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Anytime an Alabama taxpayer hears a public official defending "discretionary funds" that can be distributed at the discretion of an individual public official such as a legislator, that taxpayer should remember the case of state Rep. Bryant Melton.
Melton recently pleaded guilty of laundering thousands of public dollars from his discretionary account through a foundation associated with the Alabama two-year college system, and then using that money to help pay gambling debts.
While Melton's case involves only about $70,000 in public funds, it illustrates the lack of public oversight in how these funds are handled. And it is no small issue for taxpayers, since the Legislature has set aside about $27 million that can be spent in the current and next fiscal years in such "special project" money.
Melton's plea bargain reached with federal prosecutors outlines the process he used to launder his public discretionary funds so he could convert them to his own use. The plea document does not name other individuals, but it makes it clear that Melton could not have done this without the cooperation of other public officials.
In addition to serving in the Legislature, Melton worked as director of human resources at Shelton State Community College. The plea bargain states that in 2000, Melton had a conversation with a former president of another college overseen by the Department of Postsecondary Education, telling the former president that he was having trouble funding his daughter's medical education.
The former college president told Melton that if he would direct state funds to a foundation associated with the Alabama Fire College, the foundation would provide funds for his daughter's education. The Fire College is located on the campus of Shelton State and is also overseen by the Department of Postsecondary Education. Then a person described in the plea document as a "current president" of a college overseen by Postsecondary Education also discussed the proposed arrangement.
Shortly thereafter, according to the plea agreement, a "Board Member" of the foundation contacted Melton and said that if he would provide state money to the foundation, the foundation would provide funds for his daughter's education.
Melton soon did so, allocating $15,000 of his discretionary funds to the foundation. "The defendant personally delivered the check to Board Member," the plea agreement states.
A few months later, Melton filled out a one-page scholarship application in his daughter's name. The "Board Member" then gave Melton a check for $10,000 in his daughter's name.
But the money did not go to the daughter. According to the plea agreement, Melton "signed his daughter's name to the check and deposited it into his personal checking account from which he paid personal expenses due, in large part, to the defendant's gambling activity."
Melton's funneling of public money through the foundation for his own use continued through 2003. After his daughter completed her education, he changed the ruse "in accordance with the Board Member's instructions" to have the check issued in a friend's name, who then cashed the foundation check and split the money with Melton.
We are not suggesting that any of the $27 million that legislator's have currently set aside for discretionary funds will be siphoned off through outright fraud. In fact, we hope that no other legislators would be so bold to try such a scheme.
But anytime there are so few checks and balances governing how public money is being dispensed, abuses will occur.
In Melton's case, taxpayers should hope that federal and state prosecutors bring indictments against any public official who went along with the scheme. But the larger issue of legislative pork needs to be addressed as well.
Such pork-barrel political funds exist so that legislators can use the public's money to curry favor with voters back home, giving incumbents a big advantage at election time over any potential opponents. Even legislators who use all of his discretionary funds for legitimate public purposes will be tempted to spread it around in ways that best benefit them politically.
Despite all the high-sounding claims, discretionary funds are an invitation to abuse.
If discretionary funds continue to exist, the Legislature should impose controls that tightly limit their distribution solely to governmental agencies for public purposes. There should be requirements for the public official who allocates public money to disclose any personal or family connection to the organization getting it, and stiff criminal penalties for failure to disclose such connections. And there should be required follow-up audits of all agencies that get such funds to ensure the money is used as intended.
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