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Published in Print: March 12, 2003, as Payout Prompts Review of Minn. School Chiefs' Contracts

Payout Prompts Review of Minn. School Chiefs' Contracts

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A district leader's hefty severance package is prompting new scrutiny of superintendent contracts in Minnesota, while fueling a broader debate over what it takes to attract a talented schools chief in a highly competitive market.

At the urging of a group of Republican state lawmakers, the Minnesota state auditor is reviewing the contract of John T. Haro, the superintendent of the 28,100-student Rosemount-Apple Valley-Eagan school system. Officials of the suburban Minneapolis district say Mr. Haro is entitled to a severance package totaling at least $350,000 when he leaves this summer to head the 70,000- student Fulton County system in Georgia.

John T. Haro

The figure has drawn particular attention given the state's economic plight. Minnesota faces a $4.2 billion deficit out of a projected budget of $31 billion over the next two years, and lawmakers have considered a freeze on the salaries of public employees to help close the gap.

State Sen. Mike McGinn, who led the push for the state review of the contract, said his phones lit up with calls from constituents when they heard of the deal.

"Folks were shocked and surprised," he said. "They couldn't believe that this would be happening under the circumstances."

Board members in Mr. Haro's school system, also known as District 196, argue that the package only appears to be overly generous. They say most of the money is for unused leave that the district agreed to let Mr. Haro accrue as a way to offset the effect of a state cap on superintendent salaries that existed when he was hired in 1993.

While other districts used similar incentives to get around the salary cap—which the legislature eliminated in 1998—Mr. Haro managed to rack up considerable credits by staying with the district longer than many of his counterparts and by taking a minimal amount of leave during his tenure.

"We very honestly and truly needed to find ways to enhance compensation above what that cap was," said Mike Roseen, who chairs the Rosemount-Apple Valley-Eagan board. "So there were creative things done to put money into the package. And now we're living with the consequences."

Market Forces

Specifically, Mr. Haro has accumulated 100 days in vacation and 285 days in sick time. At his current daily pay rate of $719, that amounts to $276,815. He's also entitled to other severance worth half his $151,630 annual salary. All together, that's $352,630.

In addition, the contract allows the 52-year-old superintendent the option of continuing with his district-paid health and life insurance until age 70. Doing so would cost the system another $250,000. Mr. Haro hasn't said whether he plans to keep the coverage offered by the Minnesota district or drop it in favor of the Georgia system's insurance plan.

After defending himself in initial press reports, Mr. Haro has said he will no longer address the issue publicly, according to a district spokesman.

Other Minnesota education officials agree that although the payout is unusually large, the provisions that allowed for it were not unusual when the state's salary cap was in place. The rule kept superintendents' pay to no more than 95 percent of what the governor made.

Charlie Kyte, the executive director of the Minnesota Association of School Administrators, said the limit put the state's larger, suburban districts at a disadvantage in the nationwide competition for administrators.

"If you were trying to bring people in from states where salaries were higher, the only thing you could do was pay at the cap, and then backload the salary so that when they left they would get more benefits," Mr. Kyte said.

"I think when a lot of these were negotiated, there was the expectation that people would come into these districts and stay for three or four years. This guy literally hardly ever took vacation, and he never got sick," Mr. Kyte said, referring to Mr. Haro.

Word that the practice may have been more widespread, however, hasn't quieted critics of Mr. Haro's job agreement. Although making no claims of criminal wrongdoing, State Auditor Patricia Awada called the severance provisions "outlandish," and has launched a "legal compliance" review to ensure the contract adheres to the district's procedures.

Based on more recent inquiries, she's begun similar reviews in two other districts, which she wouldn't name.

"The public is outraged," said Ms. Awada, a Republican and a former mayor of one of the towns in Mr. Haro's district. "And the outrage is toward the system and a school board more than the administrator. He didn't set the terms of the contract. The school board did."

New Rules Eyed

The state auditor's office also is considering a comprehensive study of provisions in superintendent contracts throughout the state. The result would likely be a report, which could prompt new legislation on the issue.

Ms. Awada suggested two possible measures: a rule that forced districts to more widely publicize the details in their superintendents' contracts, and the reinstatement of some kind of cap on compensation.

The latter would be a mistake, say those district leaders who contend that the cap is what caused the problem in the first place. Instead, Mr. Roseen, the school board president in Mr. Haro's district, suggests that districts take greater care in crafting their superintendents' job agreements.

The offer his board makes to Mr. Haro's successor, he said, will likely include lower limits on the amount of leave that can be accrued.

But Mr. Roseen also said he doesn't regret the deal that brought Mr. Haro to his district. "I would have loved to have kept John," said the school board leader. "I hate to see him go."

Vol. 22, Issue 26, Page 6

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