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    Superintendents Get $2,000 Consulting Fees to Hobnob with Vendors

    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."


    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

    2004 winter and summer participants

    Education Research & Development Institute documents obtained by The Dallas Morning News list the following school leaders as participants in its 2004 winter and summer programs. Texas school leaders are bolded:

    Arlene Ackerman, San Francisco Unified School District
    Anthony Amato, New Orleans Public Schools

    Brian Benzel, Spokane (Wash.) Public Schools
    Ken Bird Westside (Neb.) Community Schools
    Ed Brand, Sweetwater Union (Calif.) High School District
    Ken Burnley, Detroit Public Schools

    Billy Cannaday Jr., Chesterfield County (Va.) Public Schools
    Rudy Castruita, San Diego Office of Education

    Gerald Dawkins, Saginaw (Mich.) City Schools
    Ken Dragseth, Edina (Minn.) Public Schools
    Debra Duvall, Mesa (Ariz.) School District

    Jim Easton, Lafayette Parish (La.) Public Schools
    Mark Edwards, Henrico County (Va.) Public Schools
    Barbara Erwin, Scottsdale (Ariz.) Unified

    Greg Firn, Milford (Conn.) Public Schools
    Steve Farrar, Lincoln Unified (Stockton, Calif.)
    Mike Flanagan, executive director, Michigan Association of School Administrators
    Karen Forys, Northshore (Wash.) School District
    Alton Frailey, Cincinnati Public Schools
    John Fryer, Duval County (Fla.) Public Schools

    George Garcia, Boulder Valley (Colo.) Public School District
    Carlos Garcia, Clark County (Nev.) School District
    David Gordon, Elk Grove (Calif.) Unified School District
    Peter Gorman, Tustin (Calif.) Unified School District
    Carmen Granto, Niagara Falls (N.Y.) City School District
    Terry Grier, Guilford County (N.C.) Schools
    Annette Griffin, Carrollton-Farmers Branch ISD
    Barb Grohe, Kent (Wash.) Public Schools

    Bill Habermehl, Orange County (Calif.) Department of Education
    Jim Hager, Washoe County (Nev.) School District
    Joe Hairston, Baltimore County (Md.) Schools
    Beverly Hall, Atlanta Public Schools
    Bill Harrison, Cumberland (N.C.) County Schools
    Patricia Harvey, St. Paul (Minn.) Public Schools
    Howard Hinesley, Pinellas County (Fla.) School District
    Peter Horoschak, South Orange-Maplewood (N.J.) School District
    Sandy Husk, Clarksville-Montgomery Schools

    Carol Johnson, Memphis Public Schools

    John Kriekard, Paradise Valley (Ariz.) School District
    Nadine Kujawa, Aldine ISD

    Michael Lannon, St. Lucie (Fla.) County Public Schools
    Pam Lannon, Lake County (Fla.) Schools
    Mary Leiker, Kentwood (Mich.) Public Schools
    Earl Lennard, Hillsborough County (Fla.) School District
    Dave Long, Riverside County (Calif.) Office of Education

    Ben Marlin, Collier County (Fla.) District School Board
    Elfreda Massie, District of Columbia Public Schools (former interim)
    Larry Maw, San Marcos (Calif.) Unified School District
    Max McGee, Wilmette (Ill.) School District
    Bill McKinney, Region IV Education Service Center (Houston)
    Frank McKinzie, Elmwood Park (Ill.) School District
    Gail McKinzie, Indian Prairie (Ill.) School District
    Ray McMullen, Department of Defense Education Activity
    Maggie Mejia, Sacramento (Calif.) City Unified School District
    Leonard Merrell, Katy ISD
    Hector Montenegro, Ysleta ISD
    Mike Moses, Dallas ISD
    Monte Moses, Cherry Creek (Colo.) School District
    Jim Murphy, executive director, New Jersey Association of School Administrators

    Connie Neale, School District U-46 (Ill.)
    Ruben Olivarez, San Antonio ISD
    Doug Otto, Plano ISD

    Stan Paz, Tucson (Ariz.) Unified School District
    Dennis Peterson, Minnetonka (Minn.) School District
    Lane Plugge, Iowa City Community School District
    Gerrita Postlewait, Horry County (S.C.) Schools

    Jim Rickabaugh, Whitefish Bay (Wis.) School District
    Stewart Roberson, Hanover County (Va.) Public Schools

    Stan Scheer, Littleton (Colo.) Public Schools
    Rick Schneider, Pasadena ISD
    Darlene Schottle, School District Five (Mont.)
    Althea Serrant, U.S. Department of Education, Region 2
    John Simpson, Norfolk (Va.) Public Schools
    Kevin Singer, Grapevine-Colleyville ISD (recently left to lead Manheim Township (Pa.) School District)
    Dennis Smith, Placentia Yorba-Linda (Calif.) Unified
    Keith Sockwell, Northwest ISD
    Tony Stansberry, Lee’s Summit (Mo.) School District
    Jim Surratt, Klein ISD

    John Thompson, Pittsburgh (Pa.) Public Schools
    Frank Till, Broward County (Fla.) Public Schools

    Doris Walker, Clover Park (Wash.) School District
    Gene White, Washington Township (Ind.) Metropolitan School District
    Robert G. Witten, Central Susquehanna Intermediate Unit 16 (Pa.)

    Alvin Wilbanks, Gwinnett County (Ga.) School District
    Clayton Wilcox, East Baton Rouge Parish (La.) Public Schools
    Joseph Wise, Christina (Del.) School District

    SOURCE: ERDI documents

    — Scott Parks
    Dallas Morning News


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