Shiner school district should have bid competitively

AG: Shiner school district should have bid competitively
Board instead chose whom they wanted to finance new project
Friday, January 12, 2007
Barry Halvorson, Victoria Advocate Sports Editor

VictoriaAdvocate.com Article | Shiner School Construction News | Construction Watch Home Page

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SHINER - The Shiner school district should have competitively bid the lease-purchase agreement used to finance its new school project, according to an attorney general's opinion.

But some school board members disagreed with it during Wednesday's board meeting.

In summarizing the opinion document for the board, Superintendent Trey Lawrence said the Texas Education Agency had requested the answer to four questions raised by a recent TEA audit of the district's operations. Those questions centered on if the lease-purchase agreement had to be bid competitively and if the district had to go through a formal request for qualifications (RFQ) procedure to hire consultants.

In the first ruling of its kind by either the AG office or a Texas court, according to the opinion document, the AG's opinion said the contract should have been bid competitively.

But the opinion held it was permissible to hire a consultant without seeking RFQs.

Under a lease-purchase arrangement, a financial institution provides the entity with actual goods, such as vehicles, or money for bigger projects, such as the construction of a building. In return, the entity makes scheduled payments until the item is paid off.

In this case, Chancellor Financial arranged the financing for the $7.493 million school construction project.

Board member Gloria Reindl, who had the strongest opinions on the AG opinion, said the opinions should mean a lot to the district.

"This says you haven't been competitive in bidding anything with this project," she said. "It's amazing we haven't found more things wrong.

"Financial consultant Bill Carraway was right in that we didn't have to competitively bid on consultants," she said after the meeting. "But after that, it was assumed all other bid processes would be followed and we didn't do that. We are accountable to the people as elected officials and (the board) hasn't done a good job of that, like with the bank bid."

Board member Laura Kaspar added it was unfortunate that the district had to spend $20,000 in legal fees responding to the AG opinion that could have been gone "toward educating the students."

Reindl objected to that comment, saying the district had spent far more on consultants, Carraway and Ken Leach, to advise the district on the lease-purchase arrangements.

Lawrence said the ruling would have no impact on the district but does set a precedent for schools looking into that financing option in the future.

"What it means is they will have to add a step to the process," he said. "We hired a consultant to contact various financial institutions and come back to us with the best offer. What this means for other school districts is that they will probably hire a consultant and then have to contact those same institutions in a public format.

Lawrence added that while the TEA had requested an opinion on acquiring things to furnish the school, but not the land or building itself, the AG's opinion said both had to be bid. He added that the AG's office had previously signed off on the district's lease-purchase contract to construct the building.

The district hopes to move into the new combined elementary, middle school and high school campus during spring break in March. The project includes a classroom building with elementary grades on the ground floor and middle school and high school classrooms on the second floor. The classroom building will be connected by an enclosed breezeway to a second building that will include science and computer labs, administrative offices, a cafeteria and kitchen, gymnasium, locker rooms and rooms for the fine arts and vocational programs.

At the beginning of the meeting, Reindl objected to the board procedure that requires two board members to request an item be put on the agenda. She said that while the board procedures have it as a requirement, the board policy states individual board members can place items on the agenda. She asked that the procedure be changed to reflect policy.

Thursday, Lawrence said that since it was local and not state policy, the board also has the option to change the policy to reflect the current procedure.

Barry Halvorson is a reporter for The Victoria Advocate.
Contact him at 361-798-3888, or by e-mail at hvilladv@vicad.com.

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