Bill targets moonlighting school chiefs:
Those whose second jobs present conflict of interest
By SCOTT PARKS, The Dallas Morning News, December 9, 2004

Texas public school superintendents should not be allowed to moonlight for businesses that sell products or services to their school districts, state Rep. Scott Hochberg, D-Houston, said Thursday.

Mr. Hochberg has filed a bill that would ban superintendents from receiving "any financial benefit for personal services performed by the superintendent for any business entity that conducts or solicits business with the school district."

Johnny Veselka, executive director of the Texas Association of School Administrators, said he agrees with Mr. Hochberg's goal.

"We certainly agree with the concept," Dr. Veselka said. "We would want to give further study to the entire proposal."

Earlier this year, The Dallas Morning News published a series of stories that examined business relationships between school superintendents and companies that market to school districts.

Texas law does not prohibit superintendents from working for a company while simultaneously recommending that same company for a contract in his district.

"This is a problem that has been brought to light," Mr. Hochberg said. "There seems to be agreement on fixing it. So, let's fix it."

Another provision in Mr. Hochberg's bill would require superintendents to get school board approval in an open meeting before accepting outside employment with any business entity whether or not it does business with the school district.

Most superintendents in large school districts work under employment contracts that allow them to consult with companies, consult with other school districts or teach part time at colleges.

Some contracts require superintendents to get prior approval from their boards.

Dr. Veselka said he doubts that Mr. Hochberg's bill would affect many superintendents outside the largest school districts.

"I don't think most of them have these kinds of opportunities," he said.

Mr. Hochberg, a Democrat who sits on the House public education committee, said he believes that his proposal is nonpartisan and that he can get support of Republicans concerned about conflicts of interest among superintendents.

E-mail sparks@dallasnews.com

Bill calls for disclosure by school officials:
Those in large districts would reveal holdings, outside income
By SCOTT PARKS, The Dallas Morning News, November 11, 2004

School superintendents and elected trustees in big Texas school districts should be required to file annual statements disclosing their outside sources of income, State Rep. Martha Wong, R-Houston, said Thursday.

Dr. Wong, a former public school administrator, filed a bill that would require superintendents and trustees in districts with 50,000 or more students to reveal their financial holdings and, in some cases, how they earn money from outside companies or educational institutions.

The annual reports, which also reveal information about financial activities of close family members, would be filed at school district offices and with the Texas Ethics Commission in Austin.

Dr. Wong said she filed her bill because of recent revelations that some Texas school superintendents and trustees have been moonlighting for companies that also hold contracts in the districts they lead – which is legal in Texas.(See below)

Mandatory financial disclosure would give the public more information to judge the ethics of school superintendents and board members, Dr. Wong said.

"I just think school districts need to be run with a great deal of integrity," she said.

The most recent statistics from the Texas Education Agency list 14 school districts with more than 50,000 students. In descending order, they are Houston, Dallas, Fort Worth, Austin, Cypress-Fairbanks, Northside, Arlington, El Paso, Fort Bend, San Antonio, Northeast, Aldine, Garland and Plano.

Johnny L. Veselka, executive director of the Texas Association of School Administrators, said he believes that more regulations on superintendents and school board members could keep good people from seeking leadership jobs in school districts.

"My initial reaction is that the credibility of superintendents is a matter to be handled at the local level," Dr. Veselka said. "Beyond that, we need more time to evaluate the details of the bill."

State law requires statewide elected officials, state lawmakers, state agency administrators and members of state agency governing boards to file annual financial disclosure statements with the Texas Ethics Commission.

Dr. Wong's bill, if it becomes law, would extend the reporting requirement to school boards and superintendents in the big school districts.

Some of the bill's more complex provisions are aimed at those who try to influence the actions of superintendents and school board members. Sections of the bill appear to create a new class of lobbyists.

They would have to register with the Ethics Commission and report how they spend money to influence contract awards or policy changes.

"I think that as school district budgets have become larger and larger, there is a lot of temptation out there," Dr. Wong said.

E-mail sparks@dallasnews.com

Education Is Big Business...for Some
by Donna Garner, March 10, 2004

Dr. Mike Moses, Superintendent of Dallas ISD, is what you might call the ultimate multitasker. He is the highest paid superintendent in the state of Texas ($322,000 plus perks -- TEA 2003 data). Moses also "moonlights" with Bracewell & Patterson as a head hunter and is being paid to help Richardson ISD find a new superintendent.

It is amazing how Dr. Moses could effectively manage such a large school system while still having time to find jobs for fellow administrators. Of course, the "good, old boy" system is well established among school administrators; and Moses' moonlighting job probably doesn't require too much time -- just a few carefully placed telephone calls to chums.

Moses may feel an obligation to help Diana Lam find a new job since she just got fired from the New York City school system yesterday on alleged corruption charges. Moses' best friends who work at Dallas-based Voyager Expanded Learning owe Lam a great deal. Lam was the superintendent of San Antonio ISD when Moses was the TEA Commissioner of Education; and undoubtedly because of her ties to Texas, she managed to implement Voyager into the NYC schools at a very hefty pricetag for the taxpayers.

Since Diana Lam was paid $781,000 in 1998 when she was forced to leave San Antonio ISD and in NYC was paid $250,000, I guess we don't need to lie awake at night and worry about her financial future.

What does keep me awake at night, however, is the realization that the same administrators who are whining that the Bush administration is not spending enough on education (36% increase under President Bush) are the very same administrators who are making exhorbitant salaries themselves.

To help put Moses' and Lam's salaries in perspective, here are a few statistics taken from yesterday's article by McNelly Torres in the San Antonio Express-News:

During 2002-03, Texas administrative salaries increased 7% while teachers' salaries increased l.7%; the average Texas superintendent's salary was $83,310 while the nationwide average was $107,024. Superintendents' salaries have increased by as much as 77% in the last five years.

Here is food for thought: Have superintendents' responsibilities increased 77% over the last five years while classroom teachers' responsibilities have only increased 1.7%? Also, I wonder if Dr. Moses conducts all the contacts for his "moonlighting" job outside of school hours. If not, I wonder how school administrators would feel about classroom teachers who conduct their extra "moonlighting" jobs during the school day.

Donna Garner
wgarner1@hot.rr.com

Some superintendents reconsider taking consulting fees
By SCOTT PARKS, The Dallas Morning News, August 14, 2004

Prominent leaders in Texas public education say they are re-evaluating whether school superintendents should moonlight for companies that sell products and services to school districts.

In some cases, the re-evaluation is personal.

Dr. Hinojosa said he resigned last week from the advisory board of The Princeton Review, a New York company that sells academic programs for students and professional training programs for teachers.

"You've raised the level of awareness and had an impact," he told The News.

Experts familiar with the public education business environment say it has become common for school superintendents to accept advisory positions with school district vendors. Some are paid. Others are only reimbursed for expenses.

State Rep. Scott Hochberg, D-Houston, a member of the House Public Education Committee, said he will introduce legislation next year to prohibit superintendents from working for companies that hold contracts in their districts.

"At minimum, there should be disclosure to the public," Mr. Hochberg said. "Not disclosure in closed executive session or in a contract. No one has made a good argument to me about why a superintendent ought to be receiving financial support from a vendor to the school district."

Dr. Hinojosa, superintendent of Spring ISD in Houston, said The Princeton Review's advisory board members fly to New York once or twice a year – expenses paid – to share their thoughts about company products and practices.

Steven Hodas, a Princeton Review executive, said advisory board members sometimes introduce the company to other superintendents. "It's always nice to get an introduction if you need help to get your foot in the door," he said.

Forgoing benefits

Dr. Hinojosa said severing business ties with The Princeton Review included giving up stock options that might have produced income for him some day. He also said he will resign from Ray and Associates, a firm that conducts superintendent searches for school districts.

Contract clauses

The Dallas Morning News reviewed the contracts of superintendents in Texas' 30 largest school districts. What we found:

Have consulting clauses

Alief ISD – Louis Stoerner

Austin ISD – Pat Forgione

Brownsville ISD – Michael Zolkoski

Clear Creek ISD – Sandra Mossman

Conroe ISD – Don Stockton

Dallas ISD – Mike Moses

Fort Bend ISD – Betty Baitland

Fort Worth ISD – Thomas Tocco

Garland ISD – Curtis Culwell

Houston ISD – Kaye Stripling

Irving ISD – Jack Singley

Katy ISD – Leonard Merrell

Killeen ISD – Charles Patterson

Klein ISD – Jim Cain

Lewisville ISD – Jerry Roy

Mesquite ISD – James Terry

North East ISD (San Antonio) – Richard A. Middleton

Northside ISD (San Antonio) – John M. Folks

Pasadena ISD – Rick Schneider

Plano ISD – Doug Otto

San Antonio ISD – Ruben D. Olivarez

Spring Branch ISD – Yvonne Katz

Ysleta ISD – Hector Montenegro

Do not have consulting clauses

Aldine ISD – Nadine Kujawa

Arlington ISD – Mac Bernd

Corpus Christi ISD – Jesus Chavez

Cypress-Fairbanks ISD – David Anthony

El Paso ISD – Charles Tafoya

Richardson ISD – Jim Nelson

Round Rock ISD – Thomas H. Gaul

(SOURCE: Dallas Morning News research)

"I haven't earned a penny yet from any of these things," he said. "I just decided that I don't need the distractions and those companies don't need the distractions and that I need to focus my time on TASA and Spring ISD."

The News has found that 23 of the superintendents in Texas' 30 largest school districts have employment contracts that allow them to moonlight for companies that sell everything from textbooks to telephones to toilet paper.

Secrecy often cloaks these consulting activities, critics say, which threatens to undermine public confidence in the process that school districts use to award billions of dollars in contracts each year.
"I think superintendents have gone too far in getting involved with companies in what they call consulting," said Dr. Linus Wright, a former Dallas ISD superintendent who is now retired. "It's a pattern of behavior that has grown over time until the acceptance level has gotten where it is today."

The consulting clauses give superintendents broad authority to moonlight. They hire out as public speakers, university teachers and consultants for other school districts and for companies seeking to do business with public schools.

Some contracts require superintendents to take vacation days for consulting activities. Other boards allow them to take a limited number of workdays a year to consult.

Contract clauses examined by The News aren't detailed. School trustees often aren't aware of the specifics. Sometimes, they don't know whom their superintendent is working for, how much she is being paid or how the pay is calculated.

In some cases, the contracts don't require the superintendent to notify trustees before taking on a consulting job. Others require prior board approval.

Dr. Wright, who served as DISD superintendent from 1978 to 1987, said school boards have gone overboard in catering to superintendents because communities believe the competition for the best executive talent is cutthroat.

"They've pushed the envelope too far to be competitive," he said. "The public should respond to the boards of trustees about how they write these contracts."

Dr. Wright and some other retired superintendents told The News that they chose not to moonlight for school district vendors before they retired from active school district leadership jobs.

"I knew people were trying to persuade me to come over to their side to do favors for them, and as a public official I just didn't think I could do that," he said.

Other superintendents made a different choice.

Lots of noise

Superintendents describe a school district procurement system that is noisy with sales calls from hundreds of companies looking for contracts. The companies struggle to cut through the noise and get those superintendents to take their calls.

Some companies have found success with a marketing strategy that uses superintendents or retired superintendents as "door openers." For a fee, they set up initial sales meetings with fellow superintendents in targeted districts.

Dr. Hinojosa, the Spring ISD superintendent, says his secretary carefully screens his calls because he doesn't want to speak to sales representatives. But a call from a fellow superintendent is different, he said.

"We respect each other. So, if a credible superintendent calls me and says 'You really need to look at this product,' I would much more listen to them," he said.

Sometimes, he acknowledged, he doesn't know whether a company is paying the colleague to make the call.

"The more astute superintendents will ask that question," he said.

Six-figure salaries

Base pay for superintendents in the 30 largest Texas districts ranges from $168,000 in Round Rock to $340,000 in Dallas.

Some states require public school superintendents to file annual financial disclosure statements that shed light on their outside sources of income. Texas doesn't require disclosure. So, the public gets no information unless a superintendent voluntarily discloses it or unless a school board discusses the subject in an open meeting.

Usually, trustees only discuss aspects of a superintendent's employment contract in closed-door meetings that the law allows for personnel matters.

Johnny L. Veselka, Texas Association of School Administrators executive director, said he and his 1,900 members will be discussing what rules should govern a superintendent's relationship with school district contractors.

"It's really important to take a look at this issue and what superintendents are doing across the nation," he said. "We need to be ready to respond to any proposals that come forth."

Urban districts are big enterprises. Almost 400,000 students attend classes in the Houston and Dallas ISDs, the state's two largest school systems. The combined operating budgets in Dallas and Houston total almost $2.5 billion a year.

School superintendents – even in small and medium-sized districts – say they must operate with one foot in the education world and the other in the business world.

Educators must build a bridge between the two worlds to be effective, according to Paul Houston, executive director of the American Association of School Administrators.

Without that bridge, superintendents become isolated from industry trends and innovations that eventually filter down to the classroom to support teachers and students, Dr. Houston said.

"I think the vast majority of them [superintendents] are altruistic," he said. "A lot boils down to the internal gyroscope a superintendent has. The more money involved, the easier it is for that gyroscope to be knocked off center."

When private interprise and school management collide

The Dallas Morning News is investigating relationships between school superintendents and companies that sell products and services to their districts. Among the findings so far:

• Dallas ISD Superintendent Mike Moses conducted superintendent searches for school districts under the banner of Bracewell & Patterson, a Houston law firm. He said he earned $10,000 for one job last spring. Simultaneously, Bracewell & Patterson was earning hundreds of thousands of dollars in legal fees from DISD.

• After public exposure of the relationship in May, Dr. Moses announced in June he would no longer consult for Bracewell & Patterson. He announced his resignation from DISD in July, saying he was tired after 3 ½ years in the job.

• Superintendents in Texas and across the nation earn consulting fees from Nebraska-based Education Research and Development Institute. Companies that market to school districts pay ERDI to bring them together superintendents in "corporate panels" held in hotel meeting rooms. In July, participating superintendents earned a $2,000 consulting fee plus their trip expenses for attending a three-day conference at a resort hotel in Rancho Mirage, Calif. Local school chiefs from Carrollton-Farmers Branch and Plano were there.

• Yvonne Katz, superintendent of Spring Branch ISD in Houston, has been a marketing consultant with Energy Education Inc. for several years. The company sells energy conservation programs to school districts. After arriving in Spring Branch in 2002, she recommended that trustees approve a contract with the company. Dr. Katz has acknowledged that she acts as a "door opener" for EEI and earns $500 each time she sets up a sales meeting for the company in another school district. Since The News' report, Spring Branch trustees have chastised Dr. Katz for not telling them about her relationship with EEI.

Superintendents get $2,000 consulting fees to hobnob with vendors
By SCOTT PARKS, The Dallas Morning News, July 23, 2004

One in an occasional series.

RANCHO MIRAGE, Calif. The Resort, perched on a sandy hillside and surrounded by purple-hued mountains, sat baking under the desert sun last week.

Inside the luxury hotel on Frank Sinatra Drive, school superintendents from across the United States – including the Dallas-Fort Worth area spent three days talking business with companies that want to sell their wares to school districts.

Textbook publishers, food-service vendors, computer manufacturers and many other companies all want to increase their share of the lucrative educational market. The school superintendents came to California's desert to help them.

In return, the superintendents got an all-expenses-paid trip and a $2,000 consulting fee.

Business ethicists say the conference creates the appearance that companies and superintendents have formed an exclusive club with the potential to affect the contracts awarded by districts.

The superintendents, dressed in colorful casual attire, arrived here from small districts (Whitefish Bay, Wis., with 3,000 students) and large (Clark County Schools in Las Vegas with about 280,000 students). They characterize themselves as tough-minded professionals who feel no obligation to buy from the companies that paid to bring them to this Palm-studded oasis.

"If a company comes here to sell, it's here for the wrong reasons," said Doug Otto, superintendent of the Plano Independent School District. "If it's a good product, it stands on its own."

Annette Griffin, superintendent of Carrollton-Farmers Branch ISD, said interacting with company executives gives her a chance to stay on the cutting edge of product developments that help students learn. She said she donates some of the money she earns to a scholarship fund.

"I'm looking for the magic bullet," Dr. Griffin said during a brief interview in a meeting-room lobby overlooking the hotel pool.

"This is the only organization I've found where companies come to us with new ideas and we have the opportunity to say how they can be structured to better serve children. We are not here to make the vendors feel good. We are brutally honest with them."

Dallas ISD Superintendent Mike Moses didn't travel to Rancho Mirage, but he was listed among the participants in last winter's conference in Oakland, Calif. So was his brother, Monte Moses, superintendent of Colorado's Cherry Creek School District.

Dr. Moses, who resigned his job with the Dallas school district last week, was unavailable for comment on his consulting work.

In some states, the law requires superintendents to disclose their sources of income on publicly available questionnaires. Texas does not require financial disclosure for superintendents.

The Dallas Morning News has examined employment contracts for superintendents in 26 of the largest school districts in Texas. Twenty of them, including the contracts of Drs. Otto and Moses, contain language that allows outside employment. Dr. Griffin's contract also allows her to take outside employment, said John Tepper, president of the Carrollton-Farmers Branch school board.

Some contracts require superintendents to get school board approval before accepting consultancies. Others say the outside work cannot interfere with the superintendent's official duties.

Pots of money

Big dollars are at stake.

Most people view school districts as places that educate children. But they also can be viewed as big pots of taxpayer money with plenty of companies trying to get their share. The annual operating budget for Dallas ISD is $1 billion.

The U.S. Department of Education says the combined budgets for public school districts exceed $500 billion a year. Wal-Mart, the world's biggest retailer, is less than half that size. The gross domestic product of Argentina is less than $500 billion.

A big chunk of a school district's budget goes for teacher and staff salaries. But another big chunk also goes for a multitude of contracts with private companies.

Elfreda Massie, vice president of strategic relationships for Harcourt Achieve in Austin, came to The Resort to talk about her company's instructional materials and professional development programs for teachers. During one meeting, she told superintendents, "We are trying to take the market for products and services for English-language learners."

Privately owned

Educational Resource and Development Institute Inc., a privately owned company in Grand Island, Neb., brings superintendents and company executives together twice a year: a summer conference and a winter conference.

ERDI is the brainchild of Mike Kneale, a former superintendent and motivational speaker. He founded the company 18 years ago and runs it with his son, Mike Jr.

"The whole concept was to create a forum where educators can learn from the companies and vice versa," Mr. Kneale said. "We want to make products more appropriate for the school setting."

ERDI literature lists 72 companies and more than 80 superintendents and other school leaders on its participant rolls. Some of them attended last week's conference. Another group will attend a second conference in Rancho Mirage this week.

Because ERDI is not publicly traded, little information about its finances is available. For example, Mr. Kneale declined to discuss how he structures the fees he charges his client companies.

He said he makes deals with competing companies in a market segment – two or three textbook publishers, for example – to blunt criticism that ERDI is working for one company over another or that a superintendent might be working for one company over another.

"No exclusive deals," Mr. Kneale said.

In addition to paying all expenses for superintendents to attend the conference, ERDI pays up to $400 to defray the expenses for a spouse, Mr. Kneale said. Each superintendent gets a flat $2,000 fee to attend. A "full participant" who attends both summer and winter meetings earns $4,000 a year in fees, he said.

The corporate panels that form the backbone of ERDI operations ran Monday, Tuesday and Wednesday.

They worked this way: Company representatives spent three hours in a hotel meeting room with five superintendents. Information revealed can be sensitive. The companies sometimes roll out new ideas for products. What is said in the room is supposed to stay in the room.

The companies set the agenda. They can request the superintendents they want on their panel based on district size, geography or desire to gain more business in a certain district.

Karen Mortensen, executive education consultant with Sagebrush Corp., said membership in ERDI is well worth the fee. She said Sagebrush, which sells software and school library products, pays $22,000 a year to attend two conferences.

"What we get is dedicated time with key school leaders from across the country," she said. "And we get to mingle with them and other reps in social settings. It would not be acceptable to be pushing product while I'm at ERDI. I would be building relationships."

Ms. Massie, the Harcourt Achieve executive, was interim superintendent of public schools in Washington, D.C., until April. She said, "We use the superintendents like a focus group. It's a piece of our research-based approach to business."

The agenda for Ms. Massie's session included "What's Keeping You Up At Night," "Federal Legislation Update 2004" and "Partnering With Your District."

Carol Wolf, another Harcourt Achieve vice president, initiated a conversation with the superintendents on an issue not on the agenda. How, she asked, does a sales rep determine whom to contact first in a district? All bureaucracies are different, and superintendents in large districts are notorious for not taking most vendor phone calls.

"How do you figure out who are the decision-makers?" Ms. Wolf asked.

"In my job, I never purchase anything," said Carlos Garcia, superintendent of the 8,000-square-mile Clark County School District in Las Vegas. "But when you're a superintendent in a small district, you do it all."

'No play at all'

Superintendents might participate in four or five corporate panels during the three-day conference, which would mean 12 to 15 hours of work.

"There is no play at all," Mr. Kneale said.

Dr. Otto of Plano and Dr. Griffin of Carrollton-Farmers Branch both said they took vacation time for the Rancho Mirage conference, which opened last Sunday with a "superintendents only" meeting, followed by an evening reception with live orchestra music.

The fact that ERDI pays the superintendents' expenses and consulting fees – and that the money doesn't come directly from school district vendors – is an important distinction, said Drs. Otto and Griffin.

"ERDI assigns us to the corporate panels, and we have no say in what company we are meeting with," Dr. Otto said.

But the distinction is lost on some business ethicists.

"The superintendents must be careful that ERDI is not just acting as a shield for companies that want access to them," said Dr. W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass. "Ultimately, they are serving the companies that are paying the guy to put on the conferences."

Oversight

Business ethicists say school board oversight is critical to keeping school superintendents within safe boundaries.

No one knows how much superintendents tell their trustees about their after-hours consulting activities or how many questions trustees ask about them.

Dr. James Campbell Quick, of the University of Texas at Arlington, likens superintendents to tennis players and school board members to umpires.

"Everyone needs someone to make their line calls," he said. "Aggressive, healthy players will get close to the line and need help remembering where the boundaries are. The board's responsibility is to ask enough questions to determine what game the superintendent is playing."

The News interviewed Mr. Tepper, the Carrollton-Farmers Branch school board president, and Mary Beth King, president of the board in Plano, about their superintendents' participation in ERDI.

Ms. King and Mr. Tepper said they do not know how much ERDI pays their superintendents or how the fees are calculated.

"Quite frankly, we don't ask," Mr. Tepper said.

Both school board presidents said they feel well briefed about ERDI and understand its program. They expressed confidence in their superintendents and said they had no reason to believe personal relationships with ERDI companies influence decision-making on contract awards.

"I know my superintendent [Dr. Otto] and I know his ethics," Ms. King said. "I do not perceive this as a problem."

Mr. Tepper agreed. "I don't think there is a conflict of interest or the appearance of one and that is because she [Dr. Griffin] has been very forthright with us about the ERDI situation," he said.

"I don't think Dr. Griffin can be bought for what they [ERDI] are paying."

E-mail sparks@dallasnews.com

Dallas Superintendent is a Paid Consultant With a Law Firm Billing His District $ Thousands