Tuesday, December 31, 2013

TTU's Feral Cat Non-Collaboration Escalates

Texas Tech University committed to collaborating with local animal service organizations on reducing the number of cats in the university's longstanding feral cat colony.  Here's what collaboration looks like.

Plan - Involve feral cat caretakers, TTU students and staff, in ascertaining the feral cat population on campus.  Determine solutions to identified concerns in conjunction with caretakers.  Test those strategies to see their impact.  Identify who is responsible for various parts of the plan.  Meet regularly to share feedback on actions taken and course correct.   Have agreed upon measures for success and methods for communicating when surprises arise. Be forthright, open and honest in dealings with one another and the public.  

Tech did none of the above with the university's feral cat caretakers.  Facilities Chief Hugh Cronin and Marketing's Chris Cook started Tech's Feral Cat War in the heat of summer, which has been ably continued by new Facilities Chief Chief Kent Meredith.

TTU accelerated cat trapping and removal during the Winter break.  The university had the audacity to steal bowls provided by cat caretakers and use those inside their traps.  This move came after Tech staff removed shelters donated by cat caretakers.

Tech repeatedly shut out the very groups it promised to work with, thus it's clear the university's intent was never to collaborate.  At every turn Tech acted unilaterally with arrogance and hubris.

Top administrators ignored expressed objections, breaking their silence only with worthless replies to EthicsPoint complaints.  I queried EthicsPoint on Tech's non-investigation and hapless response, which reiterated on September 14, 2013:

Hugh Cronin is no longer with the university. After his departure, administration continued to seek opportunities to partner with the campus and the student organization in an effort to strengthen the viability of the program intended to relocate the feral cats away from residence halls, dining halls, and child development center. 
Over three months later Tech's collaboration mantra remains unfulfilled.  EthicsPoint advised me to submit the concerns yet again.  I may do so next year.

Might TTU actually fulfill it's longstanding promise to collaborate with feral cat caretakers in 2014?  Might it look like the Plan picture painted above?  The ball is in (and has always been) in Tech's court.

Monday, December 30, 2013

Deadly Flu is Spreading in San Angelo

Two months ago City officials informed the public the Health Department had limited flu shot availability.  At year end the city issued a press release encouraging citizens to get a flu shot:

The San Angelo-Tom Green County Health Department is urging citizens to get influenza vaccinations and take precautions in the wake of an increase in local flu cases. 
The Texas Department of State Health Services recently report the level of flu-like illness is classified as “high” statewide, and medical providers are seeing an increase in flu across the state, including in San Angelo. 
It takes several weeks to build immunity after getting a flu shot.  For citizens to have optimal protections they needed the shot before a widespread outbreak.  
San Angelo's City Council under Mayor Alvin New contributed to a more severe flu season in 2012-2013 with massive budget cuts.  While a fraction of the budget has been restored, immunizations are conducted only on Tuesdays, not the five days a week prior to the $138,000 cut.  
Flu vaccines are administered during the Health Department’s weekly immunization clinic on Tuesdays from 8 a.m.-11:30 a.m. and from 1 p.m.-4:30 p.m. in its offices in Suite 9 at 2030 Pulliam St. The clinics are open only to walk-ins (no appointments). 
Once upon a time the Health Department had a primary care clinic and a pharmacy to fulfill its current recommendation:
Antiviral treatment is recommended for anyone with confirmed or suspected flu who is hospitalized, has severe or progressive illness or is at a higher risk for complications. 
They don't suggest how flu stricken Health Department clientele are to obtain such medicines. 

What's clear is the level of service reduction.  This is the state of public health in our city and state.  Be sure to thank your elected officials. 

Tuesday, December 17, 2013

Council Gives Development Consultant Six Months

City council 12 17-13 downtown development plan from City of San Angelo Texas

The Standard Times reported:

The City Council advanced San Angelo’s Downtown Development Master Plan without dropping a cent.  The council voted to give Catalyst Urban Development a 180-day window to seek investors and developers for three pieces of city property in areas between Oakes Street and Irving Street and Edgewater Inn.  The city won’t spend any additional money on the plan during that span.

The second phase, estimated to cost at least $60,000, involves developer outreach, identifying fundraising strategies, property acquisition and market outreach.  The council will vote on advancing to the second phase at a later date.
I didn't expect this council to be as free with development dollars at the last one.  It will be interesting to hear the discussion at that later date.

Update 5-27-14:  San Angelo's Downtown Development Council and the City will conduct a special meeting at 4 p.m. Thursday, June 5, in the McNease Convention Center to discuss and consider the next steps to executing the strategies outlined in a master plan for continuing the revitalization of downtown San Angelo.

Sunday, December 15, 2013

Hirschfeld Industries Up for Sale?

The City Council background packet for December 17 directly expressed the heretofore subtle economic development theme of helping local employers hit hard by competition for workers and rising wages.

The City is "currently working with four local companies to assist their needs in restructuring, expansion and transfer of ownership." 

City Council discussed an offer to Hirschfeld Industries in their December 3rd Executive Session. Insight Equity has owned a controlling interest in Hirschfeld since April 2006.

Insight targets a 6-8+ year investment horizon.  Hirschfeld is months away from 8 years of Insight ownership.  Insight Equity is a private equity underwriter (PEU).  Hirschfeld paid nearly $100 million in partner distributions from 2006-2009 with sponsor Insight getting the lion's share.  It's not clear how much they paid to their PEU owners from 2010-2013.

Texas Governor Rick Perry renegotiated a Texas Enterprise Fund agreement with Vought Aircraft Industries right before The Carlyle Group sold Vought to Triumph Group.  Buyers don't want to be saddled with failure to perform job incentive obligations, especially one requiring repayment of $35 million for cutting 35 jobs over a six year period.  That's right Perry gave the Carlyle affiliate $1 million per job lost.

Hirschfeld may or may not be the local company for sale mentioned in the City Council packet.  If it's not now, Hirschfeld's turn on the auction block will come.  Insight expects exceptional returns from Hirschfeld Industries.  I imagine they're happy for San Angelo taxpayers to add to their bounty.

Council to Consider Phase Two of Downtown Development

A very different San Angelo City Council will accept the draft Downtown Development Master Plan document from Catalyst Urban Development this week.  Mayor Alvin New and a development oriented council approved engaging Catalyst in December 2012.  Council member Kendall Hirschfeld made the motion, while Charlotte Farmer provided the second for the unanimous vote.  That motion required city staff to bring back work product from any finished phase and obtain council's approval to proceed to the next.

At the time city leaders had not designated the source of funding.  This was several months after closing the Sexually Transmitted Disease clinic and drastically cutting immunizations due to "lack of funds."

In May 2013 Mayor New, Kendall Hirschfeld, Paul Alexander, Marty Self, Johnny Silvas and Charlotte Farmer voted for the four phase contract with Catalyst, while Don Vardeman voted against it.  The contract authorized $68,000 in consulting fees and $22,000 in reimbursable expenses for Phase 1, which was expected to take six to eight weeks.  To date the city paid $66,000 in fees and $7,200 in reimbursable  expenses. 

Phase One:  Downtown Master Development Strategies document

"Land use demand has been calculated for the downtown study area that includes demand for over 600 multifamily units across multiple residential densities, 6 new restaurants, and over 220,000 sf of new office space in various tenant configurations." 
The plan showed existing restaurants downtown. 

It will need to be updated to reflect Sealy Flats' closing.  I drove by Friday evening and was surprised to see Sealy Flats dark.  San Angelo's Chaos Marketing confirmed what I saw.

I'm not going to get in to the semantics of why Sealy Flats has closed down. I don't know the reason why and as many out there already have, I can only make an educated guess.
The report shows how projected population growth will drive the need for more downtown restaurants:

The study did not state where water will come from to supply 17,000 new citizens, but it did delineate a number should live along the Concho River:

Residential riverfront development "efforts should be economically incentivized to achieve initial catalytic investment."  The plan lists a myriad of financial methods to support or subsidize recommended development and concludes with:

This analysis suggests these efforts be particular to inducing restaurant, energy sector employment, and new housing over the next 10 years.

Council will accept this report and consider moving to Phase 2, which was originally proposed as:

Phase Two -- Upon approval from City of San Angelo, Catalyst will progress into the second phase.  To complete these tasks, Catalyst would receive $10,000 per month until project-related development agreement(s) are executed. It is anticipated that this will occur with a 6 month time period. If the City chooses to acquire property, Catalyst would be entitled a fee of 3% the purchase price as City’s consultant.
The City stands to pay out large amounts should it go forward in Phase Two with Catalyst.  I look forward to watching the presentation and council discussion. It could be very different or very similar to prior council discussions.

Update 12-16-17:  San Angelo Live did a story on Sealy Flats closing.

Thursday, December 12, 2013

San Angelo's Sad ERRP History

Councilwoman Charlotte Farmer asked Human Resources Director Lisa Marley to explain ERRP funds, its purpose and history:

The ERRP is Early Retiree Reinsurance Program is what it stands for, and what it, the reason it was developed because more and more employers were dropping retirees from their coverage and so they used that as an incentive for companies to offer insurance to their retirees with this promise that there would be refunds made to your plan, or reinsurance where it comes back to the plan.--Lisa Marley
The missing history:  Four months after being approved for ERRP reimbursement the City of San Angelo raised dependent coverage for employees and early retirees from 34 to 58%.  Council chose not to apply a penny of expected ERRP reimbursement to lessen the crushing increase.  As a result nearly 200 people dropped health insurance.

45 employees/retirees and 147 employee/retiree dependents dropped coverage for 2011.
Back to Lisa Marley's testimony on 12-3-2013:

And so the program, I think actually they passed it into law in 2010 and we applied for it, were granted it.  It was a long process where you, there's a threshold that has to be met.  You could only turn in claims greater than $15,000 but less than $90,000 and then they were only going to reimburse a percentage of those claims.  But it was only on retirees who were retired and less than age 62.  

We received $343,288.  It's now $201,000.  We used the $142,000 last year.  We were going to have to raise our premiums last year by $142,000, so you all allowed us to use that for everybody, current employees and early retirees.  We did not raise any premiums last year.

I didn't answer your question about what you can use it for.  The government was really specific on, that it could only be used for three reasons, to offset the plan costs, to offset the employer's contributions to the plan or to offset the participants' costs.
Marley apparently forgot her original promise when the City was approved for ERRP:

“It will either be a better (health insurance) benefit or their premiums can be lowered.”
She also failed to mention the only real stipulation for employers, that federal funds not displace local funding, the maintenance of contribution requirement.

The city saved over $300 per month from 45 employees/retirees dropping coverage, which totals $162,000

She also failed to mention the city must use all ERRP funds by December 30, 2014. 

That program has been finished.  It ran out of money.  They had a set amount of money nationwide for for this program, for all employers it was a free for all.  We were one of the first twelve cities in Texas that actually were awarded the program.  We had outstanding claims that we turned in but they ran out of money before they got to them on the list.
She didn't mention the first eleven beat San Angelo to the ERRP window by a handy margin.  Eight months into the program here's the Texas tale of the tape:

Austin--$1.7 million
North Richland Hills--$45,000
San Angelo--$0
From the beginning City leaders were less than forthcoming on ERRP funds.  Here are their characterizations when retired police chief Russell Smith prematurely said the dreaded four letter word, ERRP:

"I don't have those numbers"
"There is not clarity"
"These things are hard to predict"
"When one time funds go away, you have problems"

One sitting City Council member equated ERRP money to a lottery ticket.  I wrote at the time:

ERRP is more akin to a bank.  Uncle Sam is shouldering 80% of claims from $15,000 to $90,000.  Funds are coming, soon.  The question is how much?  In that regard, the city has years of experience, six months are directly reimbursable.  I've never seen a lottery ticket with those attributes.

How many of the City's 51 retiree dependents will drop coverage, unable to pony up more than $500 a month?  The irony is this.  The more retirees the City drives from the plan, the less opportunity for ERRP reimbursement.

Retired spouses may have $377 to spend on lottery tickets in 2011, one option for funding future health care expenses.  It's a high risk strategy, but what alternative do they have?

Which leads us back to Lisa Marley's statement on 12-3-13 "employers were dropping retirees from their coverage."  Marley should've confessed that this is exactly what the city did after its ERRP application was approved.

Relative to the baseline, the city never offered better benefits or lowered plan premiums.  Council sat on the money for years, finally planning to utilize the bulk as the federal due date approaches.

I would suggest the players in this sad story forged a chain link or two.  Heed the words of the other Marley (Jacob) in the Christmas Carol.

BUSINESS? Mankind was my business! Their common welfare was my business! And it is at this time of the rolling year that I suffer most!

I wear the chain I forged in life! I made it link by link and yard by yard! I gartered it on of my own free will and by my own free will, I wore it!

Ah! You do not know the weight and length of strong chain you bear yourself! It was as full and as long as this seven Christmas eves ago and you have labored on it since. Ah, it is a ponderous chain!

When the city applied for ERRP it covered 280 early retirees. It expects to cover 215 in 2014, a drop of 65 people or 23%.  The story for employees shows a decrease from 933 to a predicted 754, a drop of 179 people or 20%.  The City of San Angelo provides health insurance for 244 fewer people than it did when it applied for ERRP program.  That's the untold tale of the ERRP.

Wednesday, December 11, 2013

City's "Stop Loss" Wager Results Unclear

San Angelo's City Council increased the amount the city would pay before stop loss insurance coverage would kick in from $125,000 to $150,000  The minutes from January 8, 2013 are less than clear on this change. 



Human Resources Director Lisa Marley presented background information.  A copy of the presentation is part of the Permanent Supplement Record.  Motion, to approve and select AmWins, including changing terms and related increased cost, as presented, was made by Councilmember Adams and seconded by Councilmember Hirschfeld. 

General discussion was held on the extension of the terms and analyzing the costs and terms for future years. A vote was taken on the motion on the floor. Motion carried unanimously.
Slides from the meeting reveal the missing details.

HR's Lisa Marley stated on January 8, 2013:

"We recommend increasing the deductible to $150,000. We've only hit stop loss seven times in the last five years. In the claim year for 2012 we had one claim that hit stop loss." 

Now that the year has nearly passed, how did Council and Marley do?  Lisa stated on December 3rd:

"This year we've had one of the biggest years in a long, long time in the number of people hitting stop loss."  
They cost the city $25,000 per head.  Also, the city's consultant Holmes Murphy helped negotiate down the huge stop loss increase for 2014 to 10%.  This is the same consultant who said the city would benefit by taking more risk in the stop loss arena.  It's not clear if Holmes Murphy's prediction came true.  That wasn't reported:

Last year's ten slide presentation on stop loss was reduced to a single slide for 2014.  I'm not ready to declare Holmes Murphy the "stop loss" hero yet, especially given they brought ACAP Health and their ridiculous cost sharing model into the mix.  Too little information has been shared to make that determination on both counts.

Sunday, December 08, 2013

Chilly Update on Texas Tech Feral Cats

West Texas' early and icy winter aided President Duane Nellis' war on Texas Tech's Feral Cat colony.  Here's part of the continuing story of the Tech feral cats. 

The sad thing is that during this horrible frigid weather, the cats that do remain don't have any shelter.  Tech removed the existing shelters when they dismantled all but three of the eleven feeding stations.  A volunteer had paid for all of them (as well as all the feeding bowls and supplies) and wrote Kent Meredith, the interim Director of the physical plant, about the financial loss she experienced from these things being stolen/removed.  She never got a reply.  
Tech's story all along is that they collaborated with area animal rights groups and Tech Feral volunteers.  If that were the case shelters would've been relocated or returned to volunteers, not removed and trashed.  Adding to the collaboration illusion is the string of e-mails to varying levels of TTU leadership that never got a reply.

Tech administrators reneged on their promise to collaborate long ago, choosing to escalate its cruel tactics when challenged by the cats' longtime caretakers.

Tech said it contacted PETA when PETA representatives clearly state otherwise.  It may be time for Jackson Galaxy to pay a visit to Lubbock.  Might Jackson's insightful questions for Tech administrators lead to a change of heart?  If the Grinch could do it, so can Chancellor Hance and President Nellis.

Ethics Point Has No Quality Control

After filing two reports with Texas Tech University, the first citing unethical and unprofessional behavior by two TTU leaders and the second on TTU's hapless investigation, I wrote the maker of EthicsPoint software:

I utilized TexasTech's EthicsPoint system and found the quality of investigation to be abysmal.  My concerns were not investigated but summarily dismissed. 

I shared the shoddiness of the investigation by filing a second complaint.


Does EthicsPoint monitor the quality of investigations performed by member institutions?  If so, I'd like to offer my unsatisfactory experience for consideration.
StateoftheDivision/PEU Report
Here is their reply:
Thank you for contacting NAVEX Global Client Care.  NAVEX Global is a third-party organization that provides hotline and case management systems for the organizations we serve.  NAVEX Global provides a system to receive your report information and then transmits that information to the appropriate parties.  However, our clients are the ones actually responsible for carrying-out the investigation of your report. 
If you wish to file a report or follow-up on an existing report, please consult the appropriate resources at your organization, or visit www.ethicspoint.com and click on "file a report" or "follow up" in the top-right corner of the page. Or you may call the general EthicsPoint hotline at (866) 384-4277. 
Kind regards,
NAVEX Global
Once again my experience with Texas Tech and its compliance vendor has been ethics pointless.  The lawyerization of management covers animal cruelty with doublespeak and no real recourse.  Dare I file a third complaint, based on the recommendation of software vendor EthicsPoint?

Sunday, December 01, 2013

Hirschfeld Energy to Reseek Economic Development?

San Angelo's City Council agenda for December 3rd had the  the following item under Executive Session:

Section 551.087 to discuss an offer of financial or other incentive to Hirschfeld Energy Systems, LLC with whom the City of San Angelo is conducting economic development negotiations and which the City of San Angelo seeks to have, locate, stay or expand in San Angelo.

It does not say to discuss performance regarding an existing economic development agreement.  The language implies this a new agreement and earlier this year economic development staff suggested the city was in negotiation with existing employers hit hard by oil field wage increases.

Hirschfeld Energy Systems is part of Hirschfeld Industries, which includes Hirschfeld Steel Group.  If this is a new economic development package for Hirschfeld what number will it be? At least the second.

In December 2010 The City executed a $2.6 million package for Marifer-Hirschfeld, which became Hirschfeld Energy Systems.

I recall Hirschfeld Steel playing Abilene, San Angelo and Lynchburg, Virginia off one another, but don't know how economic development funds played into any moves.

It will be interesting to hear a report from City Council's executive session.  That they've named the company in the agenda, any new deal could be close.  If it's an update on the old deal the item is poorly worded. 

The Hirschfeld name is synonymous with San Angelo, but loyalty means little to those seeking maximum profits.  Public subsidy money is a non-debt, non-equity capital injection.  It may be habit forming. 

Saturday, November 30, 2013

Health Insurance Returns to City Council Agenda

San Angelo Human Resources Director Lisa Marley offered City Council a stocking with nearly $500,000 in savings, which became the basis for the 2013-2014 budget.  A month later she returned with a lump of health insurance coal, a $450,000 increase.  That number settled to a $381,000 increase, which City Council will consider on December 3rd, after approving $201,000 of the amount needed in their November 19th meeting.  Clear as mud, right?

What's missing in the city's world of delta numbers for health insurance are history and totals.  These come from the city's FY 2014 budget.

FY 12 had a $1 million difference between self insurance revenues and operating expenses.  In FY 13 that was projected to narrow significantly to $100,000.  If the cost increase was due to experience, i.e. the rate/cost of health care, that increase would be carried forward in FY 14.  It wasn't.  (In early November I asked the city to provide their assumptions for the budget pictured above, as well as how FY 13 closed health insurance wise.  I have yet to receive this information.) 

Looking at the peak of operating expenses, it's reasonable to assume one or more "one time expenses" were projected for FY 2013, i.e. the were not expected to repeat in FY 2014.  Based on Council's vote to engage ACAP Health in May 2012, I expect the city budgeted some amount for ACAP in the $6.6 million for FY13.  Those funds, if not lost in a lawsuit or legal settlement, could become available later for employee/early retiree health insurance.

City staff proposes to fund the $381,500 via two existing funds.  The background packet calls for $201,288 in ERRP funds, which the city has held for over two years, and $180,300 in Rainy Day Funds, a fund created this budget year for future needs. 

If Council agrees with the recommendation no premium increases will be passed onto employees and early retirees.

In 2014, all insurance plans will go out for bid, with new policies becoming effective in January 2015.

Next year could be a completely different story.  Let's hope it's not as fragmented, whipsawing or convoluted.

(Click on the graph to make the image larger)

Update 12-4-13:  The Rainy Day fund, created by savings in health insurance via the prior year, will be drained by the increase in health insurance costs.  This is budget sleight of hand.  

Rep. Drew Darby's Packing

Texas State Representative Drew Darby inadvertently packed a .380 Ruger pistol loaded with six rounds in his carry on bag, which the Transportation Safety Administration (TSA) found in Austin's Bergstrom International Airport.  This resulted in Darby's arrest and booking.  The Standard Times editorial staff kicked off their piece with:

State Rep. Drew Darby, who has had remarkably few stumbles in his political career,made a colossal one this month when a gun was found in his carry-on bag at a security check at the Austin airport. 
Recently Darby spoke about increased mental health funding by the State of Texas.  He said two words drove the state's restoring lost funds and adding new money, "Sandy Hook."  A mentally ill gunman entered Sandy Hook elementary and killed 27 children and school workers.  Texas legislators are loathe for that to happen here. 

In the same talk Darby spoke about the heady life of a Texas State representative, getting to rub elbows with captains of industry, professional athletes, Hollywood entertainers and other famous and powerful people.  Will any power players intervene on Darby's behalf?

Darby faces third degree felony charges and is out on a $5,000 bond.   It's up to local law enforcement what happens with Rep. Darby, not the TSA.  To those of us who rifle through our carry on for a small bottle of mouthwash such that it can be properly placed in the quart sized plastic bag, Darby's error looks careless.

Interestingly, many news sources used Darby's Facebook picture.   Even in the bad news Darby got to put forward his best face.  Below is his arrest photo, which paints a drastically different picture.

Darby is not the first state representative to face felony charges.  It remains to be seen the consequences he'll pay for his "mistake" and how this event could turn into his red badge of courage, given in the political world crisis creates opportunity.  That's likely the mantra for Darby's team.

How might a heat packing West Texas legislator deal with a Tea Party challenger?  Debate or duel at twenty paces...

Update 1-10-14:  Charges against Rep. Darby have been dropped.

Monday, November 25, 2013

Merit of City Council Members' Ethical Concerns: Minor or Major?

A Standard Times editorial scolded Council members Charlotte Farmer and Winkie Wardlaw for raising issues with "minor merit."  Farmer raised a concern that Council's direction on the West Texas Water Partnership had been ignored by staff, while Wardlaw stated his expectation that his requested items actually be put on the agenda.  Had these been the first offenses by paid staff, then one could view their behavior as overreaction.

Recall the 2013 Mayoral race had three existing City Council members, Kendall Hirschfeld, Paul Alexander and Dwain Morrison, all with numerous years of experience.

I wrote after one Mayoral candidate session at the Chicken Farm Art Center:

Two other issues simmered during the meeting.  One dealt with the minimalist approach paid city staff seems to take with Council.  It's not clear if staff is intentionally keeping information away from council or if staff actually don't know what's going on.   Ignorance is only a tad more reassuring than mendacity.   Both are deeply disturbing. 

All three expressed concern about the performance of paid staff.  Dwain Morrison won the Mayor's race.  His challenge is to balance Council's wishes with staff capabilities/performance.  That's not an easy task.

Mayor Morrison did return ethics standards for City Council members on economic development funds to those that existed before January 3, 2012.  Council loosened standards so Mayor Alvin New, Board member and angel investor in MedHab LLC, could remain Mayor and MedHab receive a $3.6 million economic development package from the city without waiting six months.

City staff blatantly misrepresented the Mayor's position and stake in MedHab.  New had filed two affidavits on his MedHab investment.  Neither was shared with the public.

Councilman Wardlaw's concerns about fellow member Marty Self's fire protection company doing subcontract work for the city rang a different bell.  Not only did it echo Mayor New's MedHab, it resonated the work of another subcontractor, Water Chief Will Wilde's son Blake.  Blake Wilde got a handsome deal with Carollo Engineering after being fired by the City's Engineering Department and deemed not eligible for rehire.

San Angelo's Water Chief Will Wilde already stood on shaky ground having purchased and installed over $100,000 in Water Department furniture without required City Council approval.  Numerous citizens were angry over outrageous water bills, a number of which defied logic or explanation.  Wilde summarily dismissed these people.  In this dank milieu Blake's handsome subcontract with Carolla Engineering reeked, especially as Carolla's Hutch Mussallam reported directly to Blake's father, Will Wilde.

Marty Self's situation is not Blake Wilde's or Alvin New's, but there is a filed affidavit showing Self has "no interest in any profits or emoluments of any contract, job, work, or service for the City of San Angelo."  City legal staff believes this to be true, given Self's Automatic Fire Protection is a subcontractor on the airport project and not the contractor.  Like Councilman Wardlaw, I'm not sure that explanation puts Marty Self in the clear.  

What the Standard Times determined "minor issues" are in my opinion, reflective of lingering major concerns regarding the ethics and performance of city government.  I believe Mayor Morrison wants these issues behind us, so he and Council can focus on the good of San Angelo. 

Sometimes, it helps to look outside for advice, counsel and guidance on puzzling issues.  I expect the Attorney General to do that regarding Mr. Self's situation, per Mr. Wardlaw's request.  That will put the issue to bed, not a Standard Times editorial telling Council members with concerns they are embarrassing.

Sunday, November 24, 2013

Judge Brown's Tenure Aided by Decade of Indigent Health Surpluses

The Standard Times reported on Tom Green County Judge Mike Brown's retirement celebration, held at the Stephen's Central Library.

Brown has been county judge since 1995. He was elected when the county was embroiled in a multitude of problems, from financial issues to internal dissension.
 A longtime employee had this to say:

“It was kind of embarrassing to work for the county,” Killam said. “Since then (Brown) has straightened it out.”

Judge Brown left the County much better off, due in a large part to Indigent Health funds going from consistently in the red to having major surpluses.  From 1998 to 2000 the Indigent Health Program ran a $1.25 million deficit.  Over the next twelve years it ran a $7.9 million surplus (relative to the budget/General Tax Levy of 8% for Indigent Health).  

Brown said. “We’ve got a bright future, and I’ve left the team in a very positive position to grow into that.”
Indigent Health contributed greatly to the County's improved financial position under Judge Brown's tenure.

Indigent Health's nearly $8 million in surpluses comprise roughly half of the County's $16.6 million in general fund investments.  It was Mike Brown's and Tom Green County Commissioners' cash cow.

Saturday, November 23, 2013

City of San Angelo's CAFR: Huge Unfunded Liabilities Loom

Local accounting firm Armstrong Backus presented its Comprehensive Annual Financial Report (CAFR) for fiscal year 2011-2012 to San Angelo's City Council.  The report is noteworthy in many ways. 

Freddy Moore, Partner, Armstrong, Backus & Co., LLP and Gayla Thornton, Principal, Armstrong, Backus & Co., LLP

Here's how Freddy kicked off the presentation:

Our job is...we were engaged to render an opinion on the basic financial statements.  We do that, so an audit, just for a point of clarification, we don't look at all the transactions.  We have to go in there and use materialities and scopes and we test the various account balances and transactions for the purpose of giving, that we can obtain reasonable assurance that there are no material misstatements in there.  Some people think an audit is where we verify every detail and transaction down to the penny.  That's not the case.
The City received an unqualified opinion from Armstrong Backus.  Presenters gave a 30,000 foot view of the city's financial position at the end of FY 2012, i.e. a picture well over one year old. Highlights of their presentation included:

1.  Total assets as of 9-30-12 were $492 million, with $266 million total liabilities, which includes $241 million in long term debt.
2.  City's net assets/equity is $226 million up from $216 million for the prior year.
3.  Total revenue (taxes/fees) reached $121 million.   The city spent $110 million in expenses for the same period. 

The city's balance sheet carries a nearly 50% long term debt load.  Other cities are more highly leveraged, but San Angelo faces massive infrastructure demands for streets and future water supplies.

4.  There are $7 million in unrestricted net assets as of 9-30-2012.

One of the city's unrestricted funds is the employee/retiree health fund, with $1.1 million in net assets as of 9-30-12.  The health fund grew by over $550,000 during the fiscal year which spanned two major moves by the city.

Calendar year 2011 saw the city implement draconian premium hikes for dependents, causing 192 people to drop health insurance coverage.

In 2012 the city budgeted no new money for health insurance and signed an exclusive provider arrangement with San Angelo Community Medical Center.  The windfall produced by this arrangement is not in the CAFR presented.

However, the $1.1 million employee/retiree health fund comprised 16% of the city's $7 million in unrestricted net assets for FY 2012.

5.  San Angelo's Water and Sewer fund is significant, comprising $41 million of the city's $121 million in total revenue (taxes/fees).   Water/sewer fund assets were $134 million of the city's $$226 million in net assets, nearly 60% of  the total.
This revenue stream will be important when the city's balance sheet blows up in the future due to unfunded liabilities (see item 7).

Gayla spoke about the city's compliance with federal grant requirements and touched on future changes in the audit scope:

6.  The city expended $5 million in federal grants during FY 2012.  The handling of federal grants once again became an issue.  The city submitted reports to the federal government stating it spent money prior to actually doing so.  This was a significant deficiency for the second year in a row.  Upon hearing CFO/Assistant City Manager Michael Dane's solution to this deficiency, the auditor said "Hopefully."   

Last year Dane washed his hands of grant accounting, claiming a grants person needed to be hired.  This year he said an internal auditor would take on this responsibility.  Also, there was no mention of federal Early Retiree Reinsurance Program funds in the audit, either the amount used or the city's compliance with ERRP's maintenance of contribution requirement.

7.  Unfunded liabilities for retirement and health insurance are mostly absent from the 2011-2012 CAFR. The pension unfunded liability will be large, very material. 
Auditors reported that the unfunded liability for retiree/employee health insurance is being added incrementally.  It amounts to $4 million per year, but totals $80 million.  The auditor would not state the pension unfunded liability, but last year this was nearly $40 million.  These two items combined total $120 million.   
8.  COSADC will not be included next year.  

This will decrease the city's revenue by $8.5 million and fund balance by $10 million.  It's not clear if the Hickory Acquifer obligation will go with it:

2011-B Series Drinking Water SRF Promissory Note to Texas Water Development Board, original issue amount of $120,000,000, secured by utility revenues, interest rates of 0.00%-2.07%, final maturity September 15, 2031.

I doubt it will.  Items 7 and 8 stand to give the City's balance sheet a substantial haircut.  Ex-Mayor/Angel Investor Alvin New wanted the city's pension fund to go after return, which involves risk.  Will City Council concur and roll the dice?

Other strategies include selling off a revenue source for a pile of cash.  The City's water/sewer business is substantial and lucrative.  Private equity firms have targeted public infrastructure for investment.  It would not surprise me to see the city privatize its water/sewer business and for Alvin New and former Water Chief Will Wilde to somehow be involved in this evolution.  But then I speculate, which is like private equity.

The unfunded liability issue should arise in the next budget cycle, FY 2014-2015.  Armstrong Backus will be required to evaluate the City's financial statements and how they reflect the unfunded pension liability.    

Armstrong Backus' management letter identified four deficiencies as of September 30, 2012.  The first two they considered significant deficiencies from an internal control standpoint:

Inventory Security
During our physical observation of water/sewer inventory, we noted that a number of employees have access to the inventory yard and warehouse 24-hours a day and that there is no formal procedure to ensure items are secure. There are few security measures in place to prevent anyone from misappropriating inventory items. We recommend that gates to the property remain locked after business hours. We also recommend that employees have limited access to inventory after hours and that this access be monitored through security equipment or inventory logs (reconcile to periodic inventory counts).

Approvals and Authorizations of Cash Disbursements
During our review of cash disbursements, we noted three instances where purchases over $500 were made, and no purchase order was provided as supporting documentation for these items. We recommend that a purchase order be approved before any purchases are made. We also noted four invoices that showed no visible sign of authorization to pay. We recommend that all invoices be signed by a supervisor showing authorization. Without these consistent controls in place, purchases may be made without preauthorization or approval.
This is the period leading up to the Furniture Fiasco, where staff ordered and installed over $100,000 in Water Department furniture without a purchase order or required City Council approval.  Was that one of the three instances or will that show up in next year's audit?  On to the two weaknesses in internal controls:

Manual Journal Entries
We noted that controls surrounding journal entry preparation and entry have inherent internal control weaknesses. In order to strengthen the internal control over journal entries, we recommend ensuring that each manual journal entry be reviewed by someone other than the preparer prior to its entry into the accounting system.

Fair Market Value of Investments
Investments are not being adjusted to reflect fair market values. We recommend that unrealized gains/losses be recorded at least annually to properly report the value of the City’s investment portfolio.

The city's muted response to these deficiencies can be viewed in the City Council packet for 11-19-13

Thursday, November 21, 2013

Unusually High Water Bill Surfaces

San Angelo's City Council heard from Councilman Johnny Silvas before diving into the agenda.  Silvas asked the public to look at their water bill and call if any discrepancies arise.  He shared the situation of a man getting a bill for 65,000 gallons, when his historic usage had been 5,000 to 8,000 gallons per month.  Councilman Silvas asked if city staff monitored that kind of thing.

City Manager Pro Tem Michael Dane said "There is a process for that. I'll be glad to follow up with you sometime on that."  Here's how Dane et al sold the electronic water meters to the public years ago:

The daily readings include the amount of water used each hour during the previous day, which will assist the City and residents in researching unusual water usage patterns that may result from leaks or malfunctioning sprinkler systems. 

There was no mention of the type of water meter at this gentleman's home, but strange readings have been a feature of the new meters. 

If the city has access to daily readings and they begin to go off the chart, how much water could be saved by the city being proactive and informing the citizen?  One might expect this from a proactive water department. 

Rather than follow up with Councilman Silvas Dane should inform the public as to how staff is identifying unusual water usage patterns, informing citizens and reducing wasted water or inaccurate water bills.  That would actually be proactive.

Monday, November 18, 2013

Scripps Paywall & Paltry Digital-Only Subscriptions

E.W. Scripps held their earnings call on November 8.  It was the first full quarter since Scripps implemented a paywall for its newspaper portfolio.

Across our footprint, we have about 550,000 home delivery subscribers. And so our approach is to cement our relationship with those folks and provide more value and then also receive value in exchange for that from that 550,000. So if we can increase the amount of revenue coming from that 550,000, that's an important piece of this whole strategy. And although it's not necessarily being realized right now, but if you can get an extra $0.50 a week or $1 a week from that group, that's a pretty substantial increase in the revenue stream. The digital-only right now at 20,000, that -- we look at that as how good of a job are we doing penetrating the nonsubscribers in our addressable markets. If we have 550,000 home delivery subscribers, the folks who are not subscribing number about 1.5 million. And so the 20,000 is a small but important and growing number against that 1.5 million

So the opportunity for us is to ramp up that digital-only offering. Now that's going to require a lot better job on the consumer marketing front, engaging in digital marketing, being much more sophisticated in the way that we look at analytics and data to help us target likely subscribers on our digital products and really start to drive that number, where the marginal cost of delivery, once you have those folks is very, very low. So that's an important piece of the whole strategy and really something that we're focused on. So we're encouraged at the 20,000 level. We're -- and that's growing. And the activation rates of home delivery subscribers is the other number that's important. The higher the number of activations, the bigger the number of folks that are engaging with us, the more likely they are to then renew at higher rates. And that's the causal relationship and logical sequence there.

Let's put the 20,000 digital-only subscribers in perspective.   It's 1.3% of the number of nonsubscribers identified above in Scripps markets.

San Angelo's Standard Times subscribers were 3% of Scripps total subscribers in 2012.  That would correspond to 600 new digital-only subscribers at $14.99 per month or $108,000 per year.

How many regular readers chose not to pay for access to content and essentially went away?  Those numbers were not shared in the call.  Any drop in eyeballs should impact digital advertising revenue:

Digital advertising provided approximately 7% of our newspaper segment operating revenues in 2012.
Consider the Standard Times' subscription rates when I moved to San Angelo in the mid 1990's.

1996 - 32,000 Daily paid,  39,000 Sunday
2000 - 29,000 Daily paid,  35,000 Sunday
2008 - 24,000 Daily paid,  28,000 Sunday
2012 - 18,000 Daily paid,  22,000 Sunday

While San Angelo's population grew, the Standard Times subscriber base shrunk by 44%.  The drop for Scripps as a whole was a more precipitous 54% for Daily circulation.  It fell from 1.4 million in 1996 to 580,000 in 2012.

In the earnings call Scripps stated the newspaper division had 550,000 subscribers.  That means 30,000 net people dropped their paid relationship with Scripps the first nine months of the year.  Adding 20,000 digital only subscribers didn't come close to keeping Scripps' total subscribers level.

There was another oddity in the earnings call.  Scripps management can't wait for the 2014 & 2016 political seasons to unfold.  It seems political ads are profit rocket fuel for a media company.   Scripps becomes a profitable company in election years.  That might explain the wide berth given America's abysmal political leadership.

The paywall numbers are unimpressive.  I find it hard to believe this is the strategy that will return newspapers to their heyday.  

Update 11-30-13:  The Standard Times has a new city editor and watchdog journalism advocate.   Can the watchdog report on the hand that feeds it?

Saturday, November 16, 2013

City Sponsored Health Insurance: One, Two Punch

San Angelo's City Council will address employee/retiree health insurance in their November 19 and December 3 meetings.  On November 19 Council will consider a budget increase of $201,288 for health insurance for 2013-14.  That will occur in public session inside a massive budget amendment.

The second item on November 19 will occur in Executive Session.  Council will discuss a "contemplated settlement offer to ACAP Health for clinical care engineering services for the City health insurance program."  ACAP's David Toomey slithered into the October 15 Council meeting to ask for payment.

This raised questions about Assistant City Manager/CFO Michael Dane's performance for the third time.

1)  The Furniture Fiasco had the city spending over $100,000 on Water Department furniture without Council approval.  
2)  Council asked for invoices on the West Texas Water Partnership after the initial amount exceeded $100,000.  That did not happen until the tally was much higher.    
3)  Council approved the concept of shared savings on health insurance with ACAP Health, but staff never executed the contract, i.e never negotiated the arrangement thus there was nothing for council to approve.  ACAP's President wants council to pay his firm $500,000.  

Dane was Interim City Manager at the time of the Furniture Fiasco and for a large portion of the other two events.

It's galling to think that $500,000 of the city's health insurance fund balance could go to a consultant instead of to employees/retirees and their dependents.  The City plans to add $201,288 to the already approved 2013-14 health insurance budget.  The background packet detail shows this will be funded by the city's remaining ERRP dollars.

Over three years ago the federal government approved the City of San Angelo for participation in the Early Retiree Reinsurance Program (ERRP).   Human Resource Director Lisa Marley stated in the Standard Times:

“It will either be a better (health insurance) benefit or their premiums can be lowered.” 

City leadership reneged on that initial promise.  It's neither a better benefit, nor have premiums been lowered (relative to plans that existed when the city applied).  Mayor New, City Manager Harold Dominguez et al squandered their opportunity to use ERRP funds to lessen draconian health insurance increases that drove nearly 200 people from city sponsored coverage.

The City sat on the bulk of ERRP money.  In September 2012 Council voted to use funds in the only manner prohibited by a single federal standard, that federal money not replace local funds.

The clock ticks on ERRP, given its January 1, 2014 program shutdown.  It's not clear the City will meet their promise in time.  San Angelo is near the end of our ERRP saga.

Any ERRP funds returned to the federal government and any settlement monies paid to ACAP Health are a shared responsibility between Mayor New, Councilman Hirshfeld, City Council and paid staff.  Those funds should be used toward employees/retirees. 

That's the topic on December 3 for City Council, health insurance for the 2014 calendar year.  There should be few changes given it's an extension of a current contract.  The question is who pays?

Update 11-30-13:  Regarding ACAP Health, City Council minutes state "Motion, regarding the contemplated settlement offer to ACAP Health for clinical care engineering services for the City health insurance program, to acknowledge Council does not have a sufficient basis or sufficient information to make or reach any decision on the matter, was made by Councilmember Farmer and seconded by Councilmember Silvas. Motion carried unanimously."  Interestingly, Councilwoman Farmer seconded the motion to engage ACAP Health in May 2012, which also carried unanimously.

Monday, November 11, 2013

West Texas Partnership Bill Marked Past Due

San Angelo City Council took up the issue of payments for its share in the West Texas Water Partnership with Abilene and Midland.   Council tabled the item until members could get more detail on the August and September invoices.  The tabling does not preclude the City from cutting a check for June and July, as Council already approved those invoices.

Two other oddities occurred around the water partnership.  The first was the resolution to negotiate.  City Manager Valenzuela acted like this was the first official resolution, when one was enacted by his predecessor Harold Dominguez and Mayor Alvin New.  The resolution presented in the November 5th meeting did not have a provision in the motion to let Council know when the bill exceeded $100,000.

The other oddity was keeping City Council in the dark regarding invoice details for the $29,000 because one Council member breached confidentiality.  That Council person did not attend the meeting.  A former Executive Session had this person's conduct as an agenda item, until that member asked that any discussion be placed on the public agenda.  Apparently, some public work is better done in private.

San Angelo's water saga is far from over.  Water Chief Ricky Dickson cited his progressive stance as part of his qualifications for the job.  His former job duties included the city's trash service and landfill.  The public learned in City Council that these services had never been bid out over a thirty year period. This hardly sounds progressive.  As a frequent viewer of City Council proceedings I learned more about our landfill in a ten minute presentation from a potential vendor than I did from city staff.

The tension between disclosing public information and the need to keep details confidential will grow under the West Texas Water Partnership.  It will be interesting to see how varying City Council's and staff negotiate this balance, especially as the bills soar.  The partnership is competing for scarce water supplies against other municipalities and oil companies, given fracking's huge water demands.

That said, keeping information away from elected officials because one leaked is poor policy. At some point the total price tag will be revealed and officials will have their chance to be on record with their vote. The public should become aware of these matters at the soonest possible time.  Each citizen will have the opportunity to offer their voice or vote with their hands, wallet or feet. 

Friday, November 01, 2013

MedHab Gets Bronze Deal with USA Triathalon

A USA Triathalon press release stated:

USA Triathlon today announced a new Bronze-Level partnership with RPM2, a manufacturer of computerized insoles designed to monitor the training elements of running and biking, through September 2017. RPM2 will serve as the exclusive footbed training partner for the National Governing Body. USA Triathlon annual members, as well as certified coaches and members of certified clubs, will receive a 10 percent discount through the agreement. 
RPM2 is MedHab's retail product.  RPM2 joins USA Triathalon's other Bronze partners, Avis, FuelBelt, SweatVac and bike rack company ROLA.

Sunday, October 27, 2013

ASU to Improve College Experience with Donated Turf

An editorial by The Standard Times celebrated the installation of a $1.2 million turf and called the planned home game at the campus facility a worthwhile experiment.  In April the paper reported the San Angelo Health Foundation's contribution to the venture:

Angelo State University, $100,000 to install field turf on a practice field
Other donors included 1st Community Federal Credit Union, graduate Larry C. Clark and an anonymous contributor.  Apparently, these donors kicked in the other $1.1 million.  Several 1st Community board members have ASU ties.  Harlan Bruha once headed ASU's Small Business Development Center.  Former Mayor and ASU Assistant Professor Johnny Fender also sits on the 1st Community Board of Directors.

The field will be named after 1st Community Credit Union, while the LeGrande Sports Complex bears the name of another wealthy donor, neurosurgeon Dr. Bob LeGrande.  The editorial went on to highlight:

Big news to come out of the event was that ASU plans to start playing some of its football games at the stadium beginning next season. At least one game — on Sept. 13, against Western State of Colorado — will be played there.
The report stated new bleachers would need to be added, but did not identify the cost or who might foot the bill. 

ASU officials see value in playing football games on campus. Their goal is to boost enrollment to 10,000 in part by enhancing the college experience, and an element of that can be having football games — the biggest and most exciting communal events — on school grounds.

The editorial was silent on concessions, restrooms, sky boxes and other essential services associated with big time Texas football and wealthy alumni.

The San Angelo Health Foundation was formed in 1995 when Angelo Community Hospital, a nonprofit community hospital, sold out to Rick Scott"s Columbia/HCA .  It's current Board Chairman, Dr. Robert Patyrak spoke about the foundation's mission in 2011.

The intent of the Foundation is to remain in operation in perpetuity and to support community health in its broadest form. For over 15 years the San Angelo Health Foundation has served San Angelo and our Concho Valley neighbors by supporting the efforts of local nonprofit organizations and public entities.
Given the foundation's strong support of community health related projects since 1995, I'm surprised the City of San Angelo did not approach the Health Foundation when it "needed" to eliminate its sexually transmitted disease clinic and drastically cut immunizations for children and seniors.  Dr. Patyrak, as a pediatrician, would've appreciated the need to keep up children's immunizations. 

The City cut $138,000 from the health department budget in September 2012.  Ironically, San Angelo Mayor Alvin New, an Angelo State University alumnus and wealthy donor, drove the clinic's closing.  That action contributed to a more severe than normal flu season and a 300% increase in syphilis for our community. 

San Angelo will face more community health issues as the health care landscape is remade. Which experiments will contribute to the health of our community and which ones will degrade it?  

Saturday, October 26, 2013

Closed STD Clinic & 300% Increase in Syphilis

The City of San Angelo closed its Immunization and Sexually Transmitted Disease Clinic September 28, 2012.  San Angelo Live reported:

Since January of this year, San Angelo has seen a spike in sexually transmitted diseases, up 300 percent from 2012.

Mayor Alvin New and City Council prioritized a tax cut over children's health and controlling the spread of STD's.  Immunizations and STD testing and treatment at the most basic of public health services.  State data on our area's incidence of sexually transmitted diseases showed Tom Green County in the Top 25 for incidence of Chlamydia.

None of the three people in charge, Interim City Manager Michael Dane, Assistant City Manager Rick Weise or Health Director Sandra Villareal, shared any data with Council on consequences of shutting down the clinic.

Early identification and treatment helps stop the spread of sexually transmitted diseases.  Without this critical service, disease spread can become exponential. 

Oscar Hernandez, HIV/STD Manager for the DSHS in our region emphasized the severity of the outbreak in Tom Green County.

“For Syphilis itself, we have 26 cases of Syphilis from January till this date [Oct. 15],” Hernandez said. “If you do a comparison on what we got in 2012, we got 8 cases. For this year, we’re already well into the 20-something mark. So, is that a significant increase? Yes, drastically. We got about a 300 percent increase.”

Given this Syphilis spike and 2012 statewide infection rates, Tom Green could be in the Top 25 for both Chlamydia and Syphilis in 2013. 

City Council took a meat cleaver to immunizations in last year's budget, with palpable consequences.  Last fall/winter's flu season was more severe in the Concho Valley, in part due to the City's reducing flu shots.  This season's flu shots will be down 80% from historical levels.

The City of San Angelo cut both services to save money.  Oddly, this same council used a similar amount of funds for three purposes.  It gave a new employee holiday, hired a downtown master developer and gifted a half cent property tax cut.  Mayor Alvin New and City Council clearly stated their priorities and it wasn't public health.

The City reopened the STD clinic in August 2013, thanks to grant funding from the state of Texas and the federal government.  It tests and treats STD's three days per week.  The clinic has eleven months of STD's to catch up on.