Maverick County Suffers Over $2.5 Million Loss After GEO Group left Maverick County Detention Center
By: Jose G. Landa, Copyright 2015, Eagle Pass Business Journal, Inc.
According to a public “Notice of Material Event for Continuing Disclosure Requirements of SEC Rule 15c2-12” filed with the United States Securities and Exchange Commission by former Maverick County Financial Advisor Roberto Rodriguez of Southwestern Capital Markets, Inc., “Maverick County incurred over $2.5 Million in losses related to General Fund revenue budgeted during FYE 9/30/14 (18% of the $13.7 M Total General Fund) Budget” as a result of “moving all federal inmates from its County Tom Bowles [Law Enforcement and Detention Center] facility to the Maverick County Detention Center (MCDC) in an attempt to support MCDC operations after the private operator left on October 31, 2013.”
The Securities and Exchange Commission public notice further states that “while efforts were made to reduce expenses at the Tom Bowles facility during the year, it is estimated that $1.2M+ was still ultimately lost as as result of the takeover alone.” Maverick County took over the operation of the over 600 bed MCDC on November 1, 2013 under the Maverick County Sheriff’s Department and Sheriff Tom Schmerber after The GEO Group, Inc. left on October 31, 2013.
The public notice adds that “although other General Fund Revenue did come in above budget and other General Fund expenses did come in below budget in FYE 9/30/14, the Maverick County Auditor’s Office is still in the process of determining what the final amount of losses in FYE 9/30/14 were to Maverick County. The Trustee for the Public Facility Corporation (PFC) bond issue that financed the MCDC has been unresponsive to multiple proposals submitted on behalf of the PFC…to begin recovering some of the County’s FYE 9/30/14 losses resulting from the MCDC takeover and to ensure the County is not held responsible for the $690,000 owed to the former operator that was appropriated for bond payments from funds reserved for this purpose.”
The SEC public notice further states that “Maverick County budgeted $2.780M in General Fund revenue to be produced by the Tom Bowles facility in FYE 9/30/15 composed of approximately 146 federal inmates (21% of the $13.3M Total General Fund Budget), yet because the facility has not started accepting federal inmates again at 6 months–it is estimated that only $250,000 has been generated where if unchanged would result in revenue losses to the County of $2.280M for the year. Attempts to ensure the Tom Bowles facility started accepting federal inmates again immediately to stem the losses to the County of over $100,,000 a month have been ignored. Efforts have also been made by our firm as the County’s Financial Advisor to secure updated financial information from the County in order to provide a financial outlook for the final 6 months of FYE 9/30/15, however, our firm has been told that this information would not be provided and subsequent attempts to secure this information have been ignored (including a Texas Public Information Request). The gravity of the financial challenges facing the County over the last 6 months is unknown at the moment, but it is estimated that in the first 6 months more than 95% of the $5.2M in budgeted General Fund tax revenue has been collected and that I & S Fund should contain sufficient dollars to meet the County’s Debt Service obligations in September 2015 (assuming the funds are not used for other purposes before then).”
Finally, the SEC public notice states that “we have also become aware in our role as Financial Advisor that the County’s FYE 9/30/13 Audit was recently approved at the Commissioners Court meeting on April 7, 2015 despite our firm and others repeatedly identifying how multiple sections of the Audit contained materially inaccurate and/or incomplete information prior to being submitted for approval to Commissioners Court.”
Last week, the Eagle Pass Business Journal reported an article on how Maverick County’s financial problems attributable to the operations of the Maverick County Detention Center and the Tom Bowles Detention Center (County Jail) continue and how County Judge David R. Saucedo warned Commissioners Court that the County may have to seek a $1-$2 Million Anticipation Loan Note with a Source of Revenue this summer in order to satisfy the County’s obligations under the Fiscal Year End 9/30/15 Budget. This SEC Public Notice clearly anticipated a shortfall of Maverick County’s 9/30/15 Fiscal Year End Budget.
Commissioners Court have terminated all the players previously assisting it with the delicate and difficult financial negotiations with the Bondholders and Trustees of the Maverick County Detention Center’s $43 Million bonds and have hired new Financial Advisor, Bond Counsel, General Counsel, and actively participated in the appointment of a new County Auditor.
Maverick County taxpayers certainly hope that Commissioners Court and the new financial advisors and players are able to successfully negotiate an agreement with the Bond Holders and Trustees of the MCDC as well as turn the financial tide on the County’s financial problems before taxpayers are left holding the bag or pick up the pieces of whatever is left, if anything.
Commissioners Court has known of these precarious and sensitive situation but have not been open and transparent with taxpayers regarding public information concerning this urgent situation facing taxpayers.
Commissioner Roberto Ruiz is the Chairman of the Board of Directors of the Maverick County Public Facility Corporation and each Commissioner are also members of the Board together with Sheriff Tom Schmerber and County Human Resources Director Jesus Sanchez.
Maverick Countians deserve an open and transparent Commissioners Court and PFC Board of Directors and full disclosure of the County’s financial obligations, losses, and crisis, including the PFC/MCDC.
