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BoE’s Smith fails test of openness on business, land connections Whenever a governmental entity is given large amounts of cash through bonds, SPLOST or any other means, it is vitally important that public scrutiny be encouraged as a method of insuring financial accountability. Financial accountability and sound decision-making have been deficient at times at the Fayette County Board of Education. I have often found it interesting to watch grown adults say they are willing to pay hundreds of dollars in additional taxes, and yet they do not have a clue whether the current dollars are being spent wisely or not. FCBOE Chairwoman Terri Smith generates a great deal of concern in relation to her private interests and her sworn responsibility to the FCBOE. I was immediately suspicious when Ms. Smith threatened legal action when someone questioned the actions of the board. This tactic is not used unless there is something to hide. Ms. Smith’s official state of Georgia financial disclosure statement, required by law, produced a lot of red flags. In section two, Ms. Smith had to list any fiduciary position she holds with any profit or non-profit entity. She submitted, “No fiduciary positions in any business entity.” But contrary to her claims, Ms. Smith appears, in the Georgia Secretary of State records, as the secretary of a corporation named James W. Smith, Inc. (doing business as “Action Plumbing”). In addition, she appears as the registered agent for TCG Holdings, LLC, TCG Investments, LLC, and TCG Residential Development, LLC. These corporations are connected to her husband. Ms. Smith stated on her financial disclosure that she held “no direct ownership interests in any business entity.” Section five of the financial disclosure form asks for a listing of the spouse’s direct ownership interests in real property. The reply from Ms. Smith was, “My husband had no ownership interests with a fair market value in excess of $10,000.” A quick look at the public records in Fayette County reveals TCG Holdings, LLC has 32 properties with a combined value of nearly $5,881,330 in land and $6,216,090 in buildings — a total of more than $12 million. Another of the spouse’s business interests, listed in Section 8 (known business or investment of spouse) on the form, is listed as JW Smith Properties, LLC and the public records show one property valued at $92,240. Another Smith interest, Triax Investments, LLC, shows three properties with a land value of $233,410 and a building valued at $586,750. One corporation, SISBRO Investments Corporation (est. 1997), has Ms. Smith’s husband listed as CEO, CFO and secretary. (Is that direct ownership interest?) The records show three properties with a total market value of $841,200. Unfortunately, SISBRO Investments Corp. was not disclosed at all on Ms. Smith’s state form. I had some interested parties tell me Ms. Smith and/or her husband’s business interests were generating business dealings with the FCBOE while Ms. Smith was an elected member of the FCBOE. The Aug. 5, 2002, FCBOE meeting minutes shows the board went into executive session (a closed-door portion of a meeting with no one from the outside present) “... for the purpose of discussing the future acquisition of real estate.” When they returned from the closed-door session, a motion was made “that the Board of Education authorize the sale of the surplused property located in the Tyrone Industrial Park to TCG Holdings, LLC for the price of $51,000 per acre.” At this point, you have got to be shaking your head, thinking they went into the session to discuss the “acquisition of real estate,” and they came back and voted on “the sale of surplused property” to a Smith-owned corporation of which Ms. Smith is the registered agent. To make matters worse, there is absolutely no indication in the minutes that Ms. Smith refrained from attending the closed-door session where the offer from her husband’s business was considered by FCBOE members. Subsection 5 of the FCBOE’s ethics code says, ”To resist every temptation and outside pressure to use the position as a school board member to benefit himself/herself or any other individual or agency apart from the total interest of the school district.” So what is going on? Later I was given access to a letter, dated May 22, 2003, from the same TCG Holdings, LLC to the director of the FCBOE’s land acquisition department. The letter stated that TCG Holdings, LLC owned property near FCBOE schools sites in Tyrone. The school owned a private sewer system to service the schools and TCG Holdings, LLC wanted to hook into the school’s system in order to maximize a proposed development on their land. I have heard of one other instance where a Smith-owned entity attempted to purchase FCBOE land, but I could not find any documentation. Of course, the process is very imbalanced when an entity wanting to purchase land has an official on the inside with knowledge of privileged information. Because of what I have seen, I believe a federal investigator – who is immune from local and state pressure – should be brought in to conduct a formal investigation of the FCBOE land dealings and a possible conflict in relationships with developers and contractors. FCBOE member Janet Smola takes the lead on many FCBOE fiscal matters. This is distressing when you review her past actions. Ms. Smola, in the midst of an uncertain 2003 economy, demanded the FCBOE initiate a building project ($1.56 million) at a local high school which was not on the list of approved bond projects or the FCBOE’s long-range improvement list. Despite recommendations from the school facilities staff and finance staff asking members not to act, the projects were approved without targeted funding. They were going to “find the money somewhere down the road.” This started a risky tendency of dodging in and out of the lines between doing what the voters asked them to do and using bond funds for what the voters did not ask them to do. Along the way, they failed to fund some of the valid needs cited in the bond referendums. A month later, the newspaper headline read, “Fayette Board of Education borrows $8.5 million to meet September payroll,” (The Citizen, Sept. 17, 2003). Ms. Smola asked the FCBOE comptroller, “Why can’t we dip into the reserves?” The comptroller replied the reserves were down to a paltry $2 million. The FCBOE was creating expensive non-bond related expenditures and they had no idea where they stood financially. Not keeping adequate reserves became a bad habit. Recently, Ms. Smola and the FCBOE approved teacher pay raises with the promise of state funding. Unfortunately, they approved and signed the contracts prior to receiving the funds. The state cut the funds and the FCBOE failed to make the raises contingent upon receiving the money. The cuts should not have come as a surprise because Ms. Smola has repeatedly complained about the state cutting back for the last five years. There should be immediate pay reductions to recoup the unsupported raises. Top administrative staff who received plentiful raises over the years should also see cuts. It was not surprising to see the local Board of Realtors writing a big check to the pro-E-SPLOST political action committee. The developers, home builders and real estate agents have the most to gain with many of the new school sites located in undeveloped areas instead of a sensible location near current population centers. Again, everyone wants great schools, but a lack of financially accountability does not yield a great school. The emotional push from the small band of E-SPLOST advocates does more to shield the truth than to show us the light. They cry out, “It is for the children!” I believe it is more important to say we want to achieve maximum quality educational instruction, including the arts programs, in a law-abiding manner and keep promises made to the voters while utilizing our tax dollars in the most efficient way possible. As for the timing of the SPLOST announcement, the most recent 2004 bond referendum was announced with plenty of time for discussion. In fact, Board Chairman Smith at that time said, “I wouldn’t want to put off having the tax initiative [2004 bonds] on the ballot this time around just because I’m up for reelection,” (“Key only BoE member to face contest,” The Citizen, May 5, 2004). Of course, she was running unopposed. We know this year, facing opposition in the primary, there was not a peep from Ms. Smith about any kind of tax initiative until her election was sealed in the primary race. In fact, she even refused to answer questions from the newspaper prior to the primary election. Suspect? We know the bond promises exempting senior citizens from paying the bond debt service will be trashed with the SPLOST. In addition, we also know the FCBOE has exhibited a lack of financial accountability with some of their land and construction deals. We know FCBOE used scare tactics, threatening the jobs of paraprofessionals and arts faculty, and SPLOST funds cannot be used for salaries. Superintendent DeCotis stated at the Fayette Chamber of Commerce (businesses do not pay SPLOST tax, we homeowners do) forum, “The ESPLOST would cover items in the operating budget that would free up funds in the general fund to allow us to remain a special school system” (Fayette Daily News, Oct. 3, “Realtors support E-SPLOST). However, many of the items found in the SPLOST proposal were not part of the recently approved budget affecting the general fund. We know there is not one construction or renovation project listed in the proposed SPLOST that cannot wait two years until the balloon payments are made on the bonds. We know the FCBOE knew full well the contract for the student computers’ lease was going to expire in 2008 and 2009, and they had no finance plan in place to fill the void. Instead of using the 2004 bonds to fund computers as promised, the FCBOE built two new elementary schools that were unnecessary. We know the FCBOE funded staff levels last year to handle 700 more students than we actually had on the rolls. So the FCBOE should not take credit for staffing cuts when they were overstaffed from the start. In addition, we know our state QBE funding is heading in the wrong direction because we have more facilities than we have students to fill them. We know the FCBOE structured, for some reason, the early bond debt to have an expensive balloon payment for the last two years (2008 and 2009), so we are really talking about financial tension for only two years. Thus, the FCBOE is attempting to make things appear worse than reality. You have to question the FCBOE’s $1,000 per computer estimate regarding the purchase of 5,700 units. With quantity discounts and manufacturer’s school pricing, many in the corporate world are scratching their heads trying to understand why we are negotiating such a dreadful deal. [Steve Brown is the former mayor of Peachtree City. He can be reached at stevebrownptc@ureach.com.] login to post comments | Steve Brown's blog
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