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Public Notices

April 24, 2014

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County Schools Conflict Existed, State Audit Says

Originally published: 2013-02-26 11:07:51
Last modified: 2013-02-26 11:09:26
 


BY KRISTEN BUCKLES

STAFF WRITER

A conflict of interest did exist early last year when the Greene County School System expended funds to pay for work contracted to County Commissioner Tim White's business, according to the Tennessee Comptroller of the Treasury.

The comptroller released the Greene County 2011-2012 Audit Report on Monday, in which there was a "non-material finding" against the school system.

This is considered less serious than "material findings," which are those that present the potential for a "misstatement of the entity's financial statements" that "will not be prevented, or detected and corrected on a timely basis."

The incident in question occurred in early 2012, when the school systemfound A&W Farms Excavating & Hauling, LLC., to be the low bidder on sewer installation for the new Chuckey-Doak High School Fieldhouse.

White is co-owner of the business, a fact which is noted in the auditors' report.

Among the votes in question was a vote White made during a County Commission meeting to allow the Greene County School System to transfer money from the General Purpose School Fund to the system's Capital Projects Fund to cover the cost of site work, as well as the sewer work his company would later complete.

At the time, he did not give any indication that his company was involved in the project.

The fact that the bid had been awarded to A&W Excavating & Hauling was, however, included in a news story in The Greeneville Sun at the time the bid was approved.

The conflict-of-interest question came before the Greene County Commission in November after numerous committee meetings and public airings.

The commission voted 11-7 in a Nov. 19 meeting that Commissioner White was not guilty of violating the county government's Code of Ethics in connection with his handling of work for the county school system and his related activity as a county commissioner.

After more than an hour-and-a-half of questions, information-sharing and debate, the commission took the matter to a vote to simply decide whether the commission believed White violated either the County Code of Ethics or state law, or both, or neither, in connection with the matter.

"The commissioners by the majority vote thought that there hadn't been a violation, but the law was clear," County Mayor Alan Broyles said on Monday. "I think [the auditors] confirmed what has already been brought forth."

Earlier in the fall of 2012, Mayor Broyles had asked for an opinion from Third Judicial Circuit District Attorney General Berkeley Bell about whether Commissioner White's actions had violated state conflict-of-interest law.

Attorney General Bell researched it and concluded that the answer was that there had not been a violation, although he also said that the state conflict-of-interest law is not very clear and has been interpreted "in exactly opposite ways."

Bell explained in an interview that, "The [Tennessee] Attorney General gave his opinion several years ago that it would apply in this type of situation.

"However, the Tennessee Court of Appeals in 2000 held that it would not apply in this type of situation because Commissioner White has no direct supervision over the expenditure of [county school] funds.

"The funds are expended by the board of education, over which he has no supervisory authority."

Commissioner White himself maintained his innocence throughout the inquiry and considered Mayor Broyles his "accuser" in the matter.

THE FINDING

The audit report by the Comptroller's Office stated:

"During the year, the School Department expended $6,000 from the General Purpose School Fund and $22,350 from the Education Capital Projects Fund for contracted construction work performed by A & W Farms.

"These expenditures violate the state conflict-of-interest statute, Section 12-4-101(a)(1), Tennessee Code Annotated (TCA).

"This statute states that, "It is unlawful for any officer, committee member, director, or other person whose duty it is to vote for, let out, overlook, or in any manner to superintend any work or any contract in which any municipal corporation, county ... shall or may be interested, to be directly interested in any such contract."

"In Opinion No. 91-31, the state attorney general opined that '... a construction contract between a county commissioner and the county Board of Education would violate Tennessee's conflict of interest law ... and that a county commissioner cannot enter into such a contract,'" the audit concludes.

SCHOOL'S RESPONSE

County Director of Schools Dr. Vicki Kirk responded to this audit finding, agreeing that, "All conflicts of interest should be avoided."

However, she goes on to state in her response that the contractor should reveal any conflict-of-interest to the school system.

"There are very few reliable ways that a School Department can check literally every contract for conflicts-of-interest with the vendors," she said in her formal reply.

During an interview on Monday, Kirk also noted that the school system is working to implement a new form of contract for bidders to sign, in which they are to note any conflicts-of-interest.

In Kirk's formal written response included in the audit, she also takes issue with the finding's reliance upon the Attorney General's opinion, saying that this portion of state law is "sufficiently vague that not less than seven Attorney General Opinions have been requested for clarification."

At least one of those opinions was in contradiction with the others, she noted.

Moreover, she notes that such opinions have been ruled "persuasive only" and not legally binding.

"Therefore, the audit report regarding this particular finding should be reworded to indicate that it is based upon an opinion of the Attorney General, and not upon the clear and unambiguous language of the statute," Kirk concluded in her response.

AUDITORS REPLY

While auditors allow such replies from the applicable management -- in this case, Dr. Kirk, representing the school system -- it is usual for the auditors to include a statement that such replies are not audited and that the auditors "express no opinion on the response."

In this situation, however, an auditor's comment concerning Dr. Kirk's reply was included. The auditor's comment stated:

"Until any specific issue has been litigated, we [and others] must rely on previous opinions of the State Attorney General to interpret statutory provisions.

"As noted in the opinion cited in the finding above, the attorney general opined that a county commissioner, whose duty it is to provide funds for construction contracts entered into by the county school board, cannot enter into such a contract with the board of education without violating Section 12-4-101(a)(1), TCA.

"This opinion is very specific to the situation in question, and we were unable to find any subsequent opinion that contradicts 91-31."

 
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