By: Jason Hancock and Annelise Hanshaw
Missouri Independent
Hallsville, a town of about 2,000 people northeast of Columbia, was peppered with homemade purple and gold “Yes on Prop 2” signs adorning front lawns early this spring.
The Hallsville School District was asking for a $6.5 million bond issue to finance more parking for the growing high school, a new elementary classroom and increased security for schools. And on April 8, nearly 75% of voters approved the measure, and the district launched pre-construction and design work.
But the project came to a halt the afternoon of June 6 when Superintendent Tyler Walker learned the district hadn’t met public-notice requirements before the election. So their bond counsel, the law firm Gilmore & Bell, couldn’t submit the bond issue for certification to the Missouri State Auditor’s Office.
“This was not the fault of the school district,” Walker told The Independent, “yet the school district and the students we educate are unfortunately being punished.”
Hallsville is the only school district to publicly acknowledge issues with its bond measure, but there could be as many as 10 political subdivisions forced to throw out the results of the April election.
Mark Grimm, an attorney with Gilmore & Bell, said in a June 3 email to the auditor’s office that eight to 10 of his firm’s clients may need to put voter-approved bonds back on the ballot because they appear to have fallen short of the state law laying out public notice requirements in the run up to an election.
Notice of a bond issue must be published in local newspapers twice — once two weeks prior to the election and again within one week of the election. In each instance, Grimm wrote, notice ran three and two weeks before the election.
Exactly which bond measures are in jeopardy isn’t clear. The firm couldn’t comment on specifics about its clients, and the auditor’s office — which must certify that local bond measures comply with state law — was not provided with a list.
In an interview with The Independent, Auditor Scott Fitzpatrick said the state law is clear. The last thing he wanted to do was disqualify a voter-approved measure, Fitzpatrick said, but his hands are tied because public notice requirements are very specific and allow no flexibility.
“If we’re aware of the deficiency,” he said “we can’t knowingly certify that the bonds comply with all the laws.”
Fitzpatrick, a Republican from Shell Knob, acknowledged similar issues with public notice have gone undetected over the years. In fact, an $8.5 million bond measure for the Centralia R-VI School District, Hallsville’s neighbor to the northeast, was certified with similar problems.
The office has historically relied on bond attorneys like Gilmore & Bell, Fitzpatrick said, to ensure their clients are in compliance with state laws before submitting paperwork for certification. While his staff ensures publication takes place, “it was not part of our process to closely check the dates of the publications.”
“There’s a level of trust that has been historically built into this process,” he said, “because this is a sporadic thing. It’s not something where we have a team of people sitting around all day and their only job is to review these bonds and check every single law.”
Bill Burns, general counsel for Gilmore & Bell, doesn’t agree with the auditor’s position. He believes Missouri law gives Fitzpatrick enough wiggle room to certify voter-approved bonds despite “minor deficiencies relating to publication notices that would not in any way affect the outcome of the election.”
But Fitzpatrick said the law firm should have been on the lookout for these sorts of problems after a dust up in February involving the Higbee Fire Protection District — another Gilmore & Bell client — resulted in a bond measure being refused certification over similar issues.
“I am surprised that we’re dealing with this now,” he said. “I would expect that bond counsel will be more proactive and communicate with the county clerk on these deals moving forward to make sure the publication dates are where they need to be. But I would have also thought that following the February deal.”
Higbee Fire Protection District
Over the course of two elections last year, voters in Randolph County approved $1.6 million in bonds to support the Higbee Fire Protection District. It was only supposed to take one election, but the county clerk put the wrong total on the August ballot, requiring the rest of the bonds to be approved in November.
By February, all that was left for the bonds to finally be issued was the certification of the auditor’s office.
And that’s where things went sideways.
Fitzpatrick’s staff kept asking for a copy of the sample ballot that was published in the newspaper prior to the election. Erick Creach, an attorney with Gilmore & Bell representing the district, instead sent affidavits attesting that the county clerk published a sample ballot.
As it turns out, the reason Creach couldn’t share a copy of the sample ballot was because it was never published as required by law.
“Erick called first thing this morning,” wrote Leslie Korte, general counsel for the auditor’s office, in a Feb. 26 email obtained by The Independent through Missouri’s Sunshine Law. “He admitted that despite their prior representations and the certification of the clerk, they in fact did not publish the notice as required. For any election. He basically wanted us to let that slide.”
Korte wrote that she informed Creach that the auditor “cannot certify a bond that we know does not comply with state law.”
“I also addressed the secondary issue, which is Gilmore & Bell sending us documents certifying to facts that are not true, and him providing us documents yesterday afternoon identifying them as something they are not,” she wrote. “I told him all bond packages we receive from them going forward will be under heightened scrutiny, and if anything like this happens again, how it is addressed by our office will be escalated.”
Creach responded later that day reiterating that sharing the affidavits wasn’t an attempt to fool anyone but rather to “keep your office updated as I was piecing together the information, which to your point should have been addressed prior to submission of the transcript in the first place.”
The firm, Creach wrote, will “have a call today internally to discuss best practices regarding submission of transcripts and review of documentation to ensure this doesn’t happen in the future.”
Fitzpatrick said in an interview this week that Gilmore & Bell “kind of intended to mislead us on that one, and we were unable to certify those bonds because no publication took place.”
Brookfield R-III School District
In May, the auditor’s office refused to certify bonds for the Brookfield R-III School District in Linn County, again due to public notice deficiencies.
Though the school district was not a Gilmore & Bell client, the firm took note and decided it would “submit certain hypothetical fact situations” to the auditor in the hopes of clarifying what could disqualify a bond measure, said Burns, the firm’s general counsel.
One of the hypotheticals the firm submitted was publication three weeks and two weeks before the election. The auditor’s office confirmed it would not certify under those circumstances.
Grim responded that “we believe there are 8-10 bond elections from April for political subdivisions we represent where the election authority complied with all publication requirements except the publications fell slightly outside of the two week/one week provision.”
One of those was Hallsville.
“While we definitely agree that good public policy is to ensure compliance with election laws,” Grimm wrote, “failing to register bonds due to election law technicalities has the result of effectively annulling an election.”
He requested the auditor’s office consider certifying bonds regardless of the public notice issue, with the understanding that “going forward, no such grace will be provided.” And he noted the auditor’s office had just certified a bond for one of the firm’s other clients, Centralia, that had the exact same deficiencies.
Korte responded in a June 4 email that for Centralia, the auditor’s office “relied on the representation of bond counsel that the bonds complied with all state laws, including state law that dictates when those publications must take place.”
Given the number of state laws that exist to cover the issuance of bonds, Korte wrote, it would not be surprising if over the years a bond was certified “despite having an unknown or undisclosed legal defect.”
“That should never be taken as a tacit approval of any failure to comply with state law,” she wrote. “If anything, it should be used by bond counsel as a cautionary tale causing them to double down on their efforts to ensure they are monitoring their clients’ bonds and advising on how to issue bonds in full compliance.”
Hallsville School District
Boone County Clerk Brianna Lennon, who oversees elections including publishing notices, told The Independent that her office intentionally chose to publish sample ballots three and two weeks before the election.
“We have tried, especially this past time, to make sure that we have some (safeguard),” she said. “So if there is a mistake that’s made in one of the weekly papers, we still have a grace period to be able to publish.”
A changing newspaper industry has made it harder to publish sample ballots. After a local paper was bought by a large corporation, Lennon’s office struggled to get edits made of notices and receive proofs prior to printing.
Lennon didn’t think her notice strategy would run into statutory issues, since the heart of the law is to ensure voters are informed. Her office goes beyond the law’s requirements and sends sample ballots in the mail to voters and posts them online in advance of all elections.
Hallsville plans on resubmitting the bond issue for November’s election, which Walker estimates will cost the district “between $10,000 and $20,000.” Until the issue is funded and approved by the state, no payment is due to Gilmore & Bell.
The cost of delaying construction isn’t quantifiable, he said, and will cause “significant planning issues for the district,” with improvements critically needed.
“The safety and education of our students is of utmost importance to all of us in Hallsville,” he said.
Walker felt he had no reason to doubt the district’s bond counsel, since Hallsville previously passed three bond issues with Gilmore & Bell’s assistance, and he knew the firm’s reputation as “one of the best.”
“Districts rely on bond counsel because the process to pass a bond issue and finance a successful issue is a complicated one,” he said. “It requires the assistance of a bond counsel to navigate the legal and financial complexities that are involved in the process from start to finish.”
Fitzpatrick said his office will begin requiring bond counsel to sign an affidavit when submitting paperwork for certification of a bond measure “basically saying that, to the best of their knowledge, all laws have been complied with.”
State lawmakers have also reached out to him, Fitzpatrick said, with interest in changing the public notice law when the legislature reconvenes in January. Burns said his firm agrees that the law needs to be adjusted.
“The main thing I think that really needs to be changed is becoming more lenient with the date of the publication,” Fitzpatrick said, adding: “There’s a lot of kind of antiquated aspects of it.”
