Local Control Requires Vigilance: The Case of Sikeston Insurance
Local control is preferable to distant, one size fits all control, but it is not always perfect. All control requires fidelity to the law and official process, and the willingness of the local public to hold elected officials accountable for those two actions. There are times when people at the local level do not follow the rules. Instead they go along to get along or succumb to the pressure of a local bully. In the worst cases some actually steal from the public trough. When elected officials demonstrate that they are not willing to adhere to the letter of the law, they should be voted out of office in favor of those who will follow the law and protect the public’s interest. This is easier to do at the local level than it is the state or federal levels where more money is at play and people can use distance to hide behind. What is needed at the local level is elected officials who are willing to make the process transparent and to hold others accountable to the letter of the law. Case in point: Sikeston Missouri School Board.
Recently the district’s health insurance brokerage contract came up for renewal. Mitchell Insurance has acted either as the broker or insurance agent for the Sikeston School District for the past 30 consecutive years. The current school board President, Deke Lape, is employed by and an officer of Mitchell Insurance Company. A committee was appointed by the Superintendent to review bids submitted for the brokership which consisted of the Board vice president Jim Gleason as well as board members Rebecca Stewart and Matt Tanner. The elected board had no say in who was on that committee. They could not volunteer. Membership was a unilateral decision by their employee, the Superintendent. This was the first misstep in a series of fails by the district.
A public notice of a bid process was posted and three companies expressed interest in offering a bid. They were invited to come introduce themselves to the committee who would be making a recommendation to the full board on which company to select. At the time, introductions were all two of them could do as they were given no district information upon which to base any bid. The third company, Mitchell, had 30 years worth of data to use to construct a bid.
One member of the committee was very uncomfortable with this informal arrangement and knew that any contract decisions by a district must be based on monetary bids, not feelings from a meet and greet. Stewart contacted the Missouri Ethics Commission who confirmed her worries. Missouri statute would be violated if no bids were submitted. Further, statute described the process that must occur if there is a potential conflict of interest or nepotism involved in a bid process which there would be with a board president who was an officer of one of the companies submitting a bid.
School district contracts fall under state statute Chapter 105 which states:
“Generally, an official may provide/perform services for, or sell, rent or lease property to, the subdivision in an amount over $500 per transaction or $5,000* per year, ONLY IF, public notice and competitive bidding occurred AND the awarded bid (if to the official) is the lowest bid received.”
In other words, since a Board member’s company was vying for a district contract, the only way they could be approved was if there was public notice of a competitive bid process AND if their bid was the lowest.
Once it was learned that the concern was brought to the attention of the Missouri Ethics Commission an email was quickly sent out by the district to the competing companies asking for a bid with a dollar amount. A “clarification” email was sent out shortly after that to those interested in competing for the broker contract stating that the district would offer “3 years of financials” to the interested parties in order for them to offer a “monetary” bid, called for by law. The companies were given 4 days to develop a complete bid. Anyone who runs a business knows this is very little time to develop a full proposal.
In a video of the school board meeting where the selection of an insurance broker was to be voted on, the representative from Anderson Green was asked if they were given information to develop a bid. At the 55:10 mark he can clearly be heard to respond “NO”. Imagine trying to win a bid in a process where your toughest competitor also is the only one with data upon which to build a bid.
The discussion about insurance begins at the 38 minute mark.
The three bids were never made public. The school board packet did not include that information. When board member Heather Drury asked the superintendent for a copy of the bids prior to the vote, he said he did not have a copy. The board was expected to accept the recommendation of the committee as a matter of faith. If the committee had been following state statute, there should have been no deliberations in their committee meetings. All they could legally do was accept the lowest bid. So why were no dollar amounts given to the rest of the Board members? It seems likely they weren’t provided because the committee did not recommend the services of the company with the lowest bid. They recommended the board approve the brokerage contract with Mitchell Insurance who, as you can see below, actually submitted the highest bid of the three.
Anderson Green – $29,736/yr
Self Insurance – $39,648/yr
Mitchell Insurance – $42,770/yr
The school board voted blindly to accept the recommendation of the committee without knowing the details of what it was they were voting on. Drury’s was the only NO vote. She obtained the above documents only after the vote was taken.
What may have gone into the committee’s recommendation was knowledge by Lape that Mitchell had an agreement with Missouri Delta Medical Center, who had been supplying medical services to the district for several years at a discounted rate negotiated exclusively with Mitchell. Acceptance of their bid for broker services might have assumed that the actual insurance policy selected by the school district later would take advantage of this discount. Who is to say, however, that Missouri Delta Medical Center would not have been willing to negotiate an agreement with any broker’s office in order to keep the district’s business, unless there was some undisclosed relationship between MDMC and Mitchell. When competing for public money, it is perfectly reasonable for such relationships to be revealed publicly.
Regardless of these possible additional factors, it was stressed several times by board members in the video that the bid was ONLY for “broker services” NOT for coverage. As such, and with the direction provided by state statute on conflict of interest, the decision should only have been to select the lowest bidder for those specific services. The board was not given the information to cast their vote. Why not?
Another question that should be answered is, why was this vote rushed? The board did not have to make this decision until May, so why was a vote on the broker rushed in a March meeting?
Had Stewart not taken the initiative to contact the Ethics Commission asking for guidance, the district might have sailed through with a bid process that was based on nothing more than a charade. They would have no idea that the company they selected was actually the most expensive option.
Had Drury not persevered in getting that documentation and standing her ground to vote no, the public would never know the ride they were being taken on. They wouldn’t know that they had a problem in the district.
In politics appearance is everything. It appears in Sikeston you have a Superintendent who is directing business to a buddy by rigging the contract selection committee and hiding the actual bids from the rest of the Board. It appears that you have a number of board members who are not willing to call people out on the process. It appears that you may not be getting the most cost effective services for the district and that the will of the people is not being heard by their elected officials.
The public is catching on to the “where were you when” battle cry of those in power. This tactic is used by those in power to shut down dissent of their actions by calling out dissenters for being silent on similar actions in the past. “Where were you when we did x? You didn’t complain about it then. We are so surprised that you are complaining now and we think it must be for some hidden agenda because you didn’t complain before.” This of course is rubbish, but it is used tiringly frequently. The result is that many are being trained to cry fowl over the slightest divergence from official process in order to guarantee their right to speak out in the future when such unfair processes might be used on bigger issues.
Not only does granting Mitchell Insurance the broker contract mean several thousand more dollars in expense to the district for commissions, it may also mean additional costs not included in this bid. They have offered ancillary services to district personnel for additional fees in the past. This past fall Mitchell attempted to charge the district $40k to file ACA compliance paperwork. This was in addition to their usual commission. The district balked claiming that such paperwork was minor and should not cost tens of thousands of dollars. It seems the complaint about the ACA filing was realistic as Anderson Green, the lowest bidder, included such filing in their bid “at no additional cost” to the district.
Mitchell has an exclusive arrangement with Health Scope insurance who has been providing insurance to the district for a couple years now. Most likely Mitchell will come back with a recommendation to continue with Health Scope in 2016-17. The Board will just have to accept on faith that Mitchell is researching a diverse offering of insurance options and not just doing what they have done year after year because they is comfortable with that process.
Did the Board get the best deal for the Sikeston district? The people of the district may never know because their Board is not allowing others to compete for that business on a level playing field.
Tomorrow is the municipal election which includes elections for school board members. Everyone should be asking, “Do we have board members who will ask the tough or probing questions. Will they ask for documentation to base their votes on? Will they follow the letter of the law? Are they really getting the best deal for the district? Are they representing the will of the public or kowtowing to some insiders to give the appearance of unity?” If you answered no to any of these, do you have names on the ballot of people who will? If not, will you work to find some for next time? Or are you willing to experience ever higher school taxes because it is easier than speaking up?