Published Online: September 7, 2011

Supersized Buyouts for School Chiefs Scrutinized

Arlene Ackerman’s $905,000 settlement with the Philadelphia district grabbed headlines, but she isn’t the only Pennsylvania superintendent who has been shown the door in recent months with a generous settlement in hand.

According to media reports, William Hall, who led the 3,050-student Gettysburg district, left in February with $542,000. That included two years of salary and forgiving the mortgage on his house, which he had bought from the district’s vocational education program. In August, Gerald Zahorchak, Pennsylvania’s former secretary of education, was bought out a year into his five-year contract to lead the 17,700-student Allentown district. He will be paid a year’s salary of $195,000 and a $55,000 lump sum.

The board of the 11,750-student Central Dauphin district near Harrisburg didn’t fire Superintendent Luis Gonzalez after voting not to renew his contract in August. But after the vote, he was moved to a remote office to conduct “special projects” and retain his $150,000 yearly salary, while a deputy handles day-to-day operations in the district.

Pennsylvania isn’t alone in offering big buyout packages to school superintendents. The Dallas Morning News reported in August that a total of more than $7.7 million had been given in severance pay to Texas superintendents since 2005. Four years ago, school board members in Little Rock, Ark., paid $635,000 in salary, legal fees, and other benefits when they decided to fire then-superintendent Roy Brooks.

Superintendent Buyouts

A Nationwide Sampling

These agreements irk lawmakers and community members, who see them as a waste of taxpayer dollars, especially now as districts across the country grapple with painful, recession-era budget cuts. Philadelphia, for example, has had to close a budget deficit of $630 million.

“Quite simply, they’re excessive,” said Jack Wagner, the Pennsylvania state auditor general, who says he plans to audit the Philadelphia buyout offer and others given to school leaders in his state. “I don’t know why superintendents and assistant superintendents should have this elite status in terms of public employees,” he said.

‘Live and Die’ by Contract

But those who work with superintendents say that secure contracts, and sometimes big money, is needed to lure top leaders to an often-thankless job running a multi-million dollar organization. And, with a school leader’s tenure able to be cut short anytime by disaffected board members, the contract serves as valuable economic protection, they said.

Bruce Hunter, the associate executive director for the Arlington, Va.-based American Association of School Administrators, said that some settlements have been “egregious,” but that contract law protects everyone, including school leaders. “Superintendents live and die with their contract,” he said, adding that it’s hard to blame superintendents for taking high salaries.

“If someone has a winning record, you pay more for them,” he said.

One reason for high superintendent buyouts is escalating pay for school leaders. The Alexandria, Va.-based Educational Research Service, which has tracked school administrator pay for nearly 40 years, reported that the average salary for a superintendent was $161,992 in 2010-11, up from $118,496 in 2000-01. There’s wide variation within that group, though: superintendents of districts between 300 to 2,500 students earn an average salary of $119,613, while superintendents of districts with 25,000 or more students earn an average of $226,651.

The Council of the Great City Schools, a coalition of the nation’s 66 largest school districts, said in a 2010 reportRequires Adobe Acrobat Reader that 39 percent of big-city superintendents reported that their contracts included performance bonuses, and the average benefits package was valued at about $141,000. When taking into account salary, benefits, and accrued vacation time, the cost of contract buyouts can quickly rise.

In Oregon, the state passed a law in 2007 prohibiting districts from entering into contracts that obligate the district to compensate school administrators for work that was not performed. The law affected all contracts created from that point forward. Legislators said it would eliminate plush buyouts, like one where an Oregon administrator was allowed to buy his district-issued luxury SUV for $7,900 when it was valued at $26,000.

Colin Cameron, the director of professional development for the Confederation of Oregon School Administrators, in Salem, said the law doesn’t appear to have affected the ability of the state to fill administrative positions. However, the negative publicity surrounding the buyouts has prompted state school boards to try to sign superintendents to shorter-term contracts of one or two years.

Limiting Buyouts

The boards “are decreasing their liability,” said Mr. Cameron, who advocates for superintendents to get three-year, renewable contracts. “They’re not ever going to be faced with a situation where they’re going to be asked for a buyout.”

Oregon has also turned over about half of its approximately 200 superintendents in the past four years, the result of a wave of retirements, Mr. Cameron said. The influx of school leaders that are new to the position allows school boards to play hardball, he said. “They can say, you haven’t proven yourself,” he said.

But, he said that school leaders should be offered longer terms if they’re expected to potentially uproot their families and immerse themselves in their work.

The Oregon provision doesn’t appear to have had the effect lawmakers wanted. In 2008, just a year after the provision was signed into law, two districts in the state reached six-figure settlement agreements with their top administrators. Vicki L. Walker, a former Democratic state senator from Eugene who sponsored the legislation, conducted a hearing on those buyouts that eventually concluded the agreements were legal.

As reported in the Lebanon-Express newspaper, “I don’t think we accomplished a whole hell of a lot with [the bill],” Ms. Walker said.

The shorter-term contracts pushed by some Oregon districts is what Mr. Wagner, the auditor general in Pennsylvania, would like to see in his state. He also argues for more openness in negotiations. The settlement reached with Ms. Ackerman has drawn particular attention because $405,000 came from anonymous donors, who funneled their contributions into a nonprofit organization run by the district.

“What we see is a very dangerous precedent, where school districts are negotiating contracts that are not transparent,” Mr. Wagner said.

In an interview with Education Week, Ms. Ackerman said that she was “shocked” to find out that anonymous donors had contributed to her ouster.

But she didn’t consider waiving the provisions of her contract, which already had been extended for an additional year in February, three months before school officials started negotiating with her to leave.

“Should I have given it back? I didn’t break the commitment,” she said. “I dare anybody to tell me that they would.”

‘Market Rate’

Ms. Ackerman requested that about $400,000, essentially the money that would have gone to the last year of her contract, be given to a school reform initiative she championed during her tenure.

Ms. Ackerman’s sentiment, however, is not universally shared. Paul Vallas, who was her predecessor in Philadelphia, received about $180,000 in unused vacation days, sick days and performance pay when he left the district in 2007 after five years.

“I could have easily sought a two-year contract settlement,” he said. Mr. Vallas added that his criticism was not of Ms. Ackerman, but of the political players who entered in the agreement in August. “I thought the settlement was kind of outrageous,” he said.

And some administrators are bucking prevailing trends. Larry Powell, the superintendent of the Fresno County Department of Education, an organization that supports 34 districts in central California, decided to retire from his position but stay on for a salary of about $31,000. The move saves the district about $830,000, though Mr. Powell is eligible for a retirement pension of about $200,000 a year.

Other education advocates offer different solutions to the issue of large superintendent buyouts that would not require lawmakers to step in.

Butch Felkner, the division director for executive search services for the Texas Association of School Boards in Austin, said he’s sympathetic to the pressures that superintendents face, and recognizes that “when school board members get mad, the easiest person to take it out on is the superintendent.”

But he also said that in the early, heady days when a new leader joins the district, boards often get carried away with enthusiasm. “I stress to boards to look at the contract with the end in mind,” said Mr. Felkner, a former Texas school superintendent. “Don’t give away the ranch right out of the gate.”

Related Blog

Mr. Hunter, with the AASA, said that school boards might save money if they weren’t so quick to fire school leaders. Boards that do that end up having to pay for the former superintendent, plus go through the expense of searching for a new one.

The Council of the Great City Schools, in a survey of its members, showed that length of tenure is on an upswing in large districts. The average length of tenure in 2009-10 was 3.64 years, up from 2.33 years in 1999-2000.

Big contracts don’t appear to be going away anytime soon. John Covington, who was lured away from Kansas City, Mo., after two years to lead a newly-created educational authority to manage underperforming schools in Michigan, was offered a four-year contractRequires Adobe Acrobat Reader at the end of August. Its terms include a $225,000 annual salary with a $175,000 “signing bonus” his first year, $325,000 in salary for his second year, and incentive pay of anywhere from $50,000 to $100,000 a year. Mr. Covington and the board will negotiate his salary for the third and fourth years of the contract.

In all, Mr. Covington could earn $1.5 million in salary, bonuses and benefits for running the educational authority, which will oversee of some of Detroit’s lowest-performing schools in 2012-13 and eventually expand to include low-performing schools throughout the state.

“The compensation package is market rate to retain one of the nation’s leading superintendents and is fairly standard to attract top talent to what may be the toughest job in the country,” said Steven Wasko, the spokesman for Detroit public schools, in an email.

Vol. 31, Issue 03

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