Ethics Issues Snare School Leaders

Some superintendents have landed in murky ethical waters this school year for their ties to for-profit companies, highlighting the temptations administrators face as industry and education increasingly intersect.

Some questionable judgments by superintendents—from accepting company-paid trips to failing to disclose income from district vendors—have sparked proposed legislation in at least two states to curb some of the dealings educators may have with companies that market to school districts.

“[Unethical behavior] is an issue that’s been on the radar screen for our members, and they’ve indicated that they want us to work on this,” said Barbara Knisely, a spokeswoman for the American Association of School Administrators, an Arlington, Va.-based group for superintendents and other district-level administrators.

In suburban Houston, for example, Superintendent Yvonne Katz of the Spring Branch Independent School District recommended Energy Education Inc., an energy-conservation company based in Wichita Falls, Texas, for a lucrative five-year contract with the district to improve energy efficiency.

But she neglected to tell the school board that she worked for the company on the side as a consultant and had done so for several years. After a firestorm erupted over her relationship with the company, Ms. Katz retired on Nov. 30 from the 33,000-student district, even though she had three years remaining on her contract.

In addition, a close subordinate she brought into the district, former facilities and transportation associate superintendent Michael C. Maloney, has been indicted for alleged mishandling of at least $627,000 in school construction and consulting contracts.

School officials last month gave the findings of an internal investigation of the contracts to the Harris County district attorney’s office, which is reviewing the information to see if any crimes were committed.

“Did the district receive services on some of these consulting contracts? Yes. Were they worth the money we paid? Some are very questionable,” said Chuck Brawner, the police chief of the Spring Branch district and the leader of the school system’s internal investigation of Mr. Maloney.

Mr. Maloney quit his job soon after being indicted. He and Ms. Katz could not be reached for comment. A representative of Energy Education said it has always asked its consultants to disclose their business relationships to their school boards. But as a consequence of the Spring Branch controversy, the company has stopped hiring sitting superintendents as consultants.

“We were founded on integrity and trust, so we’ll do whatever it takes to protect our integrity,” said John Bernard, the company’s chief operating officer. “We understand the potential for misunderstanding, and to have something perceived as not right is not worth the risk.”

Career Moves Questioned

Elsewhere, in the course of less than two years, Janet Aikele quit her position as the Butte County, Idaho, schools superintendent; became the director of the Idaho Virtual Academy, the state’s largest online charter school; and then was hired away from that job by McLean, Va.-based K12 Inc., a company that sells online education services to schools and families.

Her job-hopping raised eyebrows in the Gem State.

That’s because when she was the Butte County schools chief, district officials granted a charter to K12 to start a virtual school. At the same time, Ms. Aikele was also a Republican state representative, and she helped persuade the legislature to hire K12 as the education provider for the Idaho Virtual Academy, according to Republican state Sen. Gary J. Schroeder, a former chairman and the senior GOP member of the Senate education committee.

The state will pay K12 from $3 million to more than $5 million a year, depending on the number of students enrolled, for five years to run the charter school.

“Was she using her position as a public employee to arrange things so she would have a good job [in the private sector]?” said Sen. Schroeder. “There are some who think that a violation of state ethics and contract law occurred.”

But Bryan Flood, the vice president of public relations and government affairs at K12, rebuffed the charge, calling it unfair and saying that Ms. Aikele was a “convenient target” for opponents of the governor’s charter school bill.

As it is, Ms. Aikele, K12’s director of families and children, is at least the second Idaho education official in the past year to take a job with an organization after helping it secure business with the state.

In May, Randy Thompson, the chief academic officer for the state school board, resigned to work for the American Board for Certification of Teacher Excellence, a nonprofit group based in Washington. Earlier in 2004, he persuaded the Idaho board of education to use the ABCTE’s alternative teacher-certification program.

Mr. Thompson, now the vice president of marketing and business development for the ABCTE, said the Idaho board of education’s approval of the teacher certification program was only a small part of a much larger, multiyear project to overhaul state teacher- certification rules.

“I was involved with the research, analysis, and information the board needed, not just this,” he said of the ABCTE’s teacher- certification program.

Consulting Cash

This past summer, nearly 100 superintendents from around the country received $2,000 each in consulting fees as well as a free trip to a conference at a luxury resort in Rancho Mirage, Calif., to advise companies how to improve the products and services they offer school systems. The three-day event was sponsored by the for-profit Education Research and Development Institute, based in Grand Island, Neb., and underwritten by companies that want to work with schools.

Some of the superintendents, such as Terry B. Grier of North Carolina’s 67,000-student Guilford County schools, faced criticism in their communities for attending the conference and accepting the consulting fee.

The Guilford County school board ruled that Mr. Grier did not violate district policy barring school employees from receiving gifts from companies that do or seek to do business with the school system.

Nonetheless, Mr. Grier will no longer work for the ERDI, according to Derran Eaddy, a district spokesman. Mr. Grier would not comment for this story.

Michael Kneale, the chief operating officer for the ERDI, said the conference was simply an information exchange. “There’s no implied pressure for the educators to do business with these companies,” he said.

In suburban Washington, Prince George’s County schools chief Andre J. Hornsby came under scrutiny for approving a $1 million sole-source contract for Emeryville, Calif.-based LeapFrog Enterprises Inc., an educational software company that employed a woman Mr. Hornsby lived with. That woman, saleswoman Sienna Owens, has since left the company, as have a division president, Bob Lally, and another saleswoman, Debora Adam, over alleged mishandling of a sales commission related to Prince George’s school district purchases.

Superintendent Hornsby was also criticized for taking a 10-day trip to South Africa in July 2003 courtesy of Plato Learning Inc., a Minneapolis-based company doing business with the 140,000-student Maryland school district. Mr. Hornsby took the trip as the president of the National Alliance of Black School Educators.

The Prince George’s school board later found no wrongdoing on Mr. Hornsby’s part, as he’d already planned the trip before his employment with the district, and he also notified the school board of the 10-day visit, said John White, a spokesman for the school district.

The FBI and the U.S. attorney’s office in Maryland are allegedly investigating Mr. Hornsby’s dealings with the two education vendors.

Meanwhile, the Prince George’s school board approved the hiring of an independent auditor to inspect purchases approved by Mr. Hornsby, and established a four-member panel to review all procurements over $25,000. The board may also vote later this month to authorize internal auditors to inspect vendor payments of more than $100,000.

Mr. Hornsby would not comment for this story.

Legislation Introduced

One expert on business ethics said that professionals such as educators are not immune from ethical lapses, and that walking the straight and narrow can even be more difficult for them as they are often held to a higher standard than others.

“There’s still the sense that teachers and doctors and so on are doing the Lord’s work,” said Joseph M. Pastore, a professor of corporate ethics and strategy at Pace University’s Lubin School of Business in New York City.

In defining ethically correct behavior, much depends on the situation, Mr. Pastore said. But he added that disclosure should be made if there is any hint of ethical impropriety.

If an arrangement “remains under the table, there’s probably a reason why it’s under the table,” Mr. Pastore said.

Ms. Knisely of the AASA said that while there are “some bad actors” in education, a majority of school administrators are “very ethical people … who get up every day and do their jobs, which is raising academic achievement for K-12 students.”

All 50 states have ethics laws covering public officials, but in light of recent alleged ethical lapses, at least several state lawmakers in Texas and Idaho have proposed to tighten legislation to make school administrators more accountable to the public.

Mr. Schroeder, the Idaho senator, said he would file a bill seeking to bar former state employees, such as Ms. Aikele, from doing business with Idaho in their areas of expertise for one year. That bill, if passed, would make Idaho the 28th state to prohibit former public employees from doing business with the state in their areas of expertise as government employees.

“If you’re an expert in charter schools for the state and if you go to a private company, then you cannot work with Idaho in that area for at least one year,” Mr. Schroeder said as an example.

In Texas, state Rep. Scott Hochberg, a Democrat, filed a bill that would bar superintendents from receiving money or other “financial benefit” for work they do for any company that conducts or seeks to do business with their school district. Another provision in the bill would require superintendents to get school board approval in an open meeting before doing outside work, such as consulting.

Another Texas bill would require superintendents and school board members of districts with 50,000 students or more to file annual reports disclosing outside sources of income. State Rep. Martha Wong, a Republican and a former public school administrator who is the author of the bill, said the legislation would help make government more transparent.

Ms. Wong added that superintendents should concentrate on doing their jobs for schools.

“If the focus is on children, then they shouldn’t be doing other things,” she said. “If they want to consult for a company, they need to quit their job.”