County: HES must obey oversight rules
Hamilton County has rebuffed the Humane Educational Society’s challenge to new financial oversight rules for certain nonprofits.
On June 21, the Hamilton County Commission voted 6-3 on a measure requiring all nonprofits to adopt county spending and travel policies if county money amounted to more than 25 percent of their annual operating budgets and assisted them “in the performance of their established purposes.”
A few days later, the Humane Educational Society sent a letter to County Attorney Rheubin Taylor, declaring the rules don’t apply to them because they provide vendor animal services and do not simply benefit from county funding. Attorney Jerrold Farinash, who serves as vice president of the agency’s board, sent the letter.
Taylor responded to Farinash in a letter dated June 30, disputing the group’s reasons for exemption.
“The policy, as adopted by the commission, made no exceptions as to the application of said policies,” Taylor said.
The Humane Educational Society receives $620,970 from Hamilton County in the fiscal 2018 budget. That amounts to about 33 percent of the money the agency receives, Farinash said. He also said it takes 50 percent of the organization’s budget to provide animal welfare services to the county.
Farinash argued the animal shelter, established in 1910, was not established to provide animal services to Hamilton County, nor does it “now exist solely for that purpose.”
While no one denies the humane society provides a valuable service to the county, the measure’s “established purposes” language actually refers to the nonprofit’s benefit, not the county’s, Taylor rebutted.
The agency has no vendor contract with the county, he said.
“It may be a matter of semantics, but the way HES, and all other non-governmental entities receive any funds from Hamilton County each year, absent a contractual agreement, is by ‘requesting’ same,” he said, adding the county cannot consider its relationship with the agency as a contractual, written or unwritten.
Taylor also pushed back against any notion the county wants to quit using animal services provided by the Humane Educational Society, which Farinash had mentioned in his letter.
“If it is the county’s decision to discontinue HES’s services, the county will need to immediately provide HES with instructions as to a safe and proper facility to which its animals should be delivered,” Farinash said, adding the group houses between 400 and 500 animals on any given day.
Farinash could not be reached for comment by phone or email.
On Wednesday afternoon, Commission Chairman Chester Bankston said he was not aware of any plans to change funding for the Humane Educational Society, nor was he aware of whether any commissioners would revisit the application of the new financial rules.
Mayor Jim Coppinger has repeatedly cautioned commissioners over “unintended consequences” of the new nonprofit financial oversight measures.
Commissioner Tim Boyd, who sponsored the nonprofit oversight legislation, has said he did see what problems affected organizations would have with abiding by the county’s spending and travel policies.
The Chattanooga Convention and Visitors Bureau, whose spending has been scrutinized by Boyd for several months, is also subject to the new rules.
County money, in the form of lodging tax revenues, accounts for over 80 percent of the CVB annual cashflow. The agency is projected to receive $8.2 million from the county in fiscal 2018.