D.C. agency to probe Rhee critic's complaint over ethics of school funds clause

DC Schools Chancellor Michelle Rhee goes before the City Council, along with the comptroller, to discuss the recent messy layoffs in district public schools.
DC Schools Chancellor Michelle Rhee goes before the City Council, along with the comptroller, to discuss the recent messy layoffs in district public schools. (Bill O'leary - )
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By Bill Turque
Washington Post Staff Writer
Tuesday, June 8, 2010

The District's Office of Campaign Finance will investigate a complaint, filed by an outspoken critic of Schools Chancellor Michelle A. Rhee and Mayor Adrian M. Fenty, alleging that Rhee violated the law by soliciting donations from private foundations that reserved the right to pull their funding if there was a change in the school system's leadership.

Cecily E. Collier-Montgomery, the office's director, told Robert V. Brannum on Friday, in response to his complaint, that there was "reasonable cause to believe that a violation has occurred" and that "a full investigation is warranted in this matter." Collier-Montgomery's finding was first reported over the weekend by WTTG (Channel 5).

Rhee raised $64.5 million from four private foundations (Broad, Walton, Robertson and Arnold) to underwrite pay raises and performance bonuses under the new contract ratified last week by the Washington Teachers' Union. The foundations, which have donated hundreds of millions of dollars to education initiatives across the country, stipulated in letters that they reserved the right to review their commitments if there was a "material change" in the D.C. school system's leadership.

Brannum, president of the D.C. Federation of Civic Associations and a supporter of D.C. Council Chairman Vincent C. Gray's mayoral campaign, alleges that Rhee contrived to protect her job by accepting the leadership clause as a condition of the private funding -- constituting a direct personal financial benefit.

In a statement Monday, Rhee spokeswoman Jennifer Calloway said the allegation is without merit.

"The chancellor did not violate any law. Any suggestion that she received some personal benefit from private funding of the WTU contract is nonsense," Calloway said, adding that the leadership clause was a standard feature of private funding agreements.

"The chancellor did not seek that condition and in fact wanted unconditional funding. She had no role or choice in the conditions the funders decided to impose," Calloway said.

Kathy S. Williams, general counsel for the campaign finance office, said the investigation will center on whether Rhee violated the District's conflict of interest laws, which say that no public official "shall use his or her official position or office to obtain financial gain for himself or herself." Under District regulations, the office has three months to conduct an investigation and issue a ruling. Rhee can appeal the ruling to the D.C. Board of Elections and Ethics.

The leadership clause in the private funding agreements triggered a major political flap in the city this spring because of Rhee's uncertain future. Fenty (D), who appointed her in 2007, is in a tough primary fight with Gray, who has not committed to reappointing her.

Brannum said Monday that his support for Gray and his opposition to Rhee -- whom he has criticized in numerous blog posts as insensitive and autocratic -- were not factors in his decision to pursue the complaint.

"For the record and to be clear, my request for investigation of Chancellor Michelle Rhee was not coordinated with or in consultation with any candidate for office or any person connected directly or indirectly with any candidate for office," Brannum said in an e-mail.

Gray, asked whether he thought an investigation is warranted, said in a statement issued by his campaign:

"I will leave the investigation to the Office of Campaign Finance. My focus is making sure teachers are protected under the new contract and that the quality of education improves for our children. I applaud collaboration with private foundations, but any lasting improvement to education, and funding for those improvements, cannot be tied to one person. That is a recipe for failure and will ultimately be a disservice to kids in DCPS."

The leadership issue threatened to unravel the tentative labor deal struck by the District and the union April 7. D.C. Chief Financial Officer Natwar M. Gandhi rejected an unorthodox plan by Rhee to use $21 million in foundation funds to help finance teacher salary increases. Gandhi said the money funding the contract had to be on hand and without condition.

After several weeks of interagency finger-pointing and negotiation, Gandhi, Rhee and Fenty devised a plan to essentially borrow money from other school programs that won't be in dire need of money before the end of the fiscal year Sept. 30. The bulk of the $21 million is scheduled to become available immediately after council approval of the contract, which is expected soon. After that, the other funds will return to their original accounts.

The shuffling of the funds effectively renders moot the leadership clause because the private money will be spent almost immediately on the initial 11 percent of the teacher salary package, covering retroactive payments dating to 2008. Regardless of the outcome of the Sept. 14 primary, the chances of Rhee leaving the chancellor's post by Oct. 1 are increasingly small. The balance of the private money, earmarked for the performance pay initiative, is not guaranteed under the contract and was not a factor in Gandhi's fiscal analysis of the pact.

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