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Tennessee’s civil service system is inefficient, unfair and outdated, a report by the Comptroller’s Division of State Audit suggests.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.
A former Tennessee governor and the state’s current comptroller are among public figures with ties to an East Tennessee bank whose closure by regulators was one of the state’s first bank failures in nearly a decade, reports The Tennessean.
Former Gov. Don Sundquist sat on the Knoxville-based BankEast’s board. He and Comptroller Justin Wilson owned shares in its holding company.
After the bank’s failure last month, and the purchase of much of its assets by U.S. Bank, their BankEast stock is considered worthless.
State Rep. Joe Armstrong, D-Knoxville, also served on BankEast’s board and listed the bank as a source of income in a filing with the Tennessee Ethics Commission. He received a business loan from the bank.
BankEast failed after real estate, construction and other loans went sour amid the economic downturn. The bank’s 10 branches now fly the corporate flag of U.S. Bank. The Minneapolis-based company bought much of the failed bank’s assets, including $272 million of loans, and assumed $268 million of deposits
BankEast’s holding company, in which Sundquist, Wilson and others owned stock, wasn’t part of the U.S. Bank purchase. Typically, shareholders of a failed bank lose their money because they fall behind depositors and holders of unsecured and subordinated debt on a list of priority of creditors’ claims.
…Sundquist held 2 percent of voting shares in BankEast’s holding company at year-end 2010, according to BankEast Corp.’s most recent annual report filing with a regulator.
The ex-governor declined to comment on his ties to the bank, whose lead founder and chairman, Fred Lawson, was banking commissioner during the Sundquist administration. Sundquist was governor from 1995 to 2003 and was a congressman for a dozen years before that.
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.
Former Revenue Commissioner Reagan Farr approved 20 multimillion-dollar tax reductions for Tennessee businesses without proper documentation or justification, according to a report released this week by the state comptroller that The Tennessean characterizes as “blistering.”
Farr approved some of those reductions, known formally as tax variances, despite objections from his own staffers. Still others were given the green light without the knowledge of senior staff, according to the report. (Link to letter HERE)
Tax variances are granted after corporations contest their tax bills with the state. Under state law, the revenue commissioner may issue such variances without oversight by other state agencies.
Because the variances pertain to a business’s private affairs, details, such as the names of the companies and the amounts of the tax reductions, were not released in the report.
Farr, who was appointed by former Democratic Gov. Phil Bredesen, disputed the report’s findings and said politics, not tax policy, led to Republican Comptroller Justin Wilson’s critical report.
During Farr’s tenure from 2007 to 2010, there were 20 tax variances granted. Under his predecessor, Bredesen appointee Loren Chumley, 13 variances were approved over four years. From 2000 to 2003, only six variances were approved.
Wilson said the practice ballooned during Farr’s time in office and that there was a lack of documentation to back up the variances.
“The commissioner of revenue made decisions involving millions of dollars for which we could find no documentation, no rationale, no formal analysis and no evidence of investigation of the effect of such a variance on a similarly situated taxpayer,” Wilson said.
Farr defended his record and said each variance came with the approval of the department’s legal counsel, or the special counsel to the commissioner. Farr, who is now the chief operating officer of a solar energy startup company called Silicon Ranch, said he did not believe his tax policies were to blame for the critical report.
“I do think this is more about politics than policy,” Farr said.
Wilson said the report was focused solely on the tax practices of the Revenue Department.
See also the Chattanooga Times-Free Press story.
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.”
News release from state comptroller’s office:
With its high credit ratings just reaffirmed, the State of Tennessee plans to sell an estimated $584 million worth of bonds next week – the largest sale in the state’s history.
Some of the bond proceeds will be used to pay for new capital projects and infrastructure, 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 new permanent jobs, plus thousands more construction jobs and jobs in related industries.
The proceeds will also finance improvements to various state-owned buildings and properties across Tennessee, including a new research building for the University of Tennessee-Knoxville campus, a new library for the University of Tennessee-Chattanooga campus, a prison in Bledsoe County, renovations to the Supreme Court building and other state office buildings in Nashville and a new driver license center in Memphis.
Bonds will also be issued to refund (refinance) outstanding bonds to take advantage of low interest rates. Over time, the refunded bonds could save the state up to $10 million in interest costs.
The sale includes both taxable and tax-exempt bonds. Tennessee buyers must pay federal taxes on the taxable bonds, but they are not required to pay the state’s Hall Income Tax on interest earnings.
“This sale represents an excellent opportunity for people to buy Tennessee bonds,” Comptroller Justin P. Wilson said. “The major rating agencies have reaffirmed, once again, that our state is financially well-managed and therefore has strong credit-worthiness. I’m pleased that these bonds will be used to pay for a variety of needs our citizens have, including economic development projects that will create badly-needed jobs. Also, this sale represents an opportunity for us to save taxpayer money by capitalizing on low interest rates.”
Earlier this week, two of the major New York bond rating agencies – Fitch and Moody’s Investors Services – reaffirmed Tennessee’s AAA rating, which is the highest rating available. The third major agency, Standard and Poor’s, reaffirmed Tennessee’s AA+ rating, the second highest rating available. Among other factors used in determining the ratings, the agencies praised Tennessee for its sound financial management practices, low debt burden, well-funded pension plan and adequate reserves. The rating agencies expressed some concerns about a possible reduction in federal funding and the overall health of the economy – factors which are largely beyond the state’s control.
The bond sale will be held from Oct. 11-13. More information about the sale is available at www.buyTNbonds.com. The state is using an aggressive strategy to market the bonds. Senior staff members taped a presentation to provide investors with an overview of the bond offering. The web site provides information on the brokerage firms participating in the sale, as well as instructions for first-time investors on how to purchase bonds, a link to the preliminary official statement and the taped investor presentation.
The previous record for a state bond sale was $389.635 million in 2009.
A tough new law imposing stricter state oversight of Tennessee’s 182 utility districts – which serve hundreds of thousands of customers and collect millions of dollars in rates – quietly went into effect Friday, reports the News Sentinel.
More reform is on the way, according to state Comptroller of the Treasury Justin P. Wilson, who ushered the legislation through the General Assembly.
Wilson said he was crafting the new law before recent investigative audits uncovered flagrant misuse and thefts of ratepayer money in several East Tennessee utility districts.
“The need for transparency and accountability in this area we had before these investigations were completed and before we knew what they would turn up,” Wilson said.
But those scandals grabbed lawmakers’ attention, he said, and provided impetus for last-minute tweaks of the bill.
“When you’re dealing with the General Assembly, it’s better to deal with concrete examples that you can see,” he said. “The bill was modified in response to these accusations.”
The story is part of a News Sentinel package of articles on utility districts and their problems.
There’s also a story on water leakage from utility systems – up to 40 percent loss in once case; a report on an investigation into alleged misdeeds at an Oak Ridge utility district and an editorial lauding Comptroller Wilson’s efforts to audit districts and strengthen the laws governing them.
News release from state comptroller’s office:
A former Campbell County elementary school principal faces theft and official misconduct charges as a result of an investigation by the Comptroller’s Division of Municipal Audit. A Campbell County grand jury indicted Sandra Chaniott, the former Jacksboro Elementary School principal, last week.
Auditors determined that Chaniott made a deal to sell her school 33 air purifiers, but she actually delivered only 12. The school paid more than $8,000 for the undelivered air purifiers.
Chaniott made a profit of more than $2,000 for the air purifiers she did deliver, which allowed her to personally benefit from a school contract.
Auditors also learned that when Chaniott served as principal at Caryville Elementary School, she sold that school 47 air purifiers. Assuming all of those air purifiers were delivered, Chaniott would have personally gained almost $7,000 from those sales.
The investigation also revealed that Chaniott had hired her son and another individual to paint the school without putting the work out for bid, which violated the Campbell County Board of Education purchasing policy. Chaniott also failed to report payments made to the painters to the Internal Revenue Service.
Also, auditors noted that the school’s bank account shrank from $44,000 to $4,000 during the first 13 months Chaniott served as the school’s principal.
“It is not acceptable for people in positions of trust to divert public money for their own personal gain or the gain of their family members or friends,” Comptroller Justin P. Wilson said. “Money spent at schools should directly or indirectly benefit the students. It seems clear from our auditors’ report that wasn’t necessarily happening in all cases at Jacksboro Elementary School.”
To view the report online, go to:
News release from state comptroller’s office:
Comptroller Justin P. Wilson praised members of the General Assembly for approving legislation that will bring sweeping changes to the way utility districts operate and report information to the public.
“I have often said that sunlight is the best disinfectant,” Comptroller Wilson said. “And this legislation will bring more information about utility districts into the sunlight. I want to thank all the members of the General Assembly who voted for these reforms, but particularly Sen. Ken Yager and Rep. Ryan Haynes, who sponsored the bill and worked to ensure its passage.”
“This bill is about accountability, whether we’re talking about water loss, expenditure of ratepayer funds or the selection process for the boards of directors of utility districts,” Sen. Yager said. “This legislation makes significant changes to the Utility District Law of 1937 that will give greater conformity across the state in the way we select our boards of directors and it will also ensure greater transparency and accountability.”
TUCSON, Ariz. (AP) — University of Arizona police continue to investigate the weekend death of a male student found in his dorm room. Police spokesman Juan Alvarez tells The Associated Press the cause of death is unknown, but right now police say there’s no indication of foul play or an ongoing threat to the community.
The UA confirmed Monday the identity of the student as 19-year-old Wilson Forrester. He was a sophomore at the Tucson school and was studying pre-sociology.
Alvarez says the Pima County Medical Examiner’s Office is also involved in the investigation. Alvarez says it could take weeks before the forensic evidence investigation is completed.
From the Tennessee Democratic Party:
Wilson Forrester, the 19-year-old son of Tennessee Democratic Party Chairmen Chip Forrester, passed away unexpectedly Saturday.
Wilson Forrester died in Tucson, Ariz., where he was a sophomore at the University of Arizona studying business finance.
Wilson leaves behind his father Chip, mother Alice Forrester, brother Evan Forrester and stepmother Gabrielle Mittelstaedt as well as scores of friends.
“Our family is deeply grateful for the outpouring of support during this trying time. Your thoughts and prayers give us strength,” Forrester said. “While Wilson’s death is tragic, his life was not. Wilson had an absolute passion for life and he adventured through each day with a sense of purpose and an open mind.”
A Celebration of Wilson’s Life will be held at Hume-Fogg Academic Magnet High School, 700 Broadway, Nashville, TN 37203, from 2 p.m. – 4 p.m. Saturday, April 9. A Celebration of Life service will follow at 4 p.m. at the school.
At this time, the cause of death is not known, but foul play is not suspected. While results of the death investigation are forthcoming, the family asks for respectful consideration of their privacy.
A Facebook page, “In Memory of Wilson Waters Forrester,” has been set up for friends and family to offer remembrances.
In lieu of flowers, gifts can be made to the Wilson Waters Forrester Celebration of Life Fund, Acct: 183717507 at any First Tennessee bank branch or by sending a check to “Wilson Waters Forrester Celebration of Life Fund,” P.O. Box 198107, Nashville, TN 37219.