A $2.9 Million Payout, With a Few Shortcuts

By Joe Stephens
Washington Post Staff Writer
Friday, December 21, 2007

As an elementary school principal in Washington, Sheila Ford had to adapt to the haphazard D.C. public school bureaucracy.

So when she decided to retire in 2005 and help start a nonprofit organization to train teachers, it didn't shock her that school officials authorized nearly $3 million for her Teachers Institute on a single day, shortly after she made a half-hour presentation. Nor was she surprised when she picked up the first check -- for $1 million -- and there was no contract laying out the agreement.

"If you're going to do business" in the school system, she said, "you do it the way you are told."

When Ford went back for documentation, she received a single-page expense voucher.

"We didn't know -- what should we do with this? What do you call this?" said Richard Spigler, the institute's chairman. "The issue to us was, it is not a contract. What are we going to do?"

The institute considered giving back the money but ultimately kept it and went ahead training D.C. schoolteachers in a new method of reading and writing instruction. The organization, which has two employees and operates rent-free out of the attic of a school building, has received more than $5.5 million from the D.C. schools since mid-2005.

There was no formal competition for the initial funding, according to a schools spokeswoman, nor was there a formal contract. The school system's chief academic officer wasn't told of the payments, and just as she was putting one reading program in place, other school officials were giving millions of dollars to the institute to train teachers in another. Both people whose signatures appear to be on the form that authorized the funding say they did not sign it.

"No one wants to own up to the signatures," said schools spokeswoman Mafara Hobson. "We paid over a million dollars, and I can't figure out how and why."

The lax financial controls were "scary," said Hilda Ortiz, the school system's chief academic officer until this year. "There was no written policy. There was nothing."

Ortiz said she wasn't initially told about the arrangement with the institute, despite her job overseeing instruction. She speculated that the funding was an end run around her plans.

"It wouldn't have been something that I would have signed on for -- I just didn't see enough evidence that it worked," she said of the institute's training technique. She said the institute's program, which initially focused on 15 schools, also renewed a cycle of fragmented teaching approaches in the city schools.

Ford defended her program, modeled after one developed by a Columbia University professor who has worked with systems across the country. The institute has received praise from a number of D.C. principals for its work with hundreds of teachers.

"I have been motivated by doing the right thing for elementary school children my entire life," Ford said. "I have made a lot of decisions that people did not like."

Ford's critics include an institute co-founder who wrote to Schools Chancellor Michelle A. Rhee in July complaining of runaway spending and a lack of oversight, which triggered an ongoing inquiry by D.C. Inspector General Charles J. Willoughby. Elizabeth Kelly wrote that she and two other co-founders and the original board treasurer had resigned amid concerns about how the group was managing its finances.

Kelly also said the institute's approach clashed with the school system's official program and created situations in which children were exposed to two reading instruction methods at the same time. That led to resistance from some administrators, who failed to show up for training sessions, she said.

"Substantial time and money was being wasted," she wrote.

Clifford B. Janey, who was superintendent when the institute began its work, declined to discuss how the organization was selected and funded. Rhee, who replaced Janey in June, also declined to comment. Hobson, her spokeswoman, said, "That's not the way this administration wants to do it."

The Start of a Murky Deal

In June 2005, Ford sat at a conference table at D.C. schools headquarters to pitch the institute's program to Janey. School officials authorized the checks June 27. Three days later, Ford retired from her job as principal.

Ford had helped Horace Mann Elementary, in an affluent neighborhood in upper Northwest, grow into one of the most highly regarded public schools in the city. Her school had received national awards, and she had drawn praise as a passionate advocate for children.

In spring 2005, Ford said, she was looking for ways to remain active in education after her retirement, scheduled for that summer. Ford said she, Kelly and two other women who had worked at Horace Mann decided to create a nonprofit group to spread enthusiasm for literacy training across D.C. schools. They incorporated the institute March 25 that year, and Ford became president and executive director. Her compensation, which started four months later, is listed as $150,000.

"It was a spontaneous initiative by four of us," Ford said. "We saw this as a huge moral obligation."

In May, Ford said, she took Meria Carstarphen, then a senior schools administrator, to New York to observe a program developed by Columbia University professor Lucy Calkins, founder of the Reading and Writing Project. Ford wanted to follow Calkins's blueprint, which stresses continuing training for teachers in reading and writing instruction.

In June, when Ford made her presentation to Janey, she was in her final month on the school's payroll, a dual role that might have been a conflict of interest. Experts point to federal law and District regulations that under certain circumstances prohibit school employees from negotiating with the school system on behalf of outside companies. The laws are aimed at preventing contracts from being steered to favored parties.

A situation such as Ford's "clearly gives the appearance, if not the actual fact, of having inside information," said Matthew S. Watson, a former D.C. auditor and former judge on the board of contract appeals. "There is just a perception that it is unfair, that it is one friend helping out another."

Ford said that she was officially retired by the time she picked up the funding checks and that she saw no conflict. The institute provided an opinion from its attorney that no laws were broken.

When school officials authorized the initial funding, instead of drawing up a formal contract, they used Form 1000, a document meant for teachers seeking approval and payment for official travel to a training course. The money was labeled a "training fee."

Hobson, the schools spokeswoman, said administrators often used Form 1000 at the time even though it did not meet the definition of a contract.

"The school system didn't require contracts," Hobson said. "That was the standard form they would use. . . . It wasn't like anyone violated any rule; that was the crappy rule that they had."

The standardized form appears to have been designed for release of a few hundred dollars at most, said Watson, the former auditor. Because the form carries no signature from Ford or another institute official, the group might not have been legally bound to perform services in exchange for the money, he said.

The institute received its money upfront, first a check for $1 million, then, two weeks later, a check for $1.9 million. Usually, contractors are paid after delivering a service or product. "It was totally inappropriate to pay in advance," Watson said. "The city took a tremendous risk."

Using the expense forms to approve almost $3 million required some creativity.

In the box asking for a teacher's name, someone typed, "Professional Development." Instead of a teacher's home address, someone inserted the address for the school system's central office. At the bottom of the document, the line for the superintendent's signature is blank.

On both forms, the other signatures are a mystery. Ortiz, the chief academic officer at the time, said the squiggle on the signature line beneath her title is not hers. She speculated that the illegible mark was the signature of Carstarphen, who was then the school system's chief accountability officer. For a time, Ortiz said, Carstarphen routinely signed documents as if she were the academic officer because that position had been open until Ortiz filled it in spring 2005.

"There was a whole confusion of roles when I was there," Ortiz said. "I had to clear that up, because I didn't want to be caught up in that kind of scenario."

Carstarphen, now the schools superintendent in St. Paul, Minn., declined to comment for this article.

The forms also bear the signature of "B. Echols." Beverly A. Echols, executive director of professional development, declined to comment. But when asked, Hobson said, "She is saying, 'It's not my signature.' "

Discord Amid Praise

After receiving its funding, the Teachers Institute quickly sent a group of assistant superintendents to New York for training. In the years since, it has sent teachers to visit Calkins's programs and brought staff members from the program to visit District schools. It holds three-day training sessions and monthly study meetings for teachers and principals.

The group has purchased thousands of children's books and provided schools with rugs for children to curl up on while reading.

"They're fabulous," said Scott Cartland, principal of Janney Elementary in Tenleytown. John Goudeaux, principal of Amidon Elementary, said the institute has made noticeable improvements in pupils' ability to read and write. "They've been awesome in every way," Goudeaux said. Hyde Elementary Principal Dana Nerenberg also praised the organization, calling its work "the best professional development I've seen."

But internally, stress was building at the organization.

Kelly and another co-founder, Lisa Bernstein, complained that Ford was secretive about institute finances and refused to tell them how much funding the group secured or precisely how it was spent.

"I definitely had concerns," Bernstein said. "I didn't feel there was complete transparency, and I didn't know why. The executive director sort of took over all decision-making power. I just wasn't comfortable with that."

Ford disputed that she had been secretive, saying she discussed all institute issues openly at board meetings.

As relations faltered, institute employees said they met in September 2006 with a facilitator at a hotel in a day-long attempt to work out their differences. But in the following months, one by one, the co-founders gave notice. One of them, Peggy Bracewell, said she left because of a crushing workload but continues to consult for the institute a few hours a week. Bracewell speaks highly of Ford, calling her "passionate, hardworking and visionary."

Robert Krasne, the founding board treasurer and an expert on corporate governance, resigned in June because of concern about Ford's lack of openness, Kelly said. Krasne declined to comment for this article.

A month after Krasne's resignation, Kelly wrote her letter to Rhee, charging that the nonprofit had "lost its way" and become "a mini-bureaucracy that is taking more from DCPS than it is giving."

Under Ford's leadership, she wrote, the institute's "focus became spending money -- as much and as quickly as possible. Oversight was limited to a monthly newsletter to [a schools administrator] with no detailed information about contracts or spending."

In September 2006, Kelly said, the institute rented a warehouse to store a "vast quantity" of excess books, supplies and electronics that the organization had bought with public funds and whose value Kelly estimated at $100,000.

She questioned why the institute was spending so much on computers and other high-end equipment when schools were often lacking the basics, including paper and copiers.

"Time and again, the Executive Director rebuffed questions from me and fellow founding members . . . about the rationale behind contracts and spending. Indeed there appears to be none," Kelly wrote.

In an interview, Kelly said she did not intend for her letter to become public but had wanted to help Rhee understand problems that needed to be addressed as she tries to reform D.C. schools.

Ford said she was "appalled" by the letter, which she attributed to "petty jealousy." She disputed the allegation that there had been little oversight, pointing to her regular meetings with Carstarphen. She said that all expenditures are documented and legitimate and have been reviewed by independent auditors but that she had limited knowledge of them because she relied on outside accountants.

An Internal Revenue Service filing shows that, for the year that ended in June, the organization spent more than $1 million on "professional development." Over two years, the institute reported spending $244,000 on computers and software, $357,000 on travel and $1.1 million on printing and publications.

In an initial interview, Ford estimated that the institute had 16 employees. Later, she said the number was actually two, explaining that the rest of her staff members were public school teachers detailed to assist the institute.

When The Washington Post questioned an IRS filing by the institute showing that it had spent $94,000 on the unpaid board of directors, an outside accountant for the group determined the number to be a mistake. The accountant, John T. Squire, said the group will file a corrected report to the IRS.

Ford referred many questions about spending and bookkeeping issues to her outside accountants, saying she prefers to keep her focus on the programs aimed at children. Time spent answering questions about finances, she said, detracts from the push to improve reading and writing.

"It is really hard to be diverted from the mission," Ford said. "The kids in the city are running out of time. I just want to do the work."

Database editor Dan Keating and staff writer V. Dion Haynes contributed to this report.

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