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From Dallas to Education Officials: Just Say No

Dallas Superintendent Mike Moses made alot of money "on the side", and this practice must stop.

Head off conflicts: Schools must be focus for superintendents
DallasNews.com, Editorial, Sunday, July 25, 2004

Message to members of public boards of education: Just say no.

That's the right answer to your superintendents when they ask for contract clauses allowing them to hatch outside business deals.
That's the right answer when a superintendent is packing to attend an all-expenses-paid trade show at a resort – and pocket a $2,000 fee for showing up and going to workshops conducted by companies that sell school material.

News stories by Dallas Morning News reporter Scott Parks have revealed the ways superintendents have kept money flowing from outside interests while tending to their full-time jobs.

Does the word "cozy" come to mind?

Let's be clear: The vast majority of the 1,000-plus superintendents of Texas school districts are hardworking, savvy administrators whose focus is the best education for their students. Nobody mentioned in The News' articles is accused of specific wrongdoing.

But why allow these public servants to stray near the line? In the state's well-paying, 30 largest school districts, at least 22 hold employment contracts that allow outside work. At some point, it would be easy for a superintendent to blur precisely whose interest comes first – the district's, his or her own, or an outside client's.

Take the case of the resort trade show, at Rancho Mirage, Calif. Organizers say that businesses only want advice on developing better products. Superintendents say they attend to "network" and keep abreast of products.

They need to find a way of networking that doesn't put a check in their pockets. Superintendents listed as "consultants" for the organizers at Rancho Mirage included those from Aldine, Carrollton-Farmers Branch, Dallas, Grapevine-Colleyville, Katy, Klein, Northwest, Pasadena, Plano, San Antonio and Ysleta school districts.

Recently, Dallas Superintendent Mike Moses wisely severed a consultancy agreement with a Houston law firm that does considerable work for the district.

That brings us to another problem: In many cases, school board members, while aware of contract clauses for outside employment, seemed oblivious to whom their top administrators were doing business with.

Next message to board members: It's your duty to ask.

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School chiefs hobnob, profit
$2,000 in consulting fees offered to attend conferences with vendors
By SCOTT PARKS Staff Writer
Published July 18, 2004

EXTRACURRICULAR INCOME On DallasNews.comOne 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.

"I find it troubling that money from the private sector is finding its way into superintendents' pockets," said Diane Swanson, a business professor and founding chair of the Ethics Initiative at Kansas State University. "There is something wrong with blurring that boundary with a cozy group of people who may not be operating at arm's length."

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

When school leaders moonlightCheck the list to see if your school leader attended a retreat.
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Spring Branch ISD leader pushed contract for firm that pays her
By SCOTT PARKS / The Dallas Morning News, July 25, 2004

Yvonne Katz earns $250,000 a year as superintendent of suburban Spring Branch ISD in Houston. She also moonlights for an energy conservation company that began contracting with the district after she got there.

On Nov. 25, 2002, four months after she assumed administrative control of Spring Branch, school trustees approved her recommendation to hire Energy Education Inc. The Wichita Falls company helps school districts save money on electricity, natural gas and water bills.

Michael Stravato / Special Contributor
Spring Branch trustees didn't know of Yvonne Katz's EEI ties. EEI uses retired superintendents and sitting superintendents, including Dr. Katz, as paid marketing consultants to generate new business. Company officials would not answer questions about how consultant fees are calculated.

More than 600 school districts across the nation have bought EEI's energy management program since 1986, according to company literature. Other districts say they run in-house conservation programs and can get free advice on government Web sites.

Dr. Katz acknowledged last week that she has worked for EEI since the mid-1990s. She said she did not earn any fees when the company got its new contract in Spring Branch. She said her only goal was to save hundreds of thousands each year on utility bills and reroute the money to educational programs for the district's 30,000 students.

"My recommendation was that we do something to save precious resources," she said.

A continuing examination by The Dallas Morning News finds that trustees in at least 22 of Texas's 30 largest school districts have agreed to put consulting clauses into their superintendent's employment contract.

For superintendents, outside employment can mean university teaching jobs, speaking engagements, freelance writing or consulting for other school districts and nonprofit organizations.

But some superintendents also work for companies that sell products and services to school districts. And some, like Dr. Katz, work for a company that holds a contract in their own districts.

Blurring the line
Business ethicists say this practice blurs the line between a superintendent's public job and his private business interests. How, they ask, can a superintendent be a part-time consultant for a company and act as the administrator ultimately responsible for that company's performance as a vendor?

Spring Branch is a case in point.

The last three Spring Branch school board presidents said they were aware that Dr. Katz's contract allows her to work other jobs. But they all said they did not know that she has had a financial relationship with EEI for several years.

EEI AT A GLANCE
Name: Energy Education Inc.

Founded: In Wichita Falls by William S. Spears in 1986.

What it does: EEI provides energy management and conservation programs for school districts. The company trains district-employed "energy managers" to instill a conservation mentality throughout the organization.

Clients: More than 600 school districts in 48 states.

SOURCE: Energy Education Inc.
"Now that you've brought it to my attention, I'll look into it," said Wayne Schaper, board president since May. "I would have to sit and read her contract to make sure what she can do and can't do."

The clause in Dr. Katz's contract says she can "undertake consulting work ... that does not conflict or interfere with the Superintendent's professional services to the District or result in any financial cost to the District."

Joseph Pastore Jr., professor of corporate ethics at Pace University in New York City, said the relationship between Dr. Katz and EEI could be good and bad at the same time.

"Saving money is good for the stakeholders," Dr. Pastore said. "But if you have a heightened suspicion and distrust about her dual role that cannot be mitigated, then that's a problem."

Administrators key
William S. Spears, chief executive and founder of EEI, said he realized from the beginning that superintendents would become the key to both selling and buying his program.

"It's not what you know but who you know," said Mr. Spears, a former Wichita Falls school board member. "There is a lot of value in that. Relationships are a staple of the business world."

As part of its contract, EEI requires a school district to appoint its own employees – maybe coaches or science teachers – as energy managers. They get paid to encourage principals, teachers and building maintenance employees to adopt common-sense conservation measures: things like turning off computers at night, lowering boiler temperatures, adjusting thermostats, retrofitting inefficient lighting and using energy-efficient buildings more than others.

EEI doesn't sell any conservation equipment. It bills itself as a unique "people-oriented" program that works by modifying the behavior of school employees.

Spring Branch officials say they are still calculating the savings formula and have not begun making payments to EEI. The district budgeted $126,000 last year to pay energy managers and buy computer hardware and software to run the utility data.

School district records obtained under the Texas Public Information Act predicted that Spring Branch would save $700,000 from July 2003 to July 2004 under EEI's program.

EEI's fees would have amounted to 35 percent of those savings – $245,000 a year or $24,000 a month.

Mr. Spears also makes the following promise to his customers: "If your district doesn't save more than the program costs you, then we'll write you a check for the difference."

News clippings from across the U.S. tell the stories of giddy school district officials from dozens of districts that saved thousands, or hundreds of thousands, after contracting with EEI.

"I personally could see it," said Denver Bruner, a former director of plant maintenance at Pampa ISD in the Texas Panhandle. "I was doing the purchase orders for the electric, gas and water bills, and I saw them going down."

The EEI Web site features testimonials from educators. Among them are Dr. Katz and Jim Nelson, former Texas Education Agency commissioner and now superintendent of Richardson ISD. "I'm not in the energy business," Dr. Katz's testimonial reads. "I'm in the school instruction teaching children business, but I know that right over my shoulder is the greatest team that I can call on and I know that they are going to help me go into the future and that's what I need to be really assured about."

Dr. Katz's role as EEI marketing consultant is not mentioned on the site.

Jeanne Guerra, a spokesperson for Richardson ISD, said Mr. Nelson has participated in promotional videos for EEI and earned about $5,000. She said he severed ties to the company when he became superintendent last month.

Not the only one
Dr. Katz is not the only sitting superintendent who acts as an EEI marketing consultant. Dr. Edgar Hatrick, superintendent of Loudon County Public Schools in Leesburg, Va., also works for the company.

Most of the EEI marketing consultants are former or retired superintendents.

Dr. Katz, 60, said she doesn't spend much time working for EEI.

"First off, I don't do this all the time," she said. "I simply am asked to open the door, and that is all my role is."

Dr. Katz cut an interview short Wednesday and said she would not be available the rest of the week to answer other questions, including how much she earns from EEI.

She and other EEI marketing consultants call superintendents and try to set up meetings with them. EEI obtains utility information from the district and uses it to make a presentation in the first sales meeting.

Usually, the marketing consultant and an EEI salesperson attend that first meeting. The targeted superintendent and his staff might never know that the marketing consultant is earning a fee for setting up the meeting.

"We don't go out of our way to tell the client that the consultant is being compensated," Mr. Spears said.

Mr. Spears also confirmed that marketing consultants get additional money if the initial meeting leads to a contract. Some states require public school superintendents to publicly disclose their sources of income each year.

Texas financial disclosure laws don't extend to superintendents. So, the public usually can't find out how much they earn, or from whom, unless the superintendent or her employer want to volunteer the information.

Spring Branch records show that staff members researched EEI's performance in other school districts and found good references for the company. Many other school administrators below Dr. Katz's level worked on contract negotiations and wording.

None of the records reveal how much of an active role, if any, she played in guiding Spring Branch into the contract.

Dr. Katz acknowledged that she also acted as an EEI marketing consultant as superintendent in Beaverton, Ore., which also used the company's energy management program.

Then, she moved to Texas in 2002, and the same relationship developed in Spring Branch.

Asked whether she regrets not revealing her connection to EEI to her trustees, Dr. Katz responded, "I don't see any inappropriate kinds of actions there."

E-mail sparks@dallasnews.com



and, the Moses scandal:

What does the future hold for Moses, DISD?
Chief may move to higher education; talk of replacement begins
By SCOTT PARKS and TOYA LYNN STEWART Staff Writers, The Dallas Morning News, July 15, 2004

DISD Superintendent Mike Moses' words of resignation had barely been recorded in reporter notebooks and by television cameras before speculation turned to the future of an overachieving Texas educator and an underachieving urban school district.

What next for Mike Moses and DISD?

The questions came like a torrent Wednesday. Who should lead DISD next? Will school trustees conduct the typical nationwide search or select a trusted Moses lieutenant? Should the new superintendent be black, brown or white?

State Sen. Royce West, D-Dallas, said he hopes trustees will find a way to continue the managerial stability that Dr. Moses brought to DISD after a decade of turmoil among trustees and in the executive offices on Ross Avenue.

Mr. West said accomplishment should trump color when trustees choose the next DISD leader. He mentioned deputy superintendents Larry Groppel and Jim Scales as possible successors. And he put in a plug for Dr. Carole Francois, a black woman who serves as Dr. Moses' chief of staff.

"She has the qualities to lead the school district," said Mr. West, a man of influence at DISD.

And what of Dr. Moses, who, at age 52, has a few good years left? Will he move to another superintendency, a tenured professorship or an administrative job in higher education, consulting, lobbying, book writing?

Maybe all of the above.

"I would say he is extremely valuable as a consultant," said Dr. Darvin Winick, a longtime mover and shaker in Texas education circles. "He can get as much work as he wants. That's where I would lay my money."

In a four-page DISD news release that highlighted his accomplishments, Dr. Moses was circumspect about his plans.

"He has indicated that he will in all likelihood be working in some area of higher education with linkages back to public education," the news release said.

"Linkages back to public education" could mean currently in-vogue university programs that provide additional management and business training for aspiring school superintendents.

Dr. Moses came to Dallas in late 2000. He was deputy chancellor at Texas Tech University in Lubbock when DISD hired him. This week, Texas Tech Chancellor David Smith announced he is a candidate to lead the University of Wisconsin system.

Speculation immediately began that Texas Tech trustees might try to recruit Dr. Moses as their chancellor. The fact that both his sons will be attending Tech in the fall added to the speculation.

Stories also are floating around that the University of Texas at Austin, the University of Texas at Dallas and Oklahoma State University might make a run at him.

"I don't have anything that is 100 percent set," he said Wednesday during an interview with The Dallas Morning News.

Little advance notice

School trustees said Dr. Moses didn't tell them he was resigning until a couple of hours before his 11 a.m. news conference.

Trustee Hollis Brashear said he received the news via fax and then through a courier.

"He had his own reasons for waiting to tell us," he said.

Trustee Ron Price said he would have appreciated a phone call instead of a fax.

"It was unfortunate that the news was delivered that way," he said.

The nine trustees will meet at the end of the month to name an interim superintendent and plan their search for Dr. Moses' replacement.

"We will continue," Mr. Brashear said. "I just hope we don't lose a step."

Mr. Price hinted that he expects a lot of community feedback on how events should play out over the next several months.

"The decision will not be made by the governor, state legislators, City Council members or special-interest groups," he said. "It will be made by the trustees."

The most important things the board can do now is to remain united and "show leadership," Mr. Price said.

Major challenge

Trustee Lois Parrott promised an orderly transition. The Moses resignation presents a big leadership challenge for Dr. Parrott, the board president for less than two months.

"We are going to work though this together," she said. "[Dr. Moses] is not going to leave until we're in good shape with someone to take over."

Dr. Moses is facing changes in life as well as work. This summer, his parents left their home in East Texas and moved to Dallas to be closer to family members. At the same time, he and his wife are becoming empty-nesters.

"I think I had one of those life-changing moments ... my son just graduated" from high school, he said.

Dr. Moses said he began to seriously contemplate resignation five or six weeks ago. He said he carefully considered the timing.

"I was hired in the middle of the school year, and this is right before school begins," he said.

His last day of service is Aug. 31.

"I'm willing to discuss that," he said. "That's a target date. If the board wants me to modify that, we can discuss that."

Dr. Moses, who has been in education for 30 years, said he was indebted for the opportunity to serve DISD students. But he acknowledged the work still left to do.

"I felt we made a lot of progress, but I would always want more," he said.

Not about the money

Dr. Moses earns $341,775 a year as DISD superintendent. If he had stayed through the end of his contract in 2006, he stood to earn an additional $500,000 in bonuses.

He said his career has "never been about money."

"I don't think that's what drives us," he said. "This is not about the retention bonus, but what's right for me and the district."

The pressures of a big urban district with complex problems - funding and school finance litigation, teacher issues, student test scores and overall academic achievement - took their toll, he said.

"I'm tired. I like the work. It's exhilarating, but it's emotionally draining in many ways," he said. "Eventually, I think you use yourself up. After a while, you wear down. What told me is that I was beginning to sense that my patience level wasn't as high as I needed it to be."

Dr. Moses said he questioned himself and wondered if he could do something to make his job "more joyful." The answer, he said, kept coming back the same.

"It's time to make a change."

E-mail sparks@dallasnews.com and tstewart@dallasnews.com


'Tired' Moses walking away from DISD
Superintendent cites pressure, says no other job is lined up

By TOYA LYNN STEWART and SCOTT PARKS Staff Writers, The Dallas Morning News, July 15, 2004

Mike Moses cited the simplest of reasons for why he is walking away from the nation's highest-paid superintendent job: "Here's the deal: I'm tired."

The 52-year-old chief of the state's second-largest school district sent a letter telling DISD trustees Wednesday that he is leaving next month.

"I like the work," he told reporters at a news conference he attended with his wife, Debra.

"It's exhilarating in many ways, but it's emotionally draining in many ways. Eventually, I think you use yourself up."

DISD trustees and some city leaders said they were sad to see Dr. Moses go.

Rumors had circulated for months that he was ready to hang it up.

Dr. Moses cited the constant pressure of the job, from phone calls in the middle of the night to school finance worries.

"You're beset by challenges from so many different directions. ... After a while, it wears you down."

When Dr. Moses took over in January 2001, he became DISD's seventh superintendent in less than 10 years. His contract, which pays $341,775 this year, runs through December 2006.

Dr. Moses said he has "had conversations" about other opportunities beyond DISD. A news release said he "will in all likelihood be working in some area of higher education with linkages back to public education."

"I am not leaving to take another job today," he said. "I don't have another job today."

As for the rest of this week? He said he's going fishing.

E-mail tstewart@dallasnews.com and sparks@dallasnews.com

Parentadvocates.org on Dr. Moses and his "consulting work"

and, we Just Ask if there are other skeletons.