government is efficiently managing its finances on behalf of its citizens.”
Comptroller Justin Wilson says interest rates on a record sale of state bonds ranged from as little as 0.25 percent to a high of 4.182 percent. He said so in an email response to a question on interest rates prompted by the the press release below. Here’s the email:
“The interest rates vary, depending on various factors, from a low of o.25% to a high of 4.182%. It gets a little complicated, but basically we had three series of bonds with each maturity in the series having a different rate. Our preliminary analysis shows that the average interest rate computed under what folks in the industry call “True Interest Cost” are 3.27% for the regular tax-exempt bonds, 2.28% for the refunding bonds and 3.51% for the taxable bonds. These are very good rates for the state and reflect the confidence the investing community has with Tennessee.” Here’s the press release:
The State of Tennessee entered the capital markets and sold $546,655,000 worth of bonds this week – the largest sale in the state’s history. Demand for the state’s bonds was high among investors, a reflection of the state’s strong credit ratings.
Earlier this month, Fitch and Moody’s Investor Services, two of the country’s major bond rating agencies, reaffirmed the state’s AAA credit rating, which is the highest available. Standard and Poor’s, the third major rating agency, reaffirmed the state’s AA+ rating, which is the second highest rating available. The state’s high ratings reflect its debt level, which is one of the lowest in the country.
Proceeds from the bond sale will be used to finance numerous projects throughout the state, including economic development grants for Volkswagen in Chattanooga, Wacker Chemie in Bradley County, Hemlock Semiconductor in Clarksville and Electrolux in Memphis. Those projects are expected to create 4,650 permanent jobs, plus thousands more in construction and related industries.
The bond proceeds will also pay for improvements to many state-owned buildings and properties, including a new driver license center in Memphis, renovations to the Supreme Court Building and other state office buildings in Nashville, a prison in Bledsoe County, a new library for the University of Tennessee-Chattanooga campus and infrastructure improvements to a research building on the Cherokee campus of the University of Tennessee-Knoxville.
The state also sold bonds to refinance some of its existing debt – which will save taxpayers approximately $5,559,000 million in interest payments over time.
None of the bond proceeds will be used to cover the state’s operating expenses or balance the budget.
“Our bond sale went extraordinarily well,” Comptroller Justin P. Wilson said. “Bonds were sold to a variety of investors including $35,000,000 to individual investors. For one category of bonds, we had nearly four times as many orders from investors as we were able to fill. This sale will help pay for four high profile economic development projects that will bring badly-needed jobs to our state, as well as other necessary improvements to our state’s infrastructure. Also, I believe taxpayers should be pleased that we were able to achieve a savings of about $5,559,000 million by refinancing part of our debt. We will continue to look for other opportunities to refinance more debt when market conditions are favorable for that.”
The Senate voted 25-6 Monday to revise the interest rate and fees for so-called “payday loans” over the protests of some Democrats.
Sponsor Sen. Bill Ketron, R-Murfreesboro, said that SB1557, as amended, benefits borrowers overall by effectively increasing the amount they can borrow, from $200 to $500, and allowing only a single $30 charge for a bad check.
The bill also requires that those making payday loans over the Internet have a presence in Tennessee and be regulated by state officials.
Democratic senators, including Sens. Douglas Henry of Nashville, Andy Berke of Chattanooga, said the bill effectively authorizes an interest rate of 360 percent.
“I know that’s a large amount of interest to pay, but when you do it in small amounts, you almost have to,” said Ketron.
Berke said it may be true that it is expensive to handle small loans, “But if that’s the case, perhaps we should consider that they don’t need to be in business.”
The bill is scheduled for a House floor vote Wednesday.