School & District Management

School Boards Give Superintendents Hefty Severance Packages to Quit Early

By Denisa R. Superville — May 11, 2017 6 min read
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When school boards offer hefty buy-out packages to get rid of superintendents with whom they no longer see eye-to-eye, do taxpayers get the shaft?

It depends.

Let’s look at the most recent case.

A bitter, months-long power struggle between the Howard County, Md., school board and its superintendent, Renee Foose, ended this month when the board approved a nearly $1.65 million severance package in exchange for Foose’s resignation with three years left on her contract.

The “post-termination payments” of $1.13 million—not including compensation for unused days off and pension—adds up to more than what Foose would have been paid in salary if the district had kept her on, according to the Baltimore Sun.

Eye-popping parachute packages are not uncommon in the corporate world, where CEOs and 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 in charge of managing resources within very constrained budgets—have also been giving out hefty severance packages to superintendents for them to go away early.

The reasons for the splits vary. Often, there is a divergence in philosophy between the superintendent and the school board, particularly after school board elections bring in new members. Superintendents may not be hitting agreed upon benchmarks and targets. Sometimes, the break-ups come amid investigation and allegations of wrongdoing, and school boards—weighing potential costs and liabilities down the road—decide it’s better for the district to pay money upfront and move on.

Sometimes things just don’t work out even after careful vetting of a superintendent-candidate, and that can happen whether it’s a school board or a 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?” Gentzel said.

“That’s a fair question. ...When a board makes its decision, it inevitably is going to make the decision in light of, or at least with full consideration of, the financial implications to the organization. But it’s a cost-benefit question, and it’s a judgment call so that the board is saying, ‘yes it will cost us X dollars to do this, but there is a bigger cost...if we don’t do it.’ ”

Districts of all sizes have paid hefty severance packages. Of course, what’s considered a large compensation package is also relative, based on a number of factors including stipulations in the superintendent’s contract, how much he or she was being paid, and a district’s size and budget.

In 2016, a few months after four new members joined the St. Paul, Minn., school board, the majority of the board members approved a $787,500 departure package for then-Superintendent Valeria Silva. The deal included a 15-month consulting arrangement for Silva, who had more than two years left on her contract as superintendent.

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 topped $1 million.

The Lee’s Summit school district in Missouri, which has around 18,000 students, agreed last year to pay its superintendent David McGehee an estimated $450,000 severance package when he left the district, according to the Kansas City Star. McGehee, who had been on administrative leave before he left, had recently signed a three-year contract with the board, according to local media.

Large payouts to superintendents with multiple years left on their contracts are unusual, but have been happening with more frequency in recent years, 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 superintendent salaries, less than a quarter—23.2 percent—of superintendents who responded said that 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. (The Howard County case involves a lawsuit filed by Foose alleging that the board sought to usurp her power and that she has been subjected to discrimination as an out lesbian.)

Some states have taken steps to curb expensive payouts.

In 2015, California Gov. Jerry Brown signed a law to limit superintendents’ severance at 12 months’ salary,from 18 months, and eliminate payouts to school chiefs who were terminated 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 to superintendents who were terminated for fraud.) The law followed reporting by the San Francisco Chronicle on the big payout Bay Area chiefs were receiving.

In Texas, the state can reduce state foundation funding if the payout is more than a year’s salary and benefits agreed to in the superintendent’s contract. The state reduces funds that are equivalent to the amount when a district exceeds what’s specified in the contract. But that’s not stopped districts from doing so. According to the state’s legislative budget board, between 2011 and 2015, the state to withheld $1.5 million in foundation school program funds from districts that exceeded the cap.

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

Despite the eye-popping numbers that grab headlines, Domenech and Gentzel say that the vast majority of school boards and superintendents work in comity and part ways amicably. The relationship between those two parties is one of the most critical in a school district, they said.

The more-common scenario when supes and boards part ways is to pay the schools chief for accrued sick time, vacation days, pensions and other stipulations in the contract, Domenech said. But even those settlements can surpass $200,000 in some cases.

How do school board avoid getting to this break-up point that may leave their districts on the hook for hundreds of thousands or even millions of dollars?

Gentzel said boards should rely on legal counsel with expertise in education law. Superintendents and board members should spend time together to build relationships and understand and respect each other’s roles and responsibilities.

“Teams don’t just automatically form,” he said. “They require investment.”

Research assistance provided by Maya Riser-Kositsky

Photos: Renee Foose, former superintendent Howard County schools, Md.

MaryEllen Elia, former superintendent Hillsborough County schools, Fla., and current New York state education commissioner. -- Hans Pennink/AP-File

A version of this news article first appeared in the District Dossier blog.