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Scales admits to "oversight," lack of transparency

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By David Carroll

CHATTANOOGA (WRCB)- Five days after it was revealed that Hamilton County Schools officials kept quiet about an early retirement payout to former Board member Janice Boydston, they now admit to a lack of oversight and transparency on the issue.

Last Friday, Eyewitness News sent three questions to Superintendent Jim Scales, and were denied answers until late Wednesday. After speaking to Kenny Smith, who was Board chairman until August 31, we learned that he "had no idea" that Mrs. Boydston had received her controversial lump sum retirement payment on August 23.  After the money had been transferred to her account, Board members discussed the issue at two more meetings, on August 26 and August 31. 

Everett Fairchild, who represents District 3, says he asked Board Attorney Scott Bennett in an open meeting about "the legal liability" of Board members, and was told "there is no liability because no money has changed hands."  But it has since been revealed that money had indeed changed hands, and at least two people who were present (CFO Tommy Kranz and Mrs. Boydston) knew of the transaction.  Here are the questions we posed last Friday, and the answers we received late Wednesday from Communications Director Danielle Clark:

WRCB: Why did Board Chair Kenny Smith not know anything about this payment? Shouldn't he have "signed off" on it?  

CLARK: It is standard operating procedures within the district that once the board approves a program, we do not typically tell them about every payment.

WRCB: Why did other Board members not know about it during the 8/26 and 8/31 discussions?

CLARK:  The disbursement was not discussed at either meeting. While the administration's actions were proper, it was an oversight not to tell the board. It was also not in keeping with the administration's policy of transparency.

WRCB:   Why haven't (previous Board members) Kenny Smith and Chester Bankston received their lump sum retirement payments?  

CLARK:  Once the community conversation began and the board decided to revisit the matter, disbursements were stopped.  We are currently working with former and current board members regarding their disbursements and will appropriate the funds in accordance with the approved program.

Clark said she was not aware of any disciplinary action that had been taken in connection with the failure to tell Board members about Boydston's payment.

Smith has told Eyewitness News that he will likely "refuse" the payment.  Bankston has said he will share it with the schools in District 9, which he represents.

Eyewitness News is now attempting to learn if anyone will be held accountable for the admitted oversight and failure to follow administration policy.




By David Carroll

CHATTANOOGA (WRCB)- Veteran Hamilton County School Board member Everett Fairchild says he's been patient with Superintendent Jim Scales, but is now voicing his concerns about the credibility of Scales and his administration team.  He has scheduled a Board work session Thursday September 30 to discuss Scales' job performance, and contract.  The meeting is scheduled for 5:00 p.m. in the Board meeting room.  Dr. Scales is under contract through June 30, 2012, but there is talk among School Board members and County Commissioners of a possible buyout attempt.

Fairchild told Eyewitness News, "It's hard to work with people you can't trust." He was responding to the news that a lump sum retirement payment of $21,750 had already been paid to former School Board member Janice Boydston before the Board had finished its discussions on the issue.  Fairchild, who was elected School Board chairman on Thursday said "Dr. Scales and his chief financial officer Tommy Kranz have betrayed our trust." 

In addition, Fairchild said during an open meeting while the issue was being debated, he asked School Board attorney Scott Bennett "if there is any legal liability against the Board on these retirement payments."  Fairchild said he was told that "no money had changed hands."  Fairchild says, "We now know that money had changed hands.  That money had already been deposited in Mrs. Boydston's account, and Dr. Scales, Tommy Kranz and Janice Boydston knew it.  They could have told us.  But they chose to sit there and say nothing."  Fairchild says Dr. Scales has shown no signs of backing down.  "All he has said to me is, 'I have a contract'" Fairchild says.

District 9 Hamilton County Commissioner Chester Bankston is also angry.  He says the superintendent's apparent refusal to adhere to the Board's approved policy is grounds for dismissal, along with "deception" on the part of both Dr. Scales and Kranz. 

"Dr. Scales and Tommy Kranz should be fired!" Bankston told Eyewitness News when asked if he had been aware of the August 23 payment to Mrs. Boydston.  He said superintendent Dr. Jim Scales and Chief Financial Officer Tommy Kranz should have informed Board members that the money had already been deposited in Mrs. Boydston's Teachers' Credit Union account.

Bankston also said that Mrs. Boydston should not have received 17 years worth of retirement funds from the now-defunct Chattanooga City School System.  He said, "I tried to make sure of that, but never got an answer from the Central Office.  Now I know why they wouldn't tell me anything.  They didn't want me to know.  That's the way they operate, and it has to stop." Mrs. Boydston's benefit of $21,750 was based on $750 per year for 29 years (17 with the city schools, 12 with Hamilton County Schools).

In addition, Bankston says Scales and Kranz "blatantly ignored" the vote of the Board, by skirting the policy that Kranz proposed, and the Board approved.  Here is the text of the original letter from Kranz to Board members, detailing his proposal to place members' retirement benefit money into a 457 retirement plan:

If a decision is made to participate in a retirement plan, the administration requests consideration of creating a plan specific for School Board members.  The Administration believes that this move would be easy to administer and would provide a greater enticement to the School Board members.  The Administration is requesting approval to create a 457 Plan.  Under this plan, the Administration would contribute a fixed annual amount, say $750, to the individual School Board member's 457 Plan account. Contributed funds would be vested at the time they are deposited into the account.  In addition, prior year contributions would be made for every year an individual has served on the School Board for any School Board member as of August 1, 2010. 
Thanking you in advance for your consideration of this request." 
Thomas Kranz
Chief Financial Officer

Although the Board originally approved this proposal, and later declined to overturn it, Mrs. Boydston's money was not placed in a 457 plan.  Instead it was wired directly to her credit union account, as she had requested.  She told Eyewitness News, "I'm responsible for any taxes on this money.  There's nothing inappropriate going on here."
Former Board chairman Kenny Smith, who presided over the meetings through August 31, said he was "disappointed that Dr. Scales or Mr. Kranz didn't make me aware that the payment to Mrs. Boydston had already been made.  They had eight days to tell me something but they didn't do it."

Mrs. Boydston said, "There's really no big story here.  The Board approved it, I'm entitled to it, I asked for it to be deposited to my account and it was."

Smith and Bankston say they have not received any of their retirement money, which they plan to disperse to the schools in their districts.

The Board originally approved the retirement payment at their August 19 meeting by a 7-1 vote, with Everett Fairchild abstaining.  The payment was made to Mrs. Boydston the following Monday, August 23.  On Tuesday August 31, which was the last day in office for Mrs. Boydston, Smith, and Bankston, the measure to overturn the payment failed in a 4-4 vote, with Jeffrey Wilson absent from the meeting.

The fact that Mrs. Boydston had already been paid was never brought up by Dr. Scales or Kranz.  Smith said, " You would think they would tell the Board chairman."  Smith voted to overturn the retirement payment vote at that meeting.

Asked what she would have done if the Board had overturned the retirement payment vote, Mrs. Boydston said, "I would have returned the money, of course."

Dr. Scales is not commenting on a possible contract buyout, only saying, "While they're sorting all that out, we've had the best school year opening since I've been here. 

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