Humane Educational Society ruffled by new Hamilton County financial oversight

Thomas Aultman hugs Snoopy the dog, who his family will foster for the holidays, at the Humane Educational Society on Friday, Dec. 23, 2016, in Chattanooga, Tenn. The Humane Society needs volunteers to help foster pets through the holiday season.
photo John Craze, left, and Carrie Goins carry cat Lyndon, who they will foster for the holidays, at the Humane Educational Society on Friday, Dec. 23, 2016, in Chattanooga, Tenn. The Humane Society needs volunteers to help foster pets through the holiday season.

The Humane Educational Society of Chattanooga wasted little time pushing back against new Hamilton County financial oversight rules for certain nonprofit organizations.

Last week, the county commission voted 6-3 to require any nonprofit organization that receives county funding amounting to more than 25 percent of its operating budget to adopt county spending and travel policies. The measure also calls for any affected agency to make room on its board for a county commissioner and to provide the commission "with copies of all financial documents and records" relating to income and expenses.

The humane society joins the Chattanooga Convention and Visitors Bureau, whose president, Bob Doak, challenged the measure before its passage.

Commissioner Tim Boyd, who sponsored the rules, has said there "shouldn't be any problem" with any nonprofit agency adopting the county spending policies if they receive "that significant amount of money."

Attorney Jerrold Farinash, who serves as vice president of the Humane Education Society board of directors, told county leaders in a June 23 letter he did not believe the financial oversight rules applied to the organization. He picked apart language in the commission resolution, which targets nonprofits receiving annual funding from Hamilton County "to assist them in the performance of their established purposes."

"Hamilton County does not provide 'funding' to HES," Farinash said. "HES is a vendor to the Hamilton County. HES provides a service [animal services] in place of the County providing that service for its citizens."

The humane society charges the county $6 per capita for its services, compared to the $8 per capita national average for animal services, he said.

The amount Hamilton County pays the society amounts to about 33 percent of the funds it receives, Farinash said. However, the cost for those services is about 50 percent of the agency's expenses. The county's fiscal 2018 budget allocates $620,970 to the humane society.

The board is "amenable" to having a commissioner serve on the body, Farinash said. Its meetings are open to the public.

Regarding finances, the organization undergoes an audit every year, which it provides to Hamilton County, he said. The society also provides its proposed budget to the county before the county establishes its own budget.

"On any given day, HES houses between 400 and 500 animals which belong to Hamilton County," Farinash said. "If it is the County's decision to discontinue HES's services, the County will need to immediately provide HES with instructions as to a safe and proper facility to which its animals should be delivered."

During the commission's Wednesday morning meeting, Mayor Jim Coppinger voiced frustration over "micromanaging" nonprofit agencies with Boyd's measure.

The county receives financial statements from nonprofit agencies that receive public tax dollars, plus those agencies have their own boards in place, he later said in a phone interview.

"Financial statements show their stability," Coppinger said. "That's always been required and we've always adhered to it."

In a phone interview, Boyd said he believes the humane society should be removed from the portion of the county budget dedicated to charitable and civic organizations if it truly is a vendor.

"If that's the case, their services need to be assigned to a county department," Boyd said. "If not, they need to comply with the resolution."

Commission Chairman Chester Bankston said he has requested an opinion from the county attorney, who is out of the office this week.

Contact staff writer Paul Leach at 423-757-6481 or [email protected].com. Follow him on Twitter @pleach_tfp.