School Boards Pay Superintendents Big Bucks to Quit Early

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Eye-popping parachute packages are not uncommon in the corporate world, where CEOs and other top executives snag multimillion-dollar payouts as they walk out the door.

But school districts—where officials are charged with being responsible stewards of public money and managing resources within often-constrained budgets—are also turning to the practice of doling out hefty severance packages to superintendents to depart early.

The Howard County, Md., school board, which had been locked in a months-long power struggle with its superintendent, this month agreed to a nearly $1.65 million severance package in exchange for Renee Foose's resignation. She had three years left on her contract.

The "post-termination payments" of $1.13 million—not including compensation for unused days off and pension—add up to more than what Foose would have been paid in salary if the district had kept her on, according to The Baltimore Sun. But in agreeing to the robust buyout, the district may have avoided costly legal fees and more money down the line: Foose has dropped her discrimination lawsuit against the school board.

High-Priced Departures

 

Renee Foose
Howard County Public Schools, Md.
2017; $1.65 million
3 years left in contract

MaryEllen Elia
Hillsborough County Schools, Fla.,
2015; $1.1 million; 2 years left in contract

Valeria Silva
St. Paul Public Schools, Minn.
2016; $787,500; 2 1/2 years left in contract

Walter Dansby
Fort Worth, school district, Tex. 2014; nearly $900,000
1 year left in contract

Pedro Martinez
Washoe County Schools, Nev. 2014, estimated $700,000
2 years left in contract

Dana Bedden
Richmond Public Schools, Va.
2017; $295,000
2 years left in contract

Districts of all sizes have awarded substantial packages to superintendents in exchange for their resignations—or retirements—before their contracts end. While the circumstances vary, it's often irreconcilable differences between boards and schools chiefs that lead to the early exits. And those differences often occur in the wake of elections that bring new members to school boards.

In 2016, months after four new members joined the St. Paul, Minn., school board, a majority approved a $787,500 departure package for Valeria Silva, who had been superintendent since 2009. The deal included a 15-month consulting arrangement for Silva, who had 2½ years left on her contract.

Florida's Hillsborough County fired its superintendent, MaryEllen Elia, in 2015, while she was a finalist for the AASA's National Superintendent of the Year Award. The Tampa Bay Times reported that Elia's severance package surpassed $1 million.

The Lee's Summit district in Missouri, with roughly 18,000 students, agreed last year to pay its superintendent, David McGehee, an estimated $450,000 severance package over two years. McGehee, who had been on administrative leave before he left the district, had just recently signed a three-year contract with the district worth about $1.2 million.

Reasons for Splitting Up

Other drivers of premature exits are when superintendents fall short of agreed-upon job-performance benchmarks. Sometimes, the breakups come amid investigations and allegations of wrongdoing, and school boards—weighing potential costs and liabilities down the road—decide it's more cost-effective to pay the money upfront and side-step costlier financial exposure later on.

And sometimes things just don't work out despite carefully vetting superintendent candidates. That can happen whether it's a school board or a private corporation, said Thomas Gentzel, the executive director and CEO of the National School Boards Association.

"I think it's always good advice for a school board—any board of directors or anybody who is hiring a CEO—to be thinking about the potential implications if things don't work out. What are the potential cost implications?" he said.

But, Gentzel added, school boards—which hire superintendents—are within their rights to terminate those leaders. If boards and superintendents are considering a breakup, the relationship has probably deteriorated to the point where it's detrimental to the district, he said.

Paying a High Price

Large payouts to superintendents with multiple years left on their contracts are still relatively unusual though, but are popping up with more frequency, said Daniel A. Domenech, the executive director of the AASA, the School Superintendents Association.

"It's unusual because boards have to consider the potential backlash that they will get from the community when they pay out that kind of money to a superintendent who is entitled to it," Domenech said. "That's the problem—that's why there are contracts. And when those contracts are terminated unilaterally by the board, then they have to pay the price, and the price, unfortunately, is very high."

The length of superintendents' contracts, how much they will be paid, and reasons why they can be fired are often covered in their employment agreements. In a 2016 survey on salaries, just 23.2 percent of superintendents who responded said their contracts contained severance or buyout clauses. When boards fire superintendents for reasons not specified in contracts, they often have to pay a lot of money.

"The reality is that there apparently is no cause," Domenech said. "I am sure if they could have come up with one, they would have."

In many instances, school boards can't disclose much detail about a superintendent's termination without facing possible legal consequences. But school boards can also face legal consequences if superintendents challenge the grounds of their dismissal. In 2014, the district in Washoe County, Nev., had to rehire Superintendent Pedro Martinez after a court found that the board fired him illegally. In the end, the board paid an estimated $700,000 to buy out the rest of his contract.

Foose, who had led the high-performing Howard County district since 2012, signed a new, four-year contract in February 2016. When three new representatives joined the school board after last November's election, they passed eight resolutions that Foose said limited her authority.

While lauded for focusing on equity and other issues, Foose was not universally popular. The Baltimore Sun said some board members described her style as "secretive and dictatorial," and in February, hundreds of parents signed an online petition calling on her to resign. A survey by the district's teachers' union, which was released in March, found that only 10.8 percent of teachers supported the superintendent, the paper reported.

The settlement agreement between Foose and the school board restricts both sides from discussing the matter, a lawyer for Foose told Education Week. Howard County school board President Cindy Vaillancourt did not respond to requests for comment.

In some states, policymakers have taken steps to rein in expensive payouts.

California Gov. Jerry Brown signed a law in 2015 to limit superintendents' severance at 12 months' salary, from 18 months, and eliminate payouts to schools chiefs who were fired for fraud and other financial wrongdoing if those actions were confirmed through an independent audit. (Previous state law allowed payouts of up to six months' salary for those fired for fraud.)

In Texas, the state can reduce a district's foundation funding if a payout is more than a year's salary and benefits agreed to in the superintendent's contract. But that has not stopped districts from doing so. According to the state's legislative budget board, between 2011 and 2015, the state withheld $1.5 million in payments from districts that exceeded the buyout cap.

New Jersey also limits the amount tenured administrators, including superintendents, assistant superintendents, and district business managers, can receive in unused sick time to $15,000. (Those under old contracts were able to exceed $15,000.)

Amicable Exits

Despite the eye-popping numbers that grab headlines, Domenech and Gentzel say the vast majority of school boards and superintendents work in comity and part ways amicably.

The more-common scenario when superintendents and boards split is to pay the schools chief for accrued sick time, vacation days, pensions, and other stipulations in the contract, Domenech said. But even those sums can reach $200,000.

How do school boards avoid getting to this breakup point that may leave their districts on the hook for hundreds of thousands or millions of dollars?

Related Blog

Even when new members sweep onto a board after an election, Domenech said, they should try to work with the superintendent who is already in place, and not just because dismissing and hiring a new leader will cost money.

"The reality is that highly regarded and highly functioning school systems are noted for their sustained leadership—both on the part of the board and on the part of the superintendent," he said.

Gentzel said boards need sharp legal counsel, with expertise in education law, on contract negotiations. But boards and superintendents should also spend significant time working together, to build relationships and understand and respect each others' roles and responsibilities.

"Teams don't just automatically form," he said. "They require investment."

Vol. 36, Issue 31, Pages 1, 16

Published in Print: May 17, 2017, as Boards Pay Big Bucks to Make Supes Leave
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