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Pody Questions State’s Contract to Outsource Motor Pool

An inquiry into contract outsourcing for the management of the state’s motor pool to Enterprise Rent-A-Car has left one state representative with more questions than answers.

And those answers may not come for another month Mark Pody, who sits on the legislature’s Joint Fiscal Review Committee, told TNReport.com.

Rep. Pody had said on Monday that he’d been told by state Department of General Services staff to expect more specific answers Tuesday. However, that didn’t happen, he said.

“I believe they’re giving me general information where I want more specific information, and I want to see where it’s documented and backed up,” said the Republican from Lebanon.

“Everything has been postponed until they come up in Fiscal Review to review the contracts next month,” Pody told TNReport.com Tuesday afternoon.

Fiscal Review is one of a handful of General Assembly committees that meet year-round. The committee convenes on the second Monday of each month. The next meeting will be July 8.

“I’m not comfortable with the stuff they’ve given me already,” said Pody, who is in his second term. “I’ve got to make them tell me why they believe it’s one way and the contract clearly says its something different.”

Pody, who owns a small company specializing in financial planning, said he was made aware of the contract — which he calls “not good business” — by Nashville’s NewsChannel 5 Chief Investigative Reporter Phil Williams.

“We want transparency in government that we know that our taxpayer dollar is being spent wisely, openly and everybody can follow through,” he told TNReport.com, something he doesn’t feel is happening with the Enterprise contract.

“I just see what’s in the contract and what’s being done is two separate entities. I’m not getting the answers that I’m looking for yet.”

Since Gov. Bill Haslam was elected to office in 2010, General Services Commissioner Steve Cates, a Brentwood developer, has overseen the transfer of certain state jobs and services to private companies,

Among these transfers was the state motor pool in 2011 when the Department of General Services decided to outsource the program to Enterprise and its car-sharing program called WeCar.

Around the same time, former Enterprise executive Kathleen Hansen was hired by Cates to head the department’s motor vehicle management division

According to a General Services’ internal memo, the state contract was not put out for bid for three reasons. First, the General Services memo seeking approval stated that “there is insufficient time to create the Request for Information, hold a pre-bid, create an Event, solicit bids, evaluate bids and award a contract by Jan. 1, 2012.”

Second, the memo stated that, “The rental of cars has not been solicited by the Purchasing Division in the past; therefore it does not have experience in developing the specifications.”

Lastly, the memo stated the state would it “piggy-back” on the “University of Tennessee’s WeCar” program, which was put out for public bid.

However, a statement submitted to NewsChannel 5 Investigates reads: “The University of Tennessee does not have a WeCar program,” but instead has a rental discount program with Enterprise for university employees and alumni only.

The UT motor pool has not been outsourced.

This statement, as well as the fact that the state’s contract calls for a fleet of 80 vehicles, but as of Tuesday only had 56 cars in it, causes Pody grave concern.

“The contract clearly calls for a minimum of 80 cars, and that’s what the state’s suppose to be paying for on a monthly basis,” Pody told TNReport.com Tuesday. “As of today, there’s only 56, and I cannot find any documentation where Enterprise or anybody else has agreed that we only pay for 56.

“There’s no paper trail to verify it. There’s just not. I don’t want us to get a bill at some point when this contract ends that says, ‘You’ve been paying now for $6 and the difference is some 20 cars.”

Additionally, Pody said while the “contract specifically calls for hourly rates in three separate spots,” General Services tells him there is no hourly rate. Instead, the state pays the daily rate of $31.33 and a weekly rate of $184.85, $26.60 more than the state of Oklahoma’s rate of $158.35.

Pody said he intends to ask his questions at the next Fiscal Review Committee meeting so he can go on record as having asked them in a public meeting.

Specifically, he wants to see the paper trail regarding the reduction of the fleet size, as well as written documentation explaining how much this has saved the state versus operating its own motor pool. He also wants a detailed explanation regarding the discrepancies between the UT statement and that of General Services regarding the “piggy-back” of the university’s contract.

Pody said he hopes to have some answers next week, well before the next Fiscal Review Committee meeting.

“It’s just me. I’ve got a month to finish getting my stuff together before they come before Fiscal Review,” he said.

Amelia Morrison Hipps may be reached at amhipps@downhomepolitics.com, on Twitter @DwnHomePolitics or at 615-442-8667.

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Business and Economy Education News Tax and Budget

Haslam Takes Up Task of Trimming Down Spending

Gov. Bill Haslam kicked off a four-day stretch of departmental hearings Monday as a warm-up to drafting his first state budget.

The new governor digested spending-plan projections from some heavy fiscal hitters right off the bat, including the Departments of Health, Education and Higher Education, which all had to present budget scenarios with reductions of 1 percent and 2 percent.

“We have 23 departments, if you add up all the requests, it will be a number obviously that we can’t fund,” Haslam said during a short break between hearings. “It’s their job to request that and to prioritize that … and then we have to wade through that at the end of the day.”

Haslam said he’s confident there’ll be fewer employees on the state payroll under his budget plan. But he said reductions need to be made “surgically” instead of by slashing staff with massive layoffs.

Haslam also heard from the Departments of Tourist Development and Financial Institutions Monday. On Tuesday, he is scheduled to hear from the Education Lottery Corporation and the Departments of Environment and Conservation, Transportation, Labor and Workforce Development, Corrections, Veterans Affairs, General Services, Commerce and Insurance, and Economic and Community Development. Hearings are expected to continue through Thursday morning.

Here are some highlights from Monday’s hearings:

Education

Education officials proposed an increase of $423 million in the state-funded portion of its budget, bringing the overall budget to $5.1 billion. Acting Education Commissioner Patrick Smith said the increase includes pay rasies and increased state funding to schools mandated by inflation and the state’s school funding formula.

Haslam told reporters that he’s committed to fully funding schools as called for under the formula, known as the Basic Education Program.

“If you look at new dollars that are available in the state, at the end of the day, about half of them will be end up taken up in (Basic Education Program) formula and TennCare increases, just by formula, not by doing anything different,” he said.

Smith outlined about $3.5 million in possible cuts, which would eliminate positions and supply costs. The proposal would also reduce operating costs for the state’s schools for the blind and deaf, cut grants that support public television stations operated by schools and reduce other programs. Without additional funds, about $70 million in other programs and grants paid for with one-time money will be cut.

The total education budget is estimated to decrease this year by about $510 million because of a $1 billion reduction in federal funds.

Tourist Development

State tourism officials say they want to build two new “Welcome Centers,” even though all departments have been asked to propose reductions to their annual budget as one-time federal stimulus dollars run out this year. According to the department, the state currently operates 14 Welcome Centers across the state.

They described plans to build a center as part of a solar farm in Haywood County, and another visitor center along I-26 in Sullivan County.

Haslam questioned the expansion plans: “I’m just wondering why, in tight times, we’re adding them.”

The centers had “been on the books for 10 years,” and the planning and funding had been approved for several years as well, Department Commissioner Susan Whitaker said.

Health

Haslam opened his first budget hearing with Commissioner of Health Susan Cooper, who emphasized the department’s role in instilling good health into all environments and not specifically focused on individual clinical care. She addressed disease prevention and outbreak investigations, immunizations, licensing facilities and emergency preparedness.

The department employs roughly 3,000 people.

She noted that in 2005 the state ranked 48th in the nation in health status but is now 42nd, crediting decreased use of tobacco and returns on investment in community efforts to fight diabetes.

Haslam set the tone early that he would ask many questions along the way, frequently interjecting and asking if stimulus funds had been involved in expenditures.

Cooper noted that good health factors can be attractive to new businesses. She outlined a base budget of $539 million.

The department offered several potential budget reduction areas such as travel, cutting communications costs, abolishing a few positions and eliminating a hemophilia program, which she quickly added would require a change in statute.

Higher Education

Joe DiPietro, president of the University of Tennessee, and John Morgan, chancellor of the Tennessee Board of Regents made their first budget appearances since taking their new positions. The message they gave Haslam was that while there are great financial challenges facing the system, the state has high value in its higher education institutions.

Richard G. Rhoda, executive director of the Tennessee Higher Education Commission led off the presentation and underscored the financial crunch by telling Haslam that in the last 10 years enrollment at the state’s four-year schools has gone up 22 percent but that they have seen appropriations fall 33 percent. At the same time, tuition and fees have risen 74 percent.

Meanwhile, Rhoda said, enrollment at two-year schools is up 38 percent during that period while appropriations are down 26 percent. But in that time, tuition and fees for those schools have risen 126 percent.

Morgan said space constraints are a serious problem at many of the state’s technology centers. DiPietro said one issue facing UT is that some buildings are over 40 years old and in need of repairs. When Haslam asked the higher ed panel if they had any creative ideas to address the financial stress on the system, one possibility Morgan raised was to apply means-testing to the HOPE scholarships derived from the state’s lottery. Haslam said after the hearing he is not ready to take such a step.

Reid Akins and Mike Morrow contributed to this report.