Phil Williams has collected emails from state officials involved in a multi-million dollar contract for managing state buildings, focusing on the commission Jones Lang LaSalle receives. An excerpt from the WTVF-TV report: Three months later, state Comptroller Justin Wilson’s staff discovered JLL was negotiating new lease agreements and telling landlords they would be expected to pay an extra 4 percent commission to the firm if they wanted to lease the state a building.
“A commission to JLL at first blush seems very wrong,” Wilson emailed his staff. “I am suspicious to say the least.”
He was suspicious because, when JLL put in a bid for the state’s business, they were asked how much extra they would charge to work on leases.
Their contract said: $0.00.
Notes from contract reviewers in the comptroller’s office show that an attorney working for General Services Commissioner Steve Cates “agreed that there was no statute, rule or policy that authorized the commission, nor did the contract authorize it. It was her understanding that, since the Lessor and not the State was paying JLL the commission, it was OK.”
But Wilson subsequently wound up approving the arrangement as a member of the State Building Commission. The TV station says his office won’t discuss the matter now because the Department of General Services is going through a scheduled audit and the contract is part of that review.
While the head of Tennessee’s newly centralized procurement system provided examples to legislators of savings to taxpayers last week, declaring they collectively total $113 million to day, state Rep. Jeremy Faison offered another example that didn’t sound so good.
Chief Procurement Officer Mike Perry’s examples included a dozen “ballpoint stick pens” that previously cost the state $1.55 for a box of a dozen versus 47 cents today and a ream of paper, previously $3.10, now $2.77.
Office supplies counted for $8 million of the projected $113 million in savings, a figure that includes comparing new multiyear contracts with old ones as well as some one-time purchases. The biggest projected savings, $33 million, was on Oracle software through “strategic sourcing,” which involves negotiating with current contract holders.
In the latter case, the vendor initially said that new software needed to bring TennCare computers into compliance with new provisions of federal law would cost $39 million, Perry said. After the negotiation, the price was $6 million.
The state comptroller on Monday issued a stern warning to Memphis officials about the city’s fiscal condition, reports the Commercial Appeal. He focused concerns on a debt refinance plan the city wants to undertake that defers debt to about 2025. State Comptroller Justin P. Wilson called such fiscal moves “scoop and toss” because they defer debt years down the road.
The comptroller late Monday released copies of a letter and financial report he sent to Mayor A C Wharton and City Council members earlier in the day that reveal officials have been in discussions with the state’s chief fiscal compliance officer for several weeks about Memphis finances.
In the letter, Wilson outlined several corrective measures the city must take before he will sign off on the municipal bond refunding plan — designed to defer obligations to 2025 and free up more cash flow for current obligations — but Wilson said those steps are more technical in nature and the city needs to address its underlying fiscal problems of low fund reserves, a declining tax base and budgetary imbalance.
In the letter, the comptroller wrote that “It is critical that Memphis change its course to reverse” those trends. “Tough decisions are necessary to change that direction. Failure to make the decisions could have very serious consequences. I pledge our support.”
In a brief interview later, Wilson said that the city’s “financial reporting is good. And Mayor Wharton to his credit recognizes they have a serious problem that if not corrected, could lead to real disaster. I think they’ve recognized this can’t go on forever. Apparently this has been building up for a long period of time.
Joint news release from House and Senate Republican Caucuses:
(NASHVILLE) – In a joint session of the Tennessee Senate and the Tennessee House of Representatives today members unanimously re-elected Secretary of State Tre Hargett, Treasurer David H. Lillard, Jr. and Comptroller Justin P. Wilson. Secretary Hargett will serve his second four-year term, while Treasurer Lillard and Comptroller Wilson will each serve two-year terms. All three were originally elected to their posts by the General Assembly in January, 2009. Treasurer Lillard and Comptroller Wilson were re-elected to their second two-year terms in January, 2011.
Senate and House leaders congratulated the Constitutional Officers today, and released the following statements:
“While many Tennesseans don’t know what they do, the constitutional officers are really the unsung heroes of state government. They work – often behind the scenes but sometimes in the harsh glare of the media spotlight – to make sure that our state’s investments are managed properly, that public employees have a financially sound retirement system, that taxpayer money isn’t wasted, stolen or misused at the local or state levels of government, that local governments get the assistance they need to be successful in various levels of their operations, that our elections run smoothly, that our public libraries have the support they need to provide excellent service to Tennesseans. Tennesseans are lucky to have leaders like Comptroller Wilson, Treasurer Lillard and Secretary of State Hargett overseeing these essential services of state government.” -Lieutenant Governor Ron Ramsey
“Tennessee is in excellent financial condition – and the work of our three constitutional officers has played no small part in that. As members of the State Funding Board, they set revenue estimates that are used by the governor, his staff and members of the General Assembly for budget planning purposes. They also appear regularly before the major rating agencies that determine how strong Tennessee’s credit ratings will be. They also provide helpful advice and information to help members of the General Assembly do their jobs better.” -House Speaker Beth Harwell
“I am very proud of the work Treasurer Lillard, Comptroller Wilson and Secretary of State Hargett have done over the last four years. They have made many major improvements to make Tennessee state government work more efficiently and effectively which benefits all Tennesseans. All three of these public servants are well deserving of another term in office.” -Senate Majority Leader Mark Norris
“Reforming government is something that’s easy to talk about, but difficult to do. These three constitutional officers have spent the last four years challenging traditional thinking about the way their offices should operate and, as a result, their offices are operating more efficiently and effectively than ever before. They have made the offices more accessible by making more services available over the Internet and have found ways to maximize the productivity of their employees.” -House Majority Leader Gerald McCormick.
News release from state comptroller’s office:
The State of Tennessee sold more than $170 million worth of general obligation bonds this week at the lowest overall interest rates in more than 40 years. The debt offering was sold in two parts, consisting of $140,000,000 in tax-exempt bonds and $30,525,000 of federally taxable bonds. The combined true interest cost of the bonds was 2.05 percent.
The tax-exempt bond proceeds will be used to fund new capital projects while the proceeds from the taxable issue will be used to refinance currently outstanding bonds.
The refinanced bonds will result in present value savings to the state of $2,607,000 over an eight-year period.
“We chose to refinance some of our bonds at this time because interest rates were so low,” said Comptroller Justin P. Wilson, who serves as secretary of the State Funding Board. “The low interest rates we were able to get demonstrate, once again, that the state is in excellent financial health.”
“Over the last 15 months, we have saved the state more than $63.6 million through refinancing, said State Treasurer David H. Lillard Jr., who is also a State Funding Board member. “We believe that’s part of our mission to be good stewards of public money.”
“Tennessee has continued to maintain strong credit ratings, which makes low interest rates possible,” said Secretary of State Tre Hargett. “We are able to maintain those credit ratings because of the excellent work done by the General Assembly, the governor and his administrative staff in managing our state’s finances.”
By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — Comptroller Justin Wilson’s move to automatically waive the first $25 in fees for public records requests is drawing praise from open government advocates.
The proposed rules, which would also give the comptroller the discretion to waive all costs related to public record searches and copies, were unanimously recommended for adoption by the Joint Government Operations Committees on Wednesday.
“The fee waiver provisions are progressive for Tennessee and should be a model for other state and local agencies,” said Frank Gibson, the founding director of the Tennessee Coalition on Open Government.
State Comptroller Justin Wilson writes in an op-ed piece: Early in the session and with little fanfare, lawmakers approved legislation that has the potential to create many new jobs in communities throughout our state. It’s called the Uniformity in Tax Increment Financing Act of 2012, a measure that gives economic development officials in our cities and counties an attractive incentive to offer businesses.
Tax increment financing — or TIF, as it is frequently called — is a method for paying for community improvements with future tax revenues. For example, consider what happens when a government decides to invest in new roads, street lights, water and sewer lines or other infrastructure improvements in a neighborhood.
Typically, the value of the property in that neighborhood will increase, which means tax collections from the area should also increase. TIF uses the extra tax revenues collected after the property value rises to recoup the costs of the government’s infrastructure investments.
In other words, it’s a way to allow growth to pay for itself. While we had laws on the books allowing for TIF before this year’s legislative session, they were confusing and sometimes contradictory.
In a remarkable coincidence, the state comptroller’s office has issued a report criticizing the state’s civil service system while Gov. Bill Haslam has pending legislation to repeal the system. (Must be a coincidence since the governor’s bill isn’t mentioned in the news release and the comptroller’s office is independent from the governor’s office.) Here’s the news release:
Tennessee’s civil service system is inefficient, unfair and outdated, a report by the Comptroller’s Division of State Audit suggests.
The system, developed in 1939, centralizes the process for people who wish to apply for civil service jobs within the state’s Department of Human Resources. The department maintains lists, or registers, of potential candidates for job openings.
This system is fundamentally flawed. For example, the human resources department ranks the potential candidates and recommends them to whichever state departments or agencies have job openings. This is inefficient because in many cases the top-ranked candidates are not interested in or may not actually be qualified for the open positions. The ranking process itself lacks transparency, so neither other departments and agencies nor candidates know exactly how the process is conducted.
Also, the registers are often top heavy with current state employees to the exclusion of people who wish to enter state service. And job openings are not always posted if human resources officials believe they have suitable pools of applicants for those positions.
The system also allows employees with more seniority to “bump” less senior employees out of jobs, which can set off chain reactions that displace numerous employees.
The Comptroller’s report, which was released today, recommends that the current system be replaced with a decentralized system that would give departments and agencies the ability to screen and hire applicants directly.
“The civil service system was designed to meet the needs of Tennessee coming out of the Great Depression. It met the needs of the first half of the twentieth century, but a lot has changed and our system needs to change to meet the needs of the twenty-first century,” Comptroller Justin P. Wilson said. “About 34,500 employees have civil service jobs with the State of Tennessee. The system used to hire them needs to be as efficient, fair and transparent as possible.”
To view the report online, go to http://www.comptroller1.state.tn.us/repository/SA/sr04056.pdf.
NASHVILLE, Tenn. (AP) — State Comptroller Justin Wilson says Tennessee’s school funding formula is fraught with complexity and a lack of transparency that could lead to either inadvertent or intentional errors in distributing state money.
Wilson said in a letter to Education Commissioner Kevin Huffman this week that the department should take steps to enhance the accuracy of the funding formula that determines how $3.8 billion is directed to school districts around the state.
The comptroller’s study found that average attendance figures –which play a key role in determining how much state money flows to schools — are self-reported, and that there is little the state can do to verify those numbers.
Wilson said Education Department and state lawmakers should work on ways to improve the formula without making it more complicated.
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.”