Eye on Hamilton County money: $900,000 set aside called 'too loose'

Eye on Hamilton County money: $900,000 set aside called 'too loose'

September 19th, 2013 by Louie Brogdon in Local Regional News

Photo: Getty Images/iStockphoto

Document: Hamilton County Commissioner Expenditures

POLL: Should Hamilton County change its policy on discretionary spending?

Illustration by Laura McNutt /Times Free Press.

Discretionary funds in other large counties

• The Nashville Metro government has no discretionary fund policy for its legislative body, according to Bonna Johnson, press secretary for Nashville Mayor Karl Dean.

• Knox County's 11 commissioners each get $5,000 a year to spend, according to county spokesman Michael Grider.

• Shelby County's 13 commissioners have a shared $200,000 pot each year, which they must hold public votes to spend, according to Harvey Kennedy, chief administrative officer for the Shelby County government.

Discretionary fund history

A full historical record of commission discretionary funds was not available this week. In the early days of the county commission, the county auditor kept track of the reports. After that, the funds were pulled from issued bonds and later the operating budget. Those records were kept by the county finance department. Some older records are stored in several areas and were not immediately accessible for this report.

According to available county records, commissioners have been given a combined $8.2 million in discretionary funds since they were first introduced.

* 1981: Commissioners first were allotted "commission project" funds in a $70,000 shared pot that commissioners couldn't pull from without a public, majority vote, according to budget documents.

* 1998: $900,000 was included in a bond issue for each commissioner to spend $100,000 on capital projects, which were tightly controlled by bond restrictions.

* 2001: Discretionary funds totaling $900,000 first appeared in the county operating budget.

* 2004: The discretionary money was again included in a bond issue.

* 2007: Commissioners requested $900,000 for discretionary money, but it was removed from the final budget and marked to be paid from a bond issue. It was unclear Wednesday whether the money was distributed through a bond, or through a known disbursement via the county's commercial paper program.

* 2008 - present: The funds are a regular fixture in the county's operating budget.

Source: Hamilton County finance and auditing records

With new leadership in place on the Hamilton County Commission, Commissioner Marty Haynes said he will renew his call for information to be posted online about the way he and other commissioners spend nearly $1 million annually at their discretion.

Details on how the money is spent should be more accessible to the public, Haynes said.

But a government watchdog group says increased transparency isn't enough for the combined $900,000 in discretionary funds -- the whole policy needs to be revised. And according to state consultants, Hamilton is the only county in Tennessee that allows individual commissioners to personally direct more than $5,000 in public money per year.

"It's something that's totally unique to Hamilton County. I work 12 counties in the Southeast [Tennessee], and none of them do it, and it's the only one of the four big counties," said Gary Hayes, county government consultant with the University of Tennessee's County Technical Assistance Service. "I've been doing this 30-something years and I've never had a county request to do anything like this."

Each year, Hamilton County commissioners are budgeted $100,000 apiece to spend on school buildings, projects or nonprofit organizations in the county and $8,000 for other discretionary expenses. What they don't spend, they can roll over into next year's balance. Commissioners vote over discretionary expenses only when price tags for projects exceed $15,000.

State law requires all county projects of $10,000 or higher to be bid, and county purchasing rules say the county mayor can approve bids below $15,000, according to county Finance Administrator Louis Wright. But if commissioners are making donations to nonprofits or paying for projects under $10,000, no vote is required.

Most counties in the state don't have discretionary funds for commissioners, and the few that do work with much smaller figures, according to an informal Times Free Press survey.

Haynes said he doesn't think his fellow commissioners are spending money inappropriately, but the funds should be open for public inspection.

"We just got a new chairman, so I'm going to let things get settled in before I bring it up again," Haynes said. "It's not that anybody doesn't get the information when they request it. It's just frustrating that it takes too long to get it."

Haynes campaigned for more transparency when he wrested his District 3 seat last year from former Commissioner Mitch McClure. Haynes again said in April and August that county staff should post the discretionary spending information online -- although he hasn't called for a commission vote.

Dick Williams, state chairman of Common Cause Tennessee, a nonpartisan, nonprofit government watchdog group, said the fund policy deserves a second look.

"I think that's, for lack of a better term, too loose of an application. It's sort of like earmarks," Williams said in an interview. "A certain degree of discretion to legislators, or in this case commissioners, seems to make sense, but to allow them to set aside a certain amount of money and let it accumulate, then perhaps spend it all right before an election year, I think it's too broad."

Williams said individual commissioners should push for certain projects in their districts during the budget-making process or during the year. Simply put, commissioners know the needs of their districts. But Williams said there should always be an open vote before money is spent.

"That seems too loose or open, and I would think it would be appropriate for the commission to review that policy and apply some constraints," Williams said.

He also suggested prohibiting discretionary funds from rolling over each year unless they are set aside for specific projects.

David Folz, a professor of public administration and state and local politics at University of Tennessee at Knoxville, agreed.

"From the standpoint of professional public financial administration, the issues that attend this practice are legion. These relate, for example, to the transparency of decision making, efficiency in the use of scarce public revenues, the effectiveness and accountability for results, and the extent to which discretionary fund decisions are fair, equitable and serve the public interest of the community as a whole," Folz said in an email last week.

County Commission Chairman Fred Skillern had $301,000 in his discretionary fund as of June 30 -- substantially more than his fellow commissioners. He said last week he's open to discussion, and he has his own ideas about limiting discretionary spending.

"I don't know if there are five votes there to do this, but I would welcome a discussion about limiting the money we got to spend," Skillern said.

Skillern said he was told that the original intent of the discretionary money was to make sure that money was spent in each district every year. Further, he said he thinks it should only be spent on public property. Skillern says he keeps funds stockpiled in case major projects come up in his district.

"I don't want to impose my will on anybody, but if I could find four more commissioners to go along with that, I have no problem whatsoever with limiting my expenditures to government property in my district," Skillern said.

Commissioners give the bulk of the funds to school and community programs that are not included in the annual budget.

The Sale Creek Middle-High School football program could not have started without $50,000 for uniforms and equipment from Skillern's District 1 fund. Commissioners Larry Henry and Chester Bankston combined recently and gave $130,000 to East Hamilton Middle/High School to build a baseball field. Ganns Middle Valley Elementary School received $50,000 from the District 3 fund.

Mike Evatt, chairman of the Hamilton County Board of Education, said much of the discretionary funding does benefit schools, which is good.

The department of education doesn't pay for playgrounds, athletics facilities and other big-ticket items, he said.

But, Evatt said, the system the commission uses needs some work.

"I feel like if a school principal is lobbying a commissioner for a playground, ... first, they bypass the board and they bypass the department of education. My opinion is if a school wants to build a playground, they need to come to the board before it's funded. That keeps everybody in the loop," Evatt said.

But the likelihood of commissioners putting the money into the hands of the school board or department of education is slim, he said.

"I don't see the commission giving $900,000 to the department of education. ... They aren't going to turn it over because then they wouldn't have a say-so [over how the money is spent]."

Information detailing commission discretionary fund spending was available only through June 30 as of late last week. Wright said no single report is regularly made, and the information had to be compiled.

But Mayor Jim Coppinger said last week that if the commission voted to post the information regularly online, it could be done. Coppinger said the discretionary fund has been included in the budget since before he was mayor.

Whatever commissioners decide, Haynes said he would start sharing his expenditures on his Facebook page.

Contact staff writer Louie Brogdon at 423-757-6481 or at lbrogdon@timesfreepress.com.