Smith pay issues lead Defense Department to terminate agency funding

NOTE: This story is being provided free as a community service to eastern Oregon.

Greg Smith’s unsupported pay claims and clumsy effort to boost his own pay have resulted in the federal government pulling funding for an agency that was supposed to create jobs, preserve parts of the Oregon Trail and protect wildlife on a former military base in eastern Oregon.

That could cost the Columbia Development Authority nearly $800,000 a year – a loss that local governments may have to make up if they want the small agency to survive.

In recent years, almost every expense of the CDA has been covered by the U.S. Defense Department. The CDA is tasked with turning the Army’s former Umatilla Chemical Depot west of Hermiston into a job center.

The Office of Local Defense Community Cooperation, a Defense Department unit, issued notice Friday that it was ending funding. The letter wasn’t clear whether the federal government wants to get back money already advanced for the current year, but suggested that it may recover “disallowed” costs going back as far as three years.

That could cost up to $2 million that the CDA doesn’t have.

The letter has injected urgency and uncertainty into an already messy government operation.

READ IT: Federal government letter

Five local governments that make up the CDA are in a costly legal fight over who gets what part of the 9,511 acres of military campus deeded to the agency. Some 4,000 acres is destined for industrial projects. One portion is to be saved to preserve remnants of the Oregon Trail and another section is being set aside as a wildlife refuge.

All of this is in the hands of the CDA’s executive director, Greg Smith. Despite his full-time role in Boardman, Smith also has private clients through his own company and serves as a Republican state representative from Heppner.

He is at the heart of the impending financial collapse of the CDA, according to public records and the recent federal letter.

The federal money flows to the CDA through the Port of Morrow, an industrial compound on the banks of the Columbia River. The port acts as the business manager for the CDA and directly applies for the annual federal award that has kept the CDA going. The notice about the funding cutoff was issued to Lisa Mittelsdorf, the port’s executive director.

Federal officials concluded in their letter that the port so badly managed Smith’s service and grant work that it was no longer entitled to the federal money. The federal letter indicated that one top port official may have committed a federal crime in her handling of the grant application.

Port officials couldn’t be reached Saturday but they have 10 days to give up the grant on their own or have the federal government end it in a way that endangers other federal funding for the port.

Based on the letter, the CDA is a bystander to its own fate. The CDA Board is scheduled to meet in Boardman on Tuesday, Feb. 25.

“I’m a bit surprised by what it has come to,” Puzey said in an interview Friday evening.

He said he hasn’t heard how the Port of Morrow intends to respond but he expects a robust discussion at the CDA board meeting.

Joe Taylor, chair of the Port of Morrow Commission, didn’t respond Saturday to messages by phone and email seeking comment.

The likely collapse of federal funding turns on Smith’s efforts to engineer his own pay raise at the CDA – and to take salaries from both the Legislature and the CDA at the same time, according to public records and the federal government’s letter on Friday.

Smith has long been a subject of controversy.

In 2022, he quit his contract to serve as economic development director for Malheur County after a state-funded rail shipping project foundered. He later had to pay Malheur County more than $68,000 related to mishandling of public records.

Last year, he was bounced from his long-time contract to run a business counseling center at Eastern Oregon University following an investigation by the Enterprise. After Smith left, the university found such a weak organization that it ended recruitment for a new director and instead shut down the business center.

And in January, the Oregon Government Ethics Commission found that Smith hadn’t followed an ethics law he himself championed. He failed to disclose in public filings a key client of his private company, the commission investigation found. Smith has told ethics investigators that his household income in recent years has averaged $1 million a year.

After the CDA Board last year challenged Smith’s handling of pay raises, he responded by claiming his reputation had been ruined and that he subsequently needed “psychological and medical counseling.” He is seeking unspecified compensation from the CDA, the Port of Morrow and Umatilla County.

The Defense Department started its review after an Enterprise investigation last year into the CDA and Smith.

The Enterprise investigation found that Smith had been claiming eight hours of work for the CDA on days during weeks he was at the Oregon Legislature. Legislative records showed Smith also was claiming daily living expenses from the Legislature on those days. He listed full work days as executive director on days when his calendar and emails showed him performing private contracting work.

When he was hired in 2015 as executive director of the CDA, the Port of Morrow assured its federal partners that Smith would not be paid by the CDA when serving as a legislator. The port said it was setting in place a system to guard against such double payment.

“The Port of Morrow asserts that they have policies and procedures in place that support our efforts to assure that federal funds will not be spent on legislative duties,” the letter said.

There is no record such a system was put in place.

The federal review zeroed in on the apparent double pay, records show. Smith last year was paid $129,000 a year for his full-time CDA job. Records show that he turns in timeslips that typically show eight hours every work day without any elaboration. Smith signs the timeslip – and signs again to approve his own claim.

Last October, Smith prepared a statement at the federal government’s request about the time claims.  He said that he was not paid through federal grants “for any eight-hour days where I am also being compensated for work performed in either my State Legislator capacity or under any other position I hold.”

That conflicts with Port of Morrow financial records showing that the majority of Smith’s pay in those periods in 2023 and 2024 came from the federal grant. Smith hasn’t responded to questions about the discrepancy.

Federal officials in January again sought port records showing that Smith’s time was properly recorded and that he was not getting federally-backed pay while performing as a legislator. They weren’t satisfied with the port’s answer, which said the port relied solely on Smith’s time cards.

READ IT: Port’s January response

“Your response did not provide any additional documentation on timekeeping” and “previously submitted documentation was insufficient,” the letter said.

The federal officials said Smith’s “self-certification” was no assurance the timecards are accurate.

The letter noted the port had the duty to ensure that “timecards accurately reflect the work performed” but such performance was “not evident.”

In a statement reported Friday by the East Oregonian of Pendleton newspaper, Smith said the funding collapse came because the federal government now “takes exception to having a state representative also serving in the capacity as an executive director.”

There is no such reference in thousands of pages of public records obtained by the Enterprise in recent months from the CDA and the Port of Morrow.

The federal reviewers also zeroed in on Smith’s effort to boost his own pay at the CDA.

The Enterprise investigation established that in late 2023, Smith proposed to the CDA board chair that his annual pay go from $129,000 to $304,000. When that didn’t advance, Smith’s team instead used the annual application for federal funding to set his salary at the three-person agency at $195,000.

A CDA employee noted in an email at the time “I know we still need board approval on the wage increases.”

Instead, the application turned in to the federal government a year ago declared the board had approved the raise, something that had not happened.

The Port of Morrow and the federal agency signed approval of the grant before it ever went to the CDA Board.

Smith then took the application to the CDA Board for hurried approval. He said nothing about pay raises, board members later recounted. But Smith used the board’s approval of the grant to direct that his pay be increased. He also said the increase was to be retroactive, generating a one-time lump sum payment to him.

That budgetary sleight-of-hand disturbed the CDA Board, which later revoked the pay raises and ordered the excess pay be returned. Smith’s pay was reduced but officials have provided no record that Smith has returned the excess pay as directed by his board.

That process also troubled federal officials, according to the recent letter. They wrote that port officials couldn’t deflect responsibility to the CDA.

The federal letter noted that the grant was submitted by the Port of Morrow and it alone was responsible to ensure application information was accurate.

The federal letter noted that Eileen Hendricks, the port’s chief financial officer, signed the grant application on behalf of the port. In signing, the letter said, Hendricks declared under federal penalty for false statements that all statements were “true, complete and accurate.”

Instead, the federal agency said, “the evidence demonstrates that the application statement regarding board approval was untrue and inaccurate.”

That wasn’t just a minor error, according to the letter.

“This statement was a material reason” the federal government approved the grant, the notice said. Without it, the Defense Department “may have decided not to fund the grant at all.”

Hendricks couldn’t be reached on Saturday and didn’t respond to an email sent to her work address.

Contact Editor Les Zaitz: [email protected]

PREVIOUS REPORTING:

Federal officials shut down Oregon agency funding over ‘concerns’ with Smith pay

Oregon ethics commission faults Rep. Greg Smith for not naming clients

Republican legislator says reputation ‘destroyed’ over his controversial pay raise

Defense Department digging into finances of Boardman public agency run by Greg Smith

Turmoil continues around Smith as public officials spar over his performance

Smith loses big pay increase, faces salary repayment in controversy over his conduct

Greg Smith exaggerates his duty to engineer major pay raise from struggling public agency