Tulsa County 2016 election: Turley, Newberry for fiscal transparency

There are three contested county offices on the Tulsa County ballot. Republican Josh Turley seeks to defeat incumbent Democrat Commissioner Karen Keith in County Commission District 2. Republican Don Newberry and Democrat John R. Andrew are vying for the Court Clerk position, left open by the retirement of Sally Howe Smith. Republican Sheriff Vic Regalado and Democrat Rex Berry are in a rematch of the April special election to replace Stanley Glanz.

A recent, seemingly unrelated news item raised an issue that should be considered by Tulsa County voters tomorrow. State bond adviser Jim Joseph and State Auditor and Inspector Gary Jones spoke out against the widespread practice of school districts waiving competitive bids for bond issues.

Oklahoma school districts are spending millions of taxpayers' dollars every year by paying high fees for financial advisers, bond counsel and underwriters, says Jim Joseph, the state's bond adviser.

Many school districts continue to do the same thing year after year, while stubbornly refusing to use cost-saving competitive selection measures, he said.

"It's like picking a roofer right after a storm because he's the first guy who came to your door," Joseph said. "You're not going to get a deal, that's for sure."

State Auditor Gary Jones agreed school boards could save Oklahoma taxpayers money by obtaining competitive quotes.

"There could be tens of millions of dollars saved over a short period of time," Jones said.

Joseph went on to compare the massive fees paid by school districts to bond counsel and financial advisers, often a percentage of the bond issue, with the smaller amounts state agencies paid for much larger bond issue. Several were listed; here's one example:

For example, Midwest City-Del City Public Schools did a $72.62 million bond issue in 2012 without competitive bids. It paid the Floyd Law Firm of Norman $363,100 for serving as bond counsel and allowed Stephen H. McDonald & Associates and BOSC Inc., a subsidiary of BOK Financial Corporation, to equally split $508,340 for serving as co-financial advisers, records show.

Compare that with a $310.48 million bond issue by the Grand River Dam Authority that was done in 2014 through a competitive process. The state paid a $114,000 bond counsel fee and a $133,448 financial adviser fee.

Although the Grand River Dam Authority bond issue was more than four times as large as the Midwest City-Del City school bond issue, the school district paid more than triple the amount in bond counsel and financial adviser fees, records show.

Joseph pointed out that bond counsel, underwriter, and financial advisers often each take 1% of the bond issue as their fee, which Joseph says "makes no sense at all. It doesn't take any more work to do a $20 million issue than a $10 million issue for the bond counsel and financial adviser, but the fee is twice as high, if payment is on a percentage basis."

What does this have to do with Tulsa County? Joseph noted that the firm of Hilborne & Weidman was frequently listed as bond counsel for these competition-waived bond issues. Hilborne & Weidman was also one of two bond counsel firms selected in 2003 by the Tulsa County commissioners (acting as the Tulsa County Industrial Authority) for the Vision 2025 revenue bonds, a massive bond issue against up to all 13 years of the new sales tax. I urged at the time that Tulsa County put all Vision 2025 bond-related contracts up for competitive bid, as commissioners haggled publicly over which firms would get a piece of the action, but they waived competitive bidding and split the baby, giving each favored firm half of the business.

Over the last 13 years, there's been a complete turnover on the County Commission, but the tradition of waiving competitive bidding has persisted. Here's one example from May 26, 2009, in Karen Keith's first year as a commissioner ($110 million in bonds), another from February 1, 2010.

On May 23, 2016, the commissioners, including Karen Keith, voted unanimously to waive competitive bidding on indebtedness, but neither the minutes nor the agenda explain the amount or nature of the indebtedness. Given the proximity to the April 2016 Vision Tulsa vote, my guess is that the vote was on the revenue bonds pledged against that new 15-year sales tax stream.

How many more projects might have been built if Vision 2025 bonds had been competitively bid? Could we have had a new juvenile justice facility without being asked for more tax dollars in two separate elections? (And it still hasn't been built! Karen Keith has been in office eight years, and we're still waiting.)

Given the size of these bond issues, even a 1% fee would be a huge amount for a small firm. The temptation to corruption would be immense. Think of the money the former Skiatook superintendent got in kickbacks from the janitorial supply company. That would be chump change compared to even a small cut of 1% of a $500 million bond issue.

Oklahoma taxpayers need legislation to require competitive bidding on bonds and to require counties, school districts, and cities -- and their associated Title 60 trusts -- to use the state bond adviser rather than hiring their own favored exclusive firms. Until we get that legislation, we need county officials who will support transparency and fiscal prudence. Josh Turley and Don Newberry, both good men with long years' experience as county employees, will provide that kind of leadership, and I hope Tulsa County voters elect them both.

As for the sheriff's race, I've voiced my concern with the pattern of funding Regalado received in the special election primary and even more concern with the way he responded to the charges. He seems to have settled down and done a reasonable job of setting TCSO on a better course, away from last year's scandals. Rex Berry is way out in left field; we don't need someone like him as sheriff. I'm voting for Regalado.