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Texas State Auditor

Planning to fail

Big surprise.

Right there with them

Anti-abortion activist Carol Everett had no experience running a family planning program when the state of Texas awarded her millions in taxpayer funds to help rebuild a network of low-income women’s health providers. The state knew that. So it should have been no surprise when Everett’s organization, the Heidi Group, failed to provide services to thousands of women after the Legislature slashed family planning funds and kicked out Planned Parenthood.

Last year, officials with the Texas Health and Human Services Commission (HHSC) acknowledged that the Heidi Group hadn’t met its contractual obligations, and the agency clawed back some of the money. But, until now, HHSC has refused to reveal how many patients Everett served, or just how much was spent on their care. Data obtained by the Observer shows that in fiscal year 2017, the Heidi Group served just over 3,300 clients, less than 5 percent of the nearly 70,000 Everett had pledged to cover. Nonetheless, the state renewed the group’s multimillion-dollar contracts for a third year.

“It’s outrageous. In what other area of state government would this kind of incompetence be rewarded over and over and over again?” said Dan Quinn, communications director at Texas Freedom Network, which called for an investigation into the Heidi Group contracts. “It’s a betrayal of taxpayers and especially of women who need these services and aren’t getting them.”

[…]

One of Heidi Group’s contracts is for the Healthy Texas Women program, which provides family planning services and preventive screenings for poor Texans. For fiscal year 2017, Heidi was initially awarded about $1.6 million to build a network of providers — a mix of clinics, individual doctors and crisis pregnancy centers — to serve nearly 51,000 patients enrolled in Healthy Texas Women. Despite spending more than $1.3 million, Heidi Group only managed to serve 2,300 clients, according to the new data.

Through a second contract, HHSC awarded the Heidi Group $5.1 million to serve nearly 18,000 clients through the Family Planning Program, the state’s other reproductive health program. Last year, the health agency conceded that the Heidi Group was falling short and cut back its contract by just over $4 million, reducing Heidi’s proposed client totals to about 3,500 and reallocating the remaining funds to other contractors. The Heidi Group missed that mark too, spending about $605,000 to serve just over 1,000 clients.

The Heidi Group was the only contractor in either program to have funds revoked in 2017.

See here and here for the background. We need to be clear that the Heidi Group’s incompetence, in conjunction with its anti-choice pedigree, is a feature and not a bug. As such, from the perspective of our state leadership, they’re doing a heck of a job. The Trib has more.

Auditor asked to investigate Heidi Group health care grant

Good.

Right there with them

Right there with them

The left-leaning nonprofit Progress Texas is asking the state auditor’s office to investigate a $1.6 million state contract awarded to an anti-abortion group under the state’s new Healthy Texas Women program.

[…]

The Heidi Group does not currently provide medical services or employ medical staff, but founder Carol Everett has said that her group will coordinate with medical providers in rural areas to provide contraception, cancer screenings and other services.

According to Progress Texas advocacy director Lucy Stein, that raises some red flags about whether the Texas Health and Human Services Commission (HHSC) improperly awarded the funds to Everett’s group.

[…]

In its request for an investigation, Progress Texas notes that Everett serves on the Women’s Health Advisory Committee, which provides input to the state health department on the implementation of its retooled reproductive health care safety net. Texas has spent the last year or so reorganizing after anti-abortion lawmakers barred Planned Parenthood from receiving public funds, and the $18 million Healthy Texas Women program is the result.

Progress Texas questioned whether a group that until a few weeks ago operated with the stated mission of “helping girls and women with unplanned pregnancies make life-affirming choices” because abortion is “contrary to God’s will” could provide the medical services promised by the new program.

See here for the background. I can’t find the aforementioned statement anywhere, but Progress Texas does have this call to action on their webpage, along with a video introduction to Heidi Group founder Carol Everett. Any time a group with no experience in a particular field receives a grant to provide services in that field, there ought to be questions about how that happened. Add in the Heidi Group’s political advocacy and you can see the potential for shenanigans. I hope the auditor agrees to take a look at this.

Legislative hearing on emergency leave

Figure this will be on the legislative agenda next spring.

Best mugshot ever

Best mugshot ever

At a Texas House hearing Tuesday looking into how some state agencies were able to keep some departing employees on the public payroll by granting them emergency leave, lawmakers expressed frustration that vague state rules may have allowed the practice.

“I want to know exactly … if there [were] any violations of the law or violations of the process, and I think that’s incumbent upon everybody on this committee to figure out if that transpired,” said Rep. Lyle Larson, R-San Antonio. “If the law wasn’t broken, then I want to know exactly how we can correct it.”

Lawmakers on the House Committee on General Investigating and Ethics were looking into whether heads of agencies have too much discretion when it comes to awarding emergency leave.

“There’s going to be absolute certain change to this statute, but let’s work together to get it right,” said Committee Chairman Rep. John Kuempel, R-Seguin, during the hearing.

Texas does not award severance pay to state employees, but recent news reports showed that Texas Attorney General Ken Paxton paid both his first assistant attorney general and communications director for months after they left the agency by categorizing both as being on emergency leave. Other reports revealed a similar practice in the General Land Office where departing employees continued to receive compensation, though not through emergency leave.

Emergency leave is often used as a way of permitting state employees to take a leave of absence for a death in the family, but the law also allows agency heads to grant it for other unspecified situations.

In June, House Speaker Joe Straus, R-San Antonio, asked the Legislature to examine the issue. He had previously called for limiting the practice in order to ensure “that agencies use taxpayer dollars appropriately.”

See here and here for the background. There’s a request for an investigation by the Rangers into the severances, but I don’t know where that stands. As a philosophical matter, I don’t particularly object to severance packages for state employees. There ought to be some limit on them, but I don’t think they need to be banned completely. The use of emergency leave as a form of severance package, done as a way of keeping people quiet as they’re being shown the door, is another matter, one that deserves a close look from the Lege. I don’t know what action they’ll take, but it will be something. The Chron has more.

Abbott orders state agencies to obey the law

Better late than never.

Droppin’ dimes, droppin’ dimes

Gov. Greg Abbott and Comptroller Glenn Hegar on Wednesday ordered state agencies to stop paying departing employees by placing them on “emergency leave.”

“Pursuant to this directive, the use of emergency leave, administrative leave or other mechanisms to continue paying state employees who have ceased to work will be prohibited,” the directive from Abbott and Hegar stated. The directive will remain in place until the Legislature takes up the issue during next year’s legislative session, Abbott’s office said.

The Dallas Morning News and other media outlets have recently reported on the growing practice by agencies to keep departing employees on the payroll by placing them on “emergency leave,” often as a form of severance.

The practice first came to light after reports that Texas Attorney General Ken Paxton paid his first assistant attorney and communications director for months after they left the agency. Subsequent stories revealed the General Land Office continued to pay departing employees without using the emergency leave designation.

Representatives of both agencies said they will follow the governor’s new order.

“We appreciate Governor Abbott’s leadership,” said Marc Rylander, spokesman for the attorney general’s office. “We do not disagree with the Governor’s new policy for all agencies subject to the direction of the governor, and we will concur with it moving forward.”

Brittany Eck, GLO spokeswoman, said the agency will suspend the use of separation agreements until lawmakers decide how to proceed.

“We look forward to continuing our work with the Governor, Comptroller, and members of the Texas Legislature to not only clarify the law on this issue but also discuss how state agencies should manage its workforce in an efficient and cost-effective manner,” Eck said.

See here and here for the background. The Lone Star Project requested an investigation into this a couple of days ago. I guess it had finally gotten to the point where Abbott could no longer ignore the issue. Trail Blazers and the Chron have more.

Lone Star Project requests investigation of severance packages

From the inbox:

BagOfMoney

Today, Lone Star Project Director Matt Angle sent letters to the Texas Rangers, the State Auditor and the Travis County District Attorney requesting formal investigations into a series of questionable payments made by Attorney General Ken Paxton, State Agriculture Commissioner Sid Miller, State Land Commissioner George P. Bush and other state officials.

Improper Payments Detailed in Investigative News Reports

Widespread abuse of state employee compensation has been detailed in a series of investigative news reports by the Houston Chronicle, the Dallas Morning News and other Texas publications over recent weeks.  The reports point to the systematic use of “emergency leave” as well as document manipulation to allow some state employees to quit or be removed from their state jobs but continue receiving thousands of dollars in state pay.   In some cases, the payments appear intended to provide special treatment to politically connected or otherwise favored employees.  In other instances, the payments may be a form of hush money to keep specific employees from criticizing state officials or disclosing information that might prove incriminating or embarrassing.

Angle’s letter to the Texas Rangers can be seen here and reads in part:

“These reports confirm that, contrary to the intent of law, multiple statewide officeholders have provided certain employees with emergency leave packages as a form of severance pay or even settlement agreements.”

“The intentional misuse of state funds violates both the spirit and the letter of the emergency leave provision of state law and could be viewed by Texas taxpayers as the equivalent of tax-payer funded hush money.”

“Specifically, the facts outlined by state news media and Texas state law merit a full investigation of the Attorney General, Agriculture Commissioner, Land Commissioner, Teacher Retirement System, Water Development Board and potentially other agencies for violations of Texas Penal Code 39.02 (Abuse of Official Capacity), Section 36.02 (Bribery), and Section 37.10 (Tampering with a Government Record).”

See here and here for the background. I had assumed someone would file a complaint over this sooner or later. The Rangers and the State Auditor can add it to their growing to-do list. The Chron has more.

Paxton’s day in appellate court

The grand jury was out to get Ken Paxton, apparently.

Best mugshot ever

Best mugshot ever

Lawyers for Attorney General Ken Paxton on Thursday tried to cast doubt on the makeup of the grand jury that indicted him. They’re hoping to overturn a lower court’s decision not to dismiss the securities fraud charges against him.

Much of the discussion at the Dallas-based 5th Court of Appeals centered on the composition of the Collin County grand jury that indicted Paxton on state charges nearly a year ago, setting up a legal drama that led to federal charges earlier this year. Paxton has pleaded not guilty to the state charges, which allege he misled investors in a company in which he had personal dealings before he became the state’s top law enforcement official.

Paxton’s lawyers argued Thursday morning that the the appeals court should reverse last year’s decision by Collin County District Judge George Gallagher not to end the case against Paxton before trial. Paxton lawyer Bill Mateja told the 5th Court of Appeals that the grand jury that indicted Paxton was not sufficiently random, the result of a judge who allegedly gave prospective jurors too much leeway in removing themselves from the process.

“Quite simply, the court did not follow the rules,” Mateja said, later acknowledging that if the grand jury were voided, it would affect every case it heard, not just Paxton’s. “It is better to nip this in the bud now than allow this to fester.”

Special prosecutor Brian Wice countered that there was nothing improper about how the jury was put together, saying Collin County District Judge Chris Older, who oversaw that process, “had inherent discretion” and “acted in good faith.” Even if the jury’s composition was less than random, Wice said, Paxton’s lawyers have so far failed to show how it harmed them.

See here, here, and here for the background. Seems like a lot to ask the court for a ruling that would have the effect of potentially throwing out a bunch of other indictments, but what do I know? There was another question at issue as well.

The other point of contention was whether Paxton was properly registered as an investment adviser when he encouraged some of his own legal clients to seek the services of Frederick “Fritz” Mowery, a friend who operated an investment firm in the same building as Paxton’s law office. Paxton received a commission on these referrals.

Arguing against the third-degree felony charge, Mateja said Paxton was registered with the federal authorities because so was Frederick “Fritz” Mowery, the friend who operated the investment firm that Paxton recommended.

He added the federal investment definition for investment advisor representative “trumps the state’s definition.” He also called the state definition too broad, saying it could require people who distribute leaflets for investment firms or newspapers that advertise for them to register as a representative.

Wice disagreed, saying the state law is clear and that Paxton should have been registered with the the Texas State Securities Board.

Yes, that’s Ken Paxton’s lawyer arguing that federal law trumps state law. Because Ken Paxton has that much respect for the power of the federal government. How anyone managed to keep a straight face during this is a mystery to me.

Anyway. The courtroom proceedings were staid and boring compared to the political spectacle, which involved Paxton making a video whining about how terribly, terribly persecuted he’s being for this itty bitty financial peccadilloes. I mean, what’s a little fraud among friends, and I right? The Lone Star Project takes apart Paxton’s claims. I’m hoping the 5th Circuit judges do the same; both sides say they expect an expedited ruling, but that would still be months from now. Finally, it turns out that there’s yet another former employee of the AG’s office who is collecting salary for doing nothing. It’s a long story, so read it all; there’s a bit at the end about how this particular employee had oversight of a disastrous project to upgrade and outsource the management of child support enforcement systems. Maybe I’m reading too much into things, but that all smells fishy to me in a way that the others did not. Read it and see what you think. The Chron has more.

State Auditor asked to investigate Paxton

Come join the party.

Best mugshot ever

Best mugshot ever

A liberal advocacy group wants the state auditor’s office to investigate whether Attorney General Ken Paxton broke the law by continuing to pay top staffersafter they resigned from the agency.

Progress Texas, a self-described “progressive” public relations firm based in Austin,sent a letter to the auditor Friday asking the office to look into whether Paxton “committed abuse and violated state law by misusing government funds” to pay two ex-staffers after they quit working at the agency.

“Paid leave policies are great, but it looks like Paxton violated state law. The facts clearly warrant a State Auditor’s Office investigation, particularly since Paxton’s justification for doling out 64 days of paid leave to two ex-employees has changed multiple times,” Progress Texas Advocacy Director Lucy Stein told The Dallas Morning News. She added: “We welcome a thorough and independent investigation. It’s important that Texans are confident that no elected official is abusing or misusing taxpayer dollars, especially to advance the work of a political campaign.”

[…]

First Assistant Attorney General Charles “Chip” Roy and Communications Director Allison Castle left the agency on March 9. A month later, both remained on the payroll,The News first reported.

Roy formally resigned the next day and backdated his departure from the agency, but Castle remains on the payroll and is scheduled to be paid a second full month’s salary of nearly $13,000 on May 2.

After more than a week of refusing to answer questions about the issue, the agency’s human resources director, John Poole, wrote a piece for a conservative websitedenying Paxton did anything wrong.

“Attorney General Paxton acted in a compassionate, legal, and ethical manner when he granted paid leave to two staffers who had worked tirelessly for the state of Texas,”Poole argued. “I stand by his decision.”

Poole added that Paxton had extended the offer to Roy and Castle under Texas’ emergency leave law, which allows officials to approve paid time off for employees who give “good cause.”

But Roy – in remission for Stage 3 Hodgkin’s lymphoma – said he was never on emergency leave and was only using up his accrued vacation time. He had been extended the option to take advantage of his health care benefits as a state employee,he added, if his health took a turn for the worse.

See here for some background. As of this writing, I don’t know if the State Auditor will follow up on this request or not. I don’t believe the Auditor has any power to issue fines or other punishment, but his findings could be used to spur another agency, like the Ethics Commission or a district attorney, to take a look. In the meantime, the Trib talks to one of the other beneficiaries of Paxton’s largesse.

A former aide to Texas Attorney General Ken Paxton said Friday that he asked for her resignation and that she did not ask for nor negotiate a now-controversial departure package that left the state paying her thousands of dollars in salary and benefits.

“The attorney general wanted to bring in a new team and go in a different direction, and that is certainly his prerogative,” said Allison Castle, who resigned as senior communications director for the embattled attorney general on March 9.

Paxton’s request for her resignation was unexpected, said Castle, who was a veteran adviser to former Gov. Rick Perry before she joined Paxton’s team. After being handed a pre-written resignation letter including the terms of a compensation package, she said she signed it, packed up her belongings and was out of the AG’s office that afternoon.

Castle said she had no reason to question the appropriateness of the terms.

The benefits and compensation deal granted Castle 64 days of paid leave.

[…]

In addition to Castle and Roy, the agency has recently lost a number of other employees, including chief of staff Bernard McNamee, scheduler Katie Lawhon and two spokeswomen, Katherine Wise and Cynthia Meyer.

Lawhon, who, like Roy and Castle, also received administrative leave upon her resignation, told The Texas Tribune on Friday she did not negotiate paid leave beyond her earned vacation time. She said she was informed that she would be getting additional administrative leave, details that appeared in a pre-written resignation letter she later received.

Amid the staffing shakeup, Paxton, a McKinney Republican, has filled several key positions with longtime allies from North Texas.

Here’s the Chron story on Employee #3. My guess is that the payoff to Chip Roy was a favor for a friend, and the other two were motivated by a desire to get more of Paxton’s cronies in the door, with the payout being an incentive to go quietly. I’m just guessing here. You’d think the state’s top attorney would understand the law better than this, but then no one ever claimed Ken Paxton was a legal genius. I do hope the auditor takes this up, if only to see what official explanations are offered.

Rangers investigating Rep. Dawnna Dukes

Busy days for them.

Rep. Dawnna Dukes

The Texas Rangers have joined a Travis County District Attorney office criminal probe into state Rep. Dawnna Dukes’ use of staff, the Texas Department of Public Safety confirmed.

“At the request of the Travis County District Attorney’s Office, the Texas Rangers are assisting in an investigation into alleged criminal misconduct of Dawnna Dukes,” DPS spokesman Tom Vinger said in a statement released Tuesday.

The Texas Tribune reported in February that the State Auditor’s Office had launched an investigation after Dukes’ then chief of staff, Mike French, asked whether it was legal for the Austin Democrat to ask staff to work on the annual African-American Heritage Festival. The festival is an event Dukes helped create 17 years ago to raise money for scholarships to Huston-Tillotson University.

The auditor’s office referred the case to Travis County prosecutors on April 15, according to the Austin American-Statesman.

See here for some background. I’m sure if Rep. Dukes winds up getting indicted for something, Ken Paxton and Rick Perry will stand with her in solidarity over these overly politicized investigations. Until then, we’ll see what happens. The Austin Chronicle has more.

Business as usual with the Texas Enterprise Fund

Raise your hand if this surprises you.

BagOfMoney

In July of 2013, Gov. Rick Perry announced that he had closed another deal. Chevron would build a 50-story tower in downtown Houston next to one of its existing office buildings. The $662 million capital investment was slated to create 1,752 high-paying jobs.

“The state is providing $12 million through the Texas Enterprise Fund to close the deal on this expansion and job creation,” Perry said in a press release at the time.

A Chevron executive added: “our new office building underscores Chevron’s long-term commitment to Houston and Texas.”

Nearly three years later, 1600 Louisiana Street, where the 1.7 million square foot building was supposed to rise in the Houston skyline, remains a grassy lot. The company, it turns out, was not actually required to build its new tower in exchange for drawing state funds.

What’s more, Chevron has announced layoffs of more than 1,500 workers in Houston over the past year, prompting questions about whether the petroleum giant employs fewer area workers than it did before Perry allowed it to tap taxpayer funds.

And yet Chevron remains in full compliance with its Enterprise Fund agreement with the state, according to Gov. Greg Abbott’s office. A close examination of the 14-page contract reveals language so vague that the company does not legally have to deliver on much of what it promised publicly.

Texas has doled out more than half a billion dollars through the Texas Enterprise Fund since 2003, with dozens of firms agreeing to create jobs in Texas in exchange for a subsidy. The fund has long been championed by Perry as a way to reel in businesses that might otherwise land elsewhere. It drew close scrutiny two years ago, in the Republican’s final days in office, after an audit found the fund riddled with weak oversight. Critics honed in on the news that grants were awarded to companies that didn’t formally apply and that state agencies repeatedly failed to check whether companies were adhering to their contracts.

There’s more, but you get the idea. I’ve written plenty about the Texas Enterprise Fund and its various cousins; go search the archives if you want a taste. I’m just going to say now what I said before about tax breaks that the city hands out: There’s a place for this kind of economic incentive, but there ought to be an annual review of each deal, with a public accounting of what was promised, what’s been done, what’s still left to do, and what the timeline is for doing them. For the TEF, there needs to be a better process for deciding how they are granted as well. I don’t think any of this is rocket science, or particularly controversial. Ultimately, it’s up to the voters to elect people who will make that a priority, and then to hold them to that promise. Until that happens, why should anything change?

Auditing HCDE

We’ll see about this.

Later this summer, state auditors are expected to release their final report on the Harris County Department of Education. They’ve been examining the agency since last December.

Superintendent James Colbert told lawmakers about it at a hearing in April.

“We should have absolutely nothing to hide as far as I’m concerned and really they provide a free service for us for things that we need to fix. And so, that’s something that I’m open to,” Colbert said.

Critics contend the Harris County Department of Education has plenty to fix, from handling records requests to duplicating services with other agencies.

Its services include early learning, special education and adult education.

State Sen. Paul Bettencourt, R-Houston, said he wants to have a hearing in Austin after the audit is released.

“What I want this to come out with is an idea of ‘Do we have a model that works in Harris County, or do we need to change it?’” he said.

See here for some background. HCDE has long been a political target, so an audit like this could provide ammunition for its detractors, or it could provide evidence that there’s nothing of substance for them to attack. The Chron story I linked to in that earlier post certainly suggests there are some things going on at HCDE that need scrutiny. Hopefully, this audit will show that they have been addressed.

The veto that keeps on giving

I haven’t closely followed the burgeoning scandal at the Texas Health and Human Services Commission, which involves no-bid contracts, up front tuition reimbursements for top level staffers, and rampant cronyism. It’s already cost three people their jobs and will likely eventually result in the HHSC Commissioner, Kyle Janek, either falling on his sword or getting defenestrated. If nothing else, it’s been a nice little stink bomb for Greg Abbott and a timely reminder as Rick Perry exits the main stage that there’s a damn good reason why everyone should be glad to see him go. And since this is a scandal that happened on Rick Perry’s watch, there is as always more to it than meets the eye.

Corndogs make bad news go down easier

Corndogs make bad news go down easier

A year and a half before a no-bid state contract collapsed in scandal last month, a criminal investigation into tens of millions of dollars worth of deals awarded through the same process by Rick Perry’s administration was derailed by the funding veto that got the governor indicted, according to the prosecutor who led the probe.

The earlier inquiry, which concerned Texas Department of Public Safety contracts for Perry’s highly touted and controversial border-security program, lasted more than a year before abruptly shuttering, said Gregg Cox, director of the Public Integrity Unit at the Travis County District Attorney’s office.

“We lacked the resources to continue that investigation,” Cox said. “Because the staff was cut when our budget was vetoed.”

[…]

The news also raises questions about whether a continuation of the inquiry could have alerted officials much earlier to vulnerabilities in the so-called “Cooperative Contracts” process.

The process, which allows state agencies to bypass competitive-bidding, but was designed for smaller purchases, was used for both the Department of Public Safety contract and the scandal-ridden Medicaid fraud detection deal given by the Texas Health and Human Services Commission to Austin technology company 21CT.

That contract, which eventually was set to cost $110 million before abruptly being canceled last month, already has led to the resignations of four high-ranking state health officials, led some lawmakers to call for Executive Commissioner Kyle Janek to step down and triggered investigations by Cox’s Public Integrity Unit, Gov.-elect Greg Abbott and the State Auditor’s Office.

Officials said the earlier Public Integrity Unit investigation focused on more than $20 million in no-bid contracts given to Virginia defense contractor Abrams Learning and Information Systems, Inc., to help Texas develop its border security strategies.

The Virginia firm, founded by retired Army Gen. John Abrams, initially got a $471,800 contract in March 2006 to help the state establish a Border Security Operations Center in Austin, according to a state documents. The deal went through the no-bid process because officials said it was in response to “an emergency.”

An internal memo that later surfaced in news reports showed that the declaration of an emergency was based on public statements by Perry, who at the time was in a tough re-election campaign in which border security was a big issue.

Three months after its first contract, Abrams received a second emergency deal, for $679,600, that greatly expanded the company’s responsibilities.

Over time, state records show, officials quietly added more and more responsibilities to the contracts until they grew to more than $20 million and covered work in most segments of the state’s growing border-security programs.

See, that’s the sort of thing that happens when the one law enforcement authority over state government gets declawed. At the time that the threat and the veto were happening, the conspiracy theory was that Perry wanted to cut any investigations into the scandal-plagued Cancer Prevention and Research Institute of Texas (CPRIT). I don’t think there was any specific intent like that – though if some evidence turned up to suggest there was, I would hardly be shocked – I think Perry just didn’t care about any collateral effects of his actions. He had his own objective, and that was all that mattered. And stuff like this is the result. Thanks for interminable years of service, Rick.

Abbott’s Enterprise Fund issues

It’s a bit of a problem for him, isn’t it?

Still not Greg Abbott

While critics were hounding Gov. Rick Perry a decade ago about his job-luring Texas Enterprise Fund, his lawyers went to Attorney General Greg Abbott to block the release of applications that supposedly had been filled out by the entities requesting taxpayer subsidies.

Abbott’s office, tasked with deciding which government records have to be made public, told Perry’s lawyers they must keep the applications secret under exemptions to state transparency laws, according to attorney general rulings and news reports.

Now, though, information contained in a blistering state audit shows that at least five of the recipients that were named in Abbott’s 2004 rulings — and which got tens of millions of dollars from the fund — never actually submitted formal applications. And if no applications ever existed, it’s not clear what Abbott was telling Perry he had to keep secret or why the public is just now learning that millions were awarded without them.

This is the sort of thing that people have in mind when they say the optics of something don’t look good for whoever. Stuff like this doesn’t help, either.

Republican governor nominee Greg Abbott has collected more than $1 million in campaign contributions from beneficiaries of a state business fund cited in a scathing audit for lax oversight of taxpayer dollars.

State law requires Abbott as attorney general to monitor state accounts and recover misspent money.

[…]

While state law requires that “at least monthly the attorney general shall inspect” state accounts, an Abbott spokesman said the state auditor has primary responsibility to check on funds.

Jerry Strickland of the attorney general’s office said Abbott has recovered millions of dollars in cases that have been referred by the comptroller during his tenure.

“Attorney General Abbott has successfully collected more than $740 million in funds owed to the state of Texas since 2003,” said Strickland.

None of that money involved the Texas Enterprise Fund, which has distributed $500 million since it was created 2003.

That may just be the weakest response to a reporter’s inquiry about a Bad Thing in the history of spokespeople. Pick a better boss to work for next time, Jerry.

One never knows how the public will respond to stories like these, or if they’re even aware of them. At least this one’s an easy one to tell – Rick Perry gave away hundreds of millions of your tax dollars in grants to big companies that didn’t even ask for them, and Greg Abbott said it was okay for him to not tell anyone about it. The word coverup does trip off the tongue easily enough.

Democratic gubernatorial candidate Wendy Davis accused her Republican opponent Monday of using his power as attorney general to “orchestrate a cover-up” of misspending inside the Texas Enterprise Fund that, according to an audit, handed out taxpayer subsidies to businesses with little oversight.

Davis seized on reports over the weekend detailing Attorney General Greg Abbott’s decade-old rulings that various Texas Enterprise Fund records be kept secret. Abbott’s office, in charge of ruling what government records must either be released or withheld, found that numerous “applications” for the grant money were exempt from state transparency laws.

But a damning new state audit found that many of the companies never submitted applications, making it unclear what applications Abbott sought to block. Davis claims to have found the answer: She is accusing Abbott of declaring the records to be secret in order to hide what the audit turned up years later — a lack of oversight over millions of dollars in grant money.

“We need an independent investigation by appropriate state or federal authorities regarding the actions by the attorney general and the attempts to use the power of his office to cover up the transfer of millions of taxpayer dollars to companies whose applications he knew didn’t exist,” Davis said Monday at a news conference in Fort Worth.

Representatives of the Abbott campaign for governor and the attorney general’s office did not immediately return phone calls.

Not even to give a perfunctory quote about how Greg Abbott has always done whatever it is he says he’s done to protect our interests? My, my, they must be in a tizzy over there. This could really be something.

The growing scandal over the mismanagement of the Texas Enterprise Fund is having a major impact in the state’s political races, and has the potential to upset the conventional wisdom as we move into the final six weeks of the political season, officials tell Newsradio 1200 WOAI.

[…]

One Republican Party consultant, who asked not to be named, told Newsradio 1200 WOAI that this could be a ‘game changer’ in the race for governor, which has repeatedly shown Abbott leading Davis by between 8 and 12 percentage points.

“People can understand that this represents the concerns they have that politicians don’t take their tax money seriously,” the consultant said. “This reaffirms the attitude that ‘it’s not real money’ because it comes from the taxpayer.”

The expert added, “misusing and mismanaging taxpayer money is something that will stick with conservatives. They won’t like it at all.”

It’s a little premature to call something a “game changer”. If we’re still talking about this a week from now, if we haven’t been distracted by some other shiny object, then maybe. Believe me, I hope that’s an accurate assessment. I’ve just seen too many other “game changers” turn out to be not so much to get too giddy just yet. The best thing that can happen is for more information about this to come out, to add to the existing story. We’ll see about that. Burka, Trail Blazers/a>, and PDiddie have more.

Great moments in false equivalence

The headline reads Money from disputed tax bills flowing to candidates for top tax chief, and then the story tells us that more than 99% of that money is going to one of those candidates.

BagOfMoney

Business entities and taxpayers are pumping thousands of dollars into the campaign coffers of candidates who, if elected state comptroller, would receive their tax-bill complaints.

The Texas Comptroller’s Office is charged with collecting state tax revenue and implementing state tax law. And even though the state auditor sought a ban on business contributions to comptroller candidates nine years ago, the Texas Legislature did not act and the practice prevails.

In this election cycle, businesses and lawyers with clients before the comptroller’s office have thrown more than $200,000 into the campaigns of two candidates seeking to replace Susan Combs: Republican state Sen. Glenn Hegar of Katy and Houston-area accountant Mike Collier, a Democrat.

Public watchdog groups see a potential conflict of interest.

“As long as we’re going to have comptrollers running on partisan political tickets, it’s almost impossible to filter out which contributions might not have an interest in the comptroller’s office,” said Craig McDonald, head of Texans for Public Justice.

Collier hasn’t received a lot of cash from entities with a stake in tax cases. Of the $200,000 he’s raised, only $1,500 comes from employees of ExxonMobil and BP, two energy firms with disputes before the Comptroller’s Office. He said he’d be open to legislative action barring contributions from donors with active cases with the office, but wouldn’t cut those donations out of his coffers.

“Because I’m the underdog and I’m trying to throw out the trench politicians, I’ll take money from anybody who’ll give it to me,” Collier said.

Hegar has snagged more than 10 percent of the more than $2 million he’s raised from businesses or firms with clients with active tax cases.

So in other words, of the “more than $200,000” that has been raised by the Comptroller candidates from people and firms that have business before the Comptroller’s office, at least $200,000 of it went to Glenn Hegar, while all of $1,500 went to Mike Collier. This is like saying that the Aaron brothers, Hank and Tommie, combined to hit 768 home runs in their career. One of the two contributed a lot more to the bottom line than the other. Oh, and well done on the “more than 10 percent of the more than $2 million” bit, which not only obscures the actual total (how much more than ten percent? how much more than $2 million?) it also surely confuses the more math-phobic readers about how much Hegar collected to the point where they have no idea that it’s way, way more than Collier. An impressive performance all around.

By the way, companies like BP and ExxonMobil have lots and lots of employees. Very few of those employees would have any role in or influence over the dispute process with the Comptroller’s office. Unless the BP and ExxonMobil employees cited above that donated to Mike Collier are among that small group, then the whole premise that “both candidates” are benefiting from contributions of entities and their representatives that have business before the Comptroller’s office is shot. Details, details.

The point of the story is that in 2005, a report by the Texas State Auditor showed that 750 taxpayers received $461 million in tax credits and refunds from the comptroller’s office less than a year after they or their representatives had made a contribution to then-Comptroller Carole Keeton Strayhorn. This was a key attack point by Rick Perry against Strayhorn in the 2006 campaign. That auditor’s report recommended that legislation be passed to the Comptroller or candidates for Comptroller from receiving campaign contributions from anyone that had a dispute pending with the office. Needless to say, nothing happened then, and nothing will happen in 2015. But at least now we’ve been reminded of the issue, and the Chronicle figured out a way to make numbers that are two orders of magnitude apart sound similar. So there’s that.

Outsourcing Texas border security

What could possibly go wrong?

Gen. John Abrams

A little-known private defense contractor from Virginia has quietly received about $20 million under a series of no-bid contracts with the State of Texas to develop its border security strategies, an effort that included shaping the state’s public message on the increasingly controversial nature and extent of violence spilling into Texas from Mexico.

According to an internal Department of Public Safety memo, the role of Abrams Learning and Information Systems Inc. expanded dramatically after Gov. Rick Perry, then in the midst of a campaign for governor, ordered an acceleration of border security operations that the state wasn’t equipped to handle on its own.

Over the next 4 1/2 years — ALIS, founded in 2004 by retired Army Gen. John Abrams — would become intimately involved in nearly every aspect of the Texas Department of Public Safety’s border security apparatus, according to documents obtained by the American-Statesman through the Texas Public Information Act. Its assignments ranged from refining the state’s Operation Border Star campaign and coordinating the role of National Guard troops along the border, to setting up the state’s joint intelligence support centers and creating a multimillion-dollar high-tech system to map border crime.

Despite the firm’s work on the state’s most important border operations, ALIS flew so far under the radar that outside of law enforcement, few state and local leaders knew of its activities. Several officials who have worked closely on border security issues said they had no knowledge of the firm until contacted by the Statesman.

State Sen. Jose Rodriguez, D-El Paso, said he plans to call for an investigation into the state’s relationship with ALIS, saying that the state had outsourced vital security operations to a firm with “less accountability and less transparency than I would expect from state agencies.”

Even a keen observer of the Department of Public Safety could easily have been unaware of the contractor. Despite more than half a dozen contracts totalling $19.2 million, according to the Texas comptroller’s office, a review of the minutes and agendas of the state’s Public Safety Commission meetings between 2006 and 2011 revealed no public discussion about the firm’s role and only passing references to the firm’s contracts.

Department policy did not require contracts such as those with ALIS to be presented to the commission until September 2009, according to DPS officials.

Nor does the website of the Legislative Budget Board, the only agency charged with gathering information on state contracts, reveal the extent of the ALIS role; it shows just two contracts worth $2.1 million.

[…]

In August 2010, the DPS enlisted Abrams to develop a public and media outreach strategy to “position Texas border security efforts in a positive light,” paying the firm to develop talking points, presentations, testimony and the “orientation” of senior government leaders. Abrams created a public relations campaign featuring 36 principal messages, including “The success of Texas border security and law enforcement efforts are critical to preserving you and your family’s safety and way of life” and “Border Security is a Federal Responsibility but a Texas problem” — the exact language contained in an earlier Perry speech and a common refrain during Perry’s presidential campaign.

A draft document obtained by the American-Statesman, titled “Border Security Public Outreach Themes and Messages,” includes talking points that would seem to boost the firm’s standing. In touting Operation Border Star, the state’s principal border security strategy, the document says that law enforcement agencies “join with private companies” to “reduce border-related crime.” The messages were meant to be used by the agency’s public information department and to guide agency interactions with the media.

DPS officials say they contracted with ALIS on media outreach because they wanted the public to know about Mexican cartels recruiting Texas students to carry drugs and other threats such as smuggling operations and public corruption.

Rodriguez said he thinks ALIS’s public information work represented a conflict of interest. “They are giving talking points to officials so they can make the case for more public money for border security, which they can then use to pay for more contracts,” Rodriguez said. “(ALIS) was doing this to make themselves more relevant.”

Abrams was one of those retired generals who spent the year 2002 on TV and in the newspapers as a “military analyst” beating the drum for an invasion of Iraq, so he knows a little something about this kind of sales job. You really need to read the whole thing, then when you’re done go read the Alternet story that came out a couple of days before the Statesman published theirs. Among other things, Alternet reporter Tom Barry points to a February report from the Texas state auditor that called into question the way some federal grant money for border security was spent:

The audit reviewed a representative selection of cases among the $265.9 million in federal grants and subgrants to DPS — in the areas of homeland security, border security, emergency management, and law enforcement interoperability.

Among the findings of negligence and incompetence were these startling instances:

  • A draw-down of $755,509 in federal funds to issue a duplicate payment to one subgrantee.
  • Five of the six procurements (83%) examined by the auditor in the cluster of federal grants for homeland and border security were not bid competitively as required.
  • DPS categorized four of the five procurements examined by the auditor as “emergency procurements,” and in three of those four DPS was unable to document why they were processed as “emergency” contracts.
  • DPS has no system to track, administer, monitor federal subgrants – as federal guidelines require, leading to routine occurrences of duplicate payments, dipping into one federal fund to pay for unrelated programs, and failure to submit required reports and audits.
  • Complete failure to track interest rates on unused federal funds and to remit those funds, as required by federal grant guidelines.
  • Access to law-enforcement databases by contract programmers who lacked proper authorization or clearance.

Grits flagged both of these, and summarizes as follows:

Sounds like the McCaffrey report and the recent Spring Break warning are all part of a broader public relations campaign. For that kind of money, there’s likely more misinformation coming, or else this was the most expensive PR advice Texas taxpayers ever paid for.

Just a reminder that no matter what the budget situation is, Rick Perry and the Republicans in the Lege will always find money for the things they think are important. Go read and find out how that money has been spent without you knowing about it. More here and here, and a statement from US Rep. Silvestre Reyes is beneath the fold.

(more…)

UH moves closer to Tier I status

Good for them.

The University of Houston is on the verge of accessing additional state money that could help catapult the school closer to prestigious Tier 1 status, according to a preliminary report from the Texas Higher Education Coordinating Board.

Both UH and Texas Tech University have been cleared to access the new National Research University Fund, pending a mandatory review by the state auditor’s office.

UH President Renu Khator said she hopes to use the money – the amount of which still needs to be determined – to recruit faculty, especially those in costly fields like science, technology and engineering.

“We have done a lot, but we have so much more to do,” she said Friday. “I want our city to be nationally and globally competitive. I want our university to be nationally and globally competitive.”

I’m sure that report exists somewhere on the THECB webpage, but if so I can’t find it. In any event, the state auditor will verify the findings then present its own report, and we’ll go from there. Getting to Tier I status will be good for UH, the city, and the state. I wish them the best of luck in the process.

The Rick Perry bailout

I don’t think I’d ever heard about this before.

Over his eight years as Texas’ [Agriculture Commissioner], [Rick] Perry oversaw a loan guarantee program with so many defaults that the state had to stop guaranteeing bank loans to startups in agribusiness and eventually bailed out the program with taxpayer money.

The state auditor panned Perry’s claims of creating jobs and criticized Perry and his fellow board members at the Texas Agricultural Finance Authority for not following their own lending guidelines.

In some instances, the auditor said, Perry and the authority guaranteed loans to applicants with a negative net worth or too much debt. Citing growing debts, the auditor finally suggested that state officials consider dismantling the program.

Even as the first alarms were sounded, Perry defended the program, saying no taxpayer money was at risk, blaming others and claiming he had fixed it.

It only got worse.

By 2002, Perry’s successor, Agriculture Commissioner Susan Combs, a Republican, stopped making loans as the percentage of bad loans neared 30 percent.

By 2009, her successor, Agriculture Commissioner Todd Staples, also a Republican, asked the Legislature to pay off the loan guarantees with a $14.7 million appropriation. The finance authority could no longer afford the $541,000 to cover the annual interest on the bad debts, almost all of which dated back to Perry’s tenure.

“It’s bad,” Staples told the American-Statesman at the time. “Unfortunately, taxpayers are on the hook for something that happened as long ago as 1987.”

In effect, Perry, as governor, signed his own government bailout when he approved the 2009 appropriations bill.

Read the whole thing, it’s quite interesting. The amount of money needed to close the books on this program wasn’t very much, but it’s clear that it was entirely Perry’s responsibility as Ag Commissioner, and that he spent a lot of effort defending his sinking ship. And I’m amazed that I’d never heard of this before now. You wonder how the 2010 campaign might have proceeded if “Rick Perry authorized his own bailout” had been part of it. Maybe we’ll get some idea about that next year.

Auditor criticizes Emerging Technology Fund

The State Auditor has issued a report saying that the Texas Emerging Technology Fund needs more transparency. I know, I’m as shocked as you are.

The report recommended that the state’s 17-member advisory board — volunteers from the technology community who advise Perry and legislative leaders on the grant applications — should be more transparent about its dealings.

The committee should meet in public, record votes and keep minutes of its meetings, the report recommended. The committee members also should be required to file annual financial statements and be prohibited from investing with or being paid by grant recipients, it said.

The technology fund’s investments in startups have attracted controversy.

The report was ordered after months of news stories detailed a secretive grant process that could have benefited Perry allies.

And Perry has had to bolster the ethics policy for his staff and the advisory committee to discourage improper business dealings.

The report is here. See here and read the rest of the story for some background. Of course, no one paid much attention to the various media reports of questionable behavior by the ETF before, so I doubt anyone will pay much attention to this one now, least of all Rick Perry. But at least it’s on the record. Burka has more.

State auditor to look at Emerging Technology Fund

State Auditor John Keel will perform an audit on the state’s Emerging Technology Fund to see if the money is being used and distributed properly.

State Auditor John Keel said Wednesday that his office will review the monitoring of the funds, compliance of the companies and universities receiving the taxpayer money, and internal controls over awards.

“It is a significant amount of money. The state has a lot invested in this and in the outcomes,” Keel said.

Most of the decision-making behind the technology fund’s awards, as well as the names of investors in chosen companies, has been shrouded in secrecy.

[…]

Keel said Wednesday that his office will start an audit Dec. 1, and he hopes to have it completed by June.

“There’s been a lot of focus and attention on this in the press; all of those things brought us to the conclusion that we need to initiate an audit of the Emerging Technology Fund,” Keel said.

The fund has not been independently evaluated since its inception. The law creating the fund did not provide for audits, but Keel has broad discretion to evaluate state government programs.

Reports of the state auditor are public and outline weaknesses and failures of state programs in adhering to state law or accountability standards. Lawmakers study the results closely as they shape legislation and decide how much money to allocate to programs.

In a memo dated Tuesday and sent to key lawmakers who serve on the state audit committee, Keel said the audit will determine whether the governor’s office disperses the technology fund grants in accordance with the law, monitors recipients “to help ensure that they comply with terms of the grant,” and determine whether the companies and the governor’s office “have controls to help ensure accountability for the use” of the funds.

What do you suppose are the odds of that? It sure would have been nice for all of this to have been done six months ago, but I suppose it’s better than nothing. See various posts here for some background.

State to audit food stamp delivery process

Better late than never.

Health and Human Services Commissioner Tom Suehs has asked [state auditor John] Keel to audit the food stamp program to improve accuracy and efficiency.

“We must fix our system so that it works for everyone. I’m asking the state auditor to help us identify both immediate and long-term solutions to make sure all Texans are able to get their cases processed on time,” Suehs said.

Keel assigned a team to start the review as soon as he got Suehs’ letter on Tuesday.

“It’s an audit that needs to be initiated immediately,” Keel said Wednesday. “We’re going to study the process and look for efficiencies. We do want to look at other states.”

Employee recommendations also will be considered, said Keel, who would not speculate on how long the audit would take.

I’m sure it will take months, because there’s got to be a ton to find that needs fixing. I feel certain that there’s only so much that can be improved without legislative action, perhaps spurred by a lawsuit verdict, an infusion of money, or a trip through the time machine to prevent the disastrous privatization scheme that has decimated HHSC from ever occurring, but this is not a stone that should be left unturned, so kudos to Suehs for taking the step.

Still waiting on Rita aid

I’m appalled by this.

The Texas Department of Housing and Community Affairs has spent about a third of the federal funds it received to help low-income residents rebuild homes damaged or destroyed by Hurricane Rita almost four years ago, the state auditor reported Friday.

As of June 5, the state housing agency had spent $135 million of $440.4 million in federal funds, auditor John Keel said. It had completed repairing or rebuilding 527 homes and had begun work on 422 more, his report said.

More than 7,300 Texans applied for help under the federal program, Keel said; 2,107 of them withdrew their requests or were deemed ineligible. The rest were approved or were awaiting a decision.

So what’s happening with the remaining applicants, the ones who are still waiting? There’s more than 4000 of them. I wish the story had some information about that.

Michael Gerber, executive director of the state housing agency, attributed delays to the complexity of federal requirements for spending the funds and to the difficulties in working with extremely poor, sometimes illiterate families who often had difficulty producing proof of clear title to their properties or other essential documents.

Agency spokesman Gordon Anderson said the auditor’s housing repair figures apparently do not include 224 rental housing units rebuilt or repaired since the hurricane. Contractors have completed an additional 140 single-family homes in the two months since the figures for the auditor’s report were gathered, he said.

Leaders of organizations that have worked on Texas hurricane recovery issues, however, said the auditor’s report reinforces their concerns that it takes too long for applicants to wade through required title searches, environmental and historical reviews and other procedures.

The cost of repairing many homes damaged by Rita increased dramatically because the dwellings suffered additional damage from rainstorms while their owners waited for funds, they said.

“The inordinate delays experienced in the Hurricane Rita rebuilding program will be dwarfed by the delays in the six-times-larger Hurricane Ike program” unless the state applies lessons it learned from Rita, said John Henneberger, co-director of the Texas Low-Income Housing Information Service, a research and advocacy group.

Walter Diggles, executive director of the Deep East Texas Council of Governments, said state agencies approached hurricane recovery with “an overabundance of caution” because they feared reports of fraud similar to those that emerged in Louisiana after Hurricane Katrina. That attitude slowed the process down, he said.

I understand the concern about scams, but let’s not let the pendulum swing too far. It doesn’t make sense for 80% of the people who were approved for assistance to not have received it four years later. Whatever it takes to fix this, let’s get it done.

Auditor’s report on TYC

Grits has a link to the State Auditor’s followup report on the Texas Youth Commission, which you can download here (PDF). In short: They’ve made progress, but they’ve still got some things to work out. Which may or may not bite them at their upcoming Sunset hearing. Read ’em for yourself and see what you think. Trailblazers has more.