CLARIFICATION: Brandon Sharp, a former state budget director, was warned he was on the brink of being dismissed for harassment of employees in a May 2014, letter by then-Director Richard Weiss of the Department of Finance and Administration. The letter’s content was reported in the Arkansas Democrat-Gazette after his May 2015 dismissal. This information was inadvertently omitted from this story. The reason for Sharp’s firing was not disclosed by either Sharp nor the Finance Department when both were asked last week. Gov. Asa Hutchinson’s office said Monday the firing had nothing to do with advice Sharp gave the governor on a bill a few months earlier.
Gov. Asa Hutchinson went against the advice of his state budget director when he signed a 2015 bill that would benefit only Ecclesia College in Springdale, the former budget director says.
The governor and two others present at the bill's signing dispute whether the objection had merit and how emphatically then-budget director Brandon Sharp pressed the issue. A Feb. 10, 2015, email referring to an Arkansas Department of Finance and Administration analysis cites a problem with the bill, but the agency said further study relieved those concerns.
Act 417 of 2015 allowed money from the state's General Improvement Fund to go to colleges that were part of the national "Work Colleges Consortium." Ecclesia is and was the consortium's only member in Arkansas. Later legislation in 2015 earmarked $33,000 for distribution under that act.
Ecclesia is a private religious college that would not normally be eligible for state taxpayer money, but it received $717,500 in state Improvement Fund grants in 2013 and 2014 from lawmakers -- including two who were later convicted of getting kickbacks in return for $550,000 of those grants.
One of the lawmakers is former state Sen. Jon Woods, sole sponsor of Act 417. Former Ecclesia College President Oren Paris III of Springdale pleaded guilty in the kickback scheme. Paris and Woods await sentencing in federal court next month.
The college's chance to reap the benefits of Act 417 ended in the fall of 2015 when a U.S. Department of Justice investigation closed in. Ecclesia's application for the $33,000 was frozen by the Northwest Arkansas Economic Development District, which administered the grant money. To this day, the money sits in the district's bank account.
THE SIGNING
All parties present for the bill signing agree that Act 417 was one in a batch of appropriation bills the governor signed March 16, 2015, in his office. Sharp described a 10-minute discussion about the bill, including a private exchange between the governor and Hutchinson's then-Chief of Staff Michael Lamoureux.
The governor, Lamoureux and Duncan Baird, the governor's liaison to the state Department of Finance and Administration, dispute that there was any out-of-the-ordinary discussion about the bill, especially a side conference in the chief of staff's office that Sharp describes.
Baird, Sharp's successor as budget director, said he doesn't recall a side conference.
"I've been to many of those meetings and seen hundreds of appropriation bills signed, and I don't remember the governor and the chief of staff ever leaving one of them to discuss a bill in private," Baird said Wednesday in a telephone interview.
Sharp was fired in May 2015. Sharp confirmed that he is the son of Sheila Sharp, who was fired by Hutchinson last month as the director of the Department of Community Correction.
Brandon Sharp said he now lives in Florida and works for a software developer there. He said no reason was given for his dismissal from his Arkansas state position and none was requested because he served in an elected administration. The finance department did not announce a reason for Sharp's dismissal and when asked recently, said in a statement: "Mr. Sharp was involuntarily terminated for performance."
Sharp said he objected to the bill being signed for the same reason cited in the Feb. 10, 2015, email from the department.
"The court had ruled against funding specific local projects, and this bill stood out to us as a clear attempt to subvert that," Sharp said of the 2006 Arkansas Supreme Court ruling in Wilson vs. Weiss.
That decision prohibits direct appropriations for local projects. The lawsuit was filed by Jacksonville attorney and former lawmaker Mike Wilson against then-Finance Department Director Richard Weiss.
Act 417 was so specific in who it benefited, Sharp said, that he wondered how it got through legislative committees.
"Most of the bills that would violate the court's decision were transparent, and usually a bill that would on its face violate the court's decision would not make it out of committee," he said.
The bill's survival in the legislative process was particularly surprising considering it went through the Joint Budget Committee, which is usually strict about such things, he said.
The wording in Act 417 never names Ecclesia. It refers only to the consortium and work study colleges, where students work at the college's direction to pay for much of their tuition.
BEFORE ACT 417
Ecclesia received the $717,500 in Improvement Fund grants in 2013 and 2014. The state's nonprofit economic development districts administered the grants, but individual legislators, each of whom was allotted a share of money for local projects, controlled the money.
The improvement fund contains mainly tax money left unspent at the end of the state's two-year budget cycle. The fund also includes interest earned on state accounts.
After the state Supreme Court in 2006 declared that the Legislature could not direct appropriations to local-level projects, lawmakers adopted the process of dispersing such funds through improvement districts. On Oct. 5, 2017, the Supreme Court also declared the district distribution process unconstitutional.
Lamoureux was a benefactor of the college while he was a state senator from Russellville and president pro tempore of the Senate, according to grant records and testimony at Woods' trial.
Lamoureux steered $100,000 to the college from the West Central Arkansas Planning and Development District in Hot Springs, $50,000 each in 2013 and 2014. Woods wrote a letter of recommendation for the 2013 grant and picked up Ecclesia's check at the Hot Springs office, according to testimony at his April trial.
Act 417 started out as Senate Bill 323 of 2015, which was filed Feb. 11, 2015, after a review of the draft bill by the finance department. Such review is a matter of routine, the department confirmed Thursday.
A Freedom of Information Act request produced a Feb. 10, 2015, email among budget analysts, including Sharp, within the finance department regarding the Senate bill.
"Bill Analysis: Potential Wilson vs. Weiss issues as there is only one college in the State of Arkansas that is part of the Work Colleges Consortium, however the appropriation bill is providing appropriation to all of the planning districts in the state," the email says.
An analyst raising a question regarding grants to local projects under Wilson vs. Weiss "was not unique as it had the potential to impede a variety of General Improvement appropriations," finance department spokesman Scott Hardin said in a statement Thursday. Further finance department review clarified the issue and allowed it to proceed, he said.
The bill passed in the Senate 33-0 and in the House 80-4.
Hutchinson took office in January 2015 and had said publicly that he opposed giving state money for local projects.
"My concern over legislative GIF has been clear from the very beginning of my administration, and further underscored by my first budget presentation to the General Assembly in which I eliminated GIF altogether," Hutchinson said last week in a statement.
"As for Act 417, it was an appropriation bill and did not carry any funding with it," he said.
An appropriation measure such as Act 417 authorizes spending but doesn't designate any money unless a budget bill also passes that provides the money. Act 1146 of 2015 allocated $33,000 to Act 417 among other General Improvement Fund money.
"In this particular case, a DFA analyst asked a question, and, after internal review by DFA, the appropriation was signed," Hutchinson's statement said.
"I've never felt pressure by a member of my staff to sign a piece of legislation, nor do I recall any conversation regarding a significant concern from DFA pertaining to Act 417," the governor's statement said. "Had I known the intentions of Senator Woods and others at the time, I would have vetoed the bill."
The governor also said he rejected requests by Woods to provide more money to Ecclesia from his own share of the state General Improvement Fund. "I thought the idea was ridiculous and denied his request," Hutchinson's statement said.
Testimony and Woods' legislative working papers disclosed at his trial showed that Woods also supported a medical marijuana legalization amendment to the Arkansas Constitution. Some of the state sales tax revenue from marijuana sales would flow into the Act 417 account under Woods' plan. Hutchinson scoffed at the idea when told about it, and when informed that the proposal was serious and Paris supported it, sternly rejected the idea, according to text exchanges read and shown at trial.
Lamoureux, who now works in Washington, D.C., said in a statement sent Thursday that the meeting in which Act 417 was considered was so routine that it does not stand out. "I do not recall the specific conversation mentioned by Mr. Sharp."
"It would have been unusual for any governor to oppose a member's appropriation bill," he added. "This type of funding at the time was decided by individual members."
Sharp said he doesn't "want to quote anybody from a conversation almost four years ago," but he remembers Hutchinson and Lamoureux stepping into Lamoureux's office, which was just outside the entrance to the governor's office. When they returned, he said the governor asked if Woods' bill included any funding. Sharp said no, and the governor signed it, Sharp said.
Sharp said he reminded the governor before he signed Act 1146 that it would put money into Act 417. The governor signed Act 1146 without comment, Sharp said.
THE $33,000
Ecclesia didn't benefit from Act 417 because the college's grant records were subpoenaed by the U.S. Department of Justice on Dec. 8, 2015.
"Clearly we decided not to proceed with this application after that," said Jeremy Ragland, deputy director of the Northwest Arkansas Economic Development District in Harrison.
Ecclesia's application for the $33,000 was filed June 1, district records show. The application was delayed at first because the amount of money the private college was getting had already become controversial with the district's board, Ragland said, so the new request wasn't immediately taken to the board for approval.
The federal investigation resulted in indictments in March 2017 and a monthlong trial this year. Paris resigned as Ecclesia's president before pleading guilty April 4 of this year. Woods was convicted of 15 counts of public corruption on May 3, most involving kickbacks from Ecclesia in return for grants.
Former state Rep. Micah Neal of Springdale pleaded guilty on Jan. 4, 2017, for his role in the kickback scheme and testified against Woods at trial. Randell Shelton Jr. of Kemp, Texas, was tried with Woods and convicted of 12 charges. The kickbacks were passed through Shelton's consulting company.
The grant money from Act 417 remains in a Northwest Arkansas district account, Ragland said Wednesday. None of the seven other development districts in the state received any grant money under Act 417, state legislative and finance records show. All $33,000 went to the Northwest district.
Act 417 was effectively repealed by Act 220 of 2016, passed during the 2016 fiscal legislative session, according to Hardin.
Metro on 08/26/2018