TUSD report: June 28, 2015

Dear supporters and correspondents,

Several persons have asked about the long hiatus in these letters, and I apologize for it. A medical issue tookme out of action for a few weeks early in the year and I have been catching up since.

This letter concerns only the superintendents new contract and closely related issues. The contract isimportant because it has attracted so much public attention and because selection and compensation of thesuperintendent are the boards direct responsibility and among its most important decisions. In this case, boththe process and the outcome are troubling.

As usual, this letter represents my personal views, which sometimes differ from the official positions of theboard and district.

Contents:What happened on June 9-10Summary of the board-approved changes in the superintendents compensationSix major problems with the new contract, the process, and the public explanations The performance bonus approved on June 23Some observations concerning performanceRevelations about Executive Session discussionsCivility issues for the board

What happened on June 9-10

Summary: On June 9 the board voted to increase the superintendents compensation for the previouslyagreed contract years 2014-15 (ends on June 30) and 2015-16 (begins on July 1) and to extend the contractby two years. The 2014-16 raises were in addition to the performance bonuses agreed in the originalcontract. I learned of the proposed contract terms only a few hours before the vote, and the district blockedpublic discussion of the details until after the vote. The raise for year 2014-15 was cancelled on the next day,following objections from TUSDs legal counsel.

The June 9 board agenda included Superintendents Contract as an Action item, without details. I had noadditional information until an Executive Session held just before the public meeting. Other board membersmay have known more: Juarez said during the public meeting that the board had received a draft of the newcontract a month before. He backtracked a minute later, so now it is unclear who knew what and when theyknew it.

The public discussion of the new contract was about 18 minutes long, from (approximately) minute 1:48 tominute 2:06 on the meeting video. The video is posted at

http://www.tusd1.org/contents/govboard/gbvideo060915.html

You can learn much about the process and the board simply by watching that 18 minutes. The discussionincludes some misleading statements, which I address below.

At the end of that discussion the board voted on the new contract. I could not vote Yes, because I had hardlyhad time to read it, much less digest its implications, and I already knew that I disagreed with the sharp jumpin compensation. On the other hand, I did not want to start another search and have the current board choosea new superintendent during an election year (2016). Sandwiched between those considerations, I abstained(rare for me). The vote was 3-1-1, with Hicks voting No.

The next morning (June 10), Central notified the board that TUSDs legal counsel had objected to the just-approved salary increase for fiscal year 2014-15, which ends at the end of this month. The superintendentsigned the contract after striking that provision.

Six major problems with the new contract, the process, and the public explanations.

Summary: At this late date retention is hardly an issue for contract years 2014-2015 and 2015-16, but theboard still voted to increase total compensation for those two years by at least $125,000 ($30,000 for 2014-15 and $95,000 for 2015-16). If the goal had been retention, then that money should have been added to theend of the contract. The drafting of the new contract was either much quicker than usual, or it happenedprivately outside of my view, or both. The negative political fallout has been substantial.

The new contract adds $95,000 to the already high compensation for contract year 2015-16.

The superintendents original contract, dating from 2013, exchanged a lower base salary in the first two yearsfor high compensation in the third year. The purpose was to increase the likelihood that the superintendentwould honor his commitment to stay through the end of the contract. I supported that structure, which madethe compensation for 2015-16 very high, even before the new raise.

Since the compensation for 2015-16 was already so high relative to the market, it made no sense to addanother $95,000. (The raise comes as $75,000 in direct compensation and $20,000 in 20 additional days ofpaid leave that can be redeemed for $1,000 each.) Moreover, the market is essentially over for 2015-16: itis very unlikely that another district would recruit Sanchez for a school year that begins in just a few weeks.

Therefore, from my viewpoint, the $95,000 raise is basically a gift and unrelated to retention.

The board president minimized the raise, saying during the public meeting:

There is a slight increase in the annual base.... and later There was a change in the paidleave days... this is basically making [the leave days in] Dr. Sanchezs contract the same asother administrators.

As far as I know, however, no one else in TUSD gets 50 days of paid leave, much less unrestricted paid leavewith every day redeemable for cash. (The next page summarizes the compensation package.)

Sanchezs guaranteed compensation, in any year of the new contract, exceeds that of any other Arizonaschool superintendent. For comparison, I attached to the email the current superintendents contract for theMesa district, which is the only Arizona school district larger than TUSD. The contracts are not exactlycomparable, but the Mesa superintendents compensation for next year is about half of what Sanchez willearn in TUSD (and the cost of living is higher in Mesa than in Tucson). The Mesa district is not only largerbut outperforms TUSD by almost any available measure.

Summary of the June 9 changes in compensation

All calculations are based on the old and new contracts, which are attached to the email. All calculations assume that vacation days in excess of 30 will be redeemed for cash.The increase in compensation for 2015-16, compared to the original contract, is indicated in bold.

Fiscal year 2014-15 The June 9 contract increased the base salary by $30,000 retroactively, to $265,000.This raise was removed on June 10 after objections from TUSDs counsel.

Fiscal year 2015-16

Compensation Original contract New contractBase pay $ 210,000 $ 260,000Unrestricted expense allowance 25,000 25,000Automatic 50% end-of-year bonus on above items 117,500 142,500(Paid leave days; redemption rate for unused days) (30; .$808) (50; $1,000)Redemption of all vacation days exceeding 30 0 20,000Guaranteed annual compensation $ 352,500 $ 447,500Redemption of additional N(#30) days .$808N 1,000NPerformance bonus (6% of base pay) up to 12,600 up to 15,600Reimbursement for memberships etc. up to 3,000 up to 3,000Unlimited reimbursement for out-of-state travelTypical health and life insurance benefits

Minimum increase in guaranteed annual compensation, for 2015-16: $ 95,000

Increase in annual compensation for 2015-16 if the board awards the full performance bonus and the superintendent uses 12 vacation days (as in 2013-14): $101,456

Extension of contract to fiscal years 2016-17 and 2017-18

Compensation 2016-17 2017-18Base pay $ 270,000 $280,000Automatic end-of-year bonus 25,000 25,000Unrestricted expense allowance 25,000 25,000(Paid leave days; redemption rate for unused days) (40; .$1,038) (40; .$1,077)Redemption of all vacation days exceeding 30 10,385 10,769Guaranteed annual compensation $ 330,385 $ 340,769Redemption of additional N(#30) days .$1,038N .1,077NPerformance bonus (6% of base pay) up to 12,600 up to 15,600Reimbursement for memberships etc. up to 3,000 up to 3,000Unlimited reimbursement for out-of-state travelTypical health and life insurance benefits

Nationally, Sanchezs level of compensation is usually restricted to much larger districts. For example, thetwo largest school districts in Texas, Houston (more than four times as large as TUSD) and Dallas (more thanthree times as large) pay their superintendents base salaries of $300,000 and $306,000. Former TUSDsuperintendent Liz Fagen, currently serving as superintendent of a Colorado district that is larger and richerthan TUSD, earns less than that. After including bonuses and expense allowances, the superintendents totalcompensation in the Houston and Dallas districts is broadly similar to Sanchezs total compensation,averaged over the three years of his new contract.

TUSD board members defending the new contract have pointed out that the TUSD superintendent earns lessper student than other superintendents in Pima County. That means little, because twice the enrollment rarelyimplies twice the salary. (That is true in Arizona and nationally.) The relevant comparison is to districts ofsimilar size or larger.

The board-approved contract included a retroactive $30,000 raise for contract year 2014-15

The boards vote to add $30,000 to superintendents salary for contract year 2014-15, just a few days beforeit ends, is even stranger than adding $95,000 to year 2015-16. The raise for 2014-15 obviously had nothingto do with retention and was a gift by any reasonable interpretation. (If the board had waited three moreweeks, then that raise would have been literally a gift of public funds, a class 4 felony.)

TUSDs counsel objected to this provision, on the grounds that statute prohibits a four-year contract, and soit was struck from the contract on the day after the vote. The counsel said that this change requires no newvote by the board.

The structure of the new contract is inconsistent with the stated goal of retaining the superintendent.

On his February 4 radio show, Bill Buckmaster asked the superintendent Have you had job offers recently?and he answered:

Yes sir, I have, you know, outside of the state, and, you know, I have had some. I have hadsome and I let them know that, you know, we have a five-year strategic plan and I would liketo see as much of that through as the board would like me to...

I am not sure where those offers were, but this kind of conversation has fed the public impression thatkeeping the superintendent in TUSD requires an unusually high salary.

The problem with this explanation is: if retention were really the issue, then the raise would have beenbackloaded into the last year of the contract, as the board did in 2013. But the new contract does the opposite.While increasing the compensation by $95,000 for next year, when it has a minimal effect on retention, theboard actually set a lower (though still high) salary in the last two years. Moreover, the 2017-18 salary is only$10,000 higher than the 2016-17 salary.

The new contract thus appears to be more consistent with increasing the superintendents short run payoffthan with maximizing the chance of his honoring the full term of the contract.

The process was rushed.

When I expressed concern, during the public meeting, that the board voted on the new contract just a fewhours after seeing it for the first time, the board president said It has happened in the past and suggestedthat my memory was faulty. On Bill Buckmasters June 19 radio show, she repeated: I do not believe thatit was any more rushed than any other process that we have had in the past,

I have participated in four previous superintendent contract processes, and here is the actual record, basedon public agenda postings:

After Fagen resigned as superintendent in 2010, the board discussed the appointment and contractof an interim superintendent during four different executive sessions in May and June 2010, beforeit approved John Carrolls contract on June 15. (That was only a six-month appointment.)

Later in 2010 the board discussed the contract of the new permanent superintendent during fourdifferent executive sessions in October and November, including three discussions after interviewswere complete, before it approved John Pedicones contract on November 23.

In 2012, the board discussed Pedicones contract during four different executive sessions in Maythrough August, before the board approved his contract extension on August 28.

In 2013, the board discussed Sanchezs contract during two different executive sessions in June, afterit had approved his appointment but before approving his contract on June 27.

I wish I could say more about the previous processes, but almost everything that I saw occurred in ExecutiveSession and so, legally, I cannot.

The counsels objection to the $30,000 raise for 2014-15, coming after the vote, suggests how rushed thecurrent process was.

From the 18-minute video of the discussion (link above), it is unclear whether the board members whosupported the new contract understood exactly what they were voting on.

The process was hidden.

The process was so fast that there must have been earlier discussions, even if they were invisible to me.When I expressed concern about the speed of the contract process, during the public meeting, Juarez said:

Dr. Stegeman ... I would highly advise you to start reading some of this email. We receiveda draft version of this over a month ago. ...I hope you dont perceive this as a personal attackon you...

About a minute later he reversed course, stating: That is not what I intended to say... I never said that wesent a copy of the contract. Grijalva later said that all board members first saw the contract on the night ofadoption, but during the interview on June 19 she also said:

I think that Dr. Sanchez had an opportunity to speak to us during our [private] 1-on-1's tosee if this was something that we wanted to move forward, because nobody wants to put acontract out there and not have support to move forward...

So it is unclear who knew what and when. Gathering majority support for the contract through chainedprivate conversations would violate the Open Meeting Law.

Other interesting questions are: Who actually wrote the new contract? Did the board and superintendent haveseparate legal representation during negotiations? Were there indeed any meaningful negotiations?

Even when the discussion finally became public, for 18 minutes on June 9, it was vague. TUSDs actingcounsel shut down any attempt to discuss the proposed contracts details. When I asked what statute or policyprevented that discussion, she did not know. (This exchange starts at approximately 1:52 on the videorecording.) In the end, I could say only that I had unspecified concerns about the compensation.

Central later circulated a legal opinion stating that statute did not require public discussion of the proposedcontract, but that ignored the issue that arose during the meeting, which was whether statute prohibited sucha discussion.

The overall impression was that the contract terms should be kept as secret as possible, from as many personsas possible, until they were approved.

Claims that TUSD has become more transparent are, in my view, unfounded. Many readers of these letterswill recall last years appointment of the board presidents mother-in-law as a school principal, over a fullycredentialed local candidate who scored higher in both rounds of interviews. The board president did notreveal the relationship even after the vote, despite board policy BCB requiring her to do so; nor did theapplicant reveal the relationship in the application forms space for that purpose; and the superintendentdenied early knowledge of the relationship until email revealed otherwise. If an outside source had notexposed the relationship (which the board president then admitted), we might still be unaware of that familyconnection.

The recent compensation decisions hurt internal morale and the districts image.

One retired TUSD teacher wrote to the board, in part:

Appalling and sickened were the words that come to mind as I read the recent article aboutthe opulence laid at the feet of our young superintendent... Yes, I know a couple of youabstained/did not vote, but neither did you speak out on the message that this sends to thefaculty and staff of the TUSD schools. You were afraid he might leave?! Why would hewith the package he already had? What happened at that board meeting is absolutelybreath-taking in a very negative sense. It is the teachers who are fleeing! ... Is he moreimportant than the fact that many secondary openings will not be filled at all and studentswill matriculate through the year with subs and subs for subs? I cannot imagine whatpossessed you, as a group, to award so much to one at the expense of the many...

I cannot express it better. The Stars editorial on June 13 exemplified the political damage of the boardsaction. Jimmy Lovelace published a guest oped in the Star on March 9, in which he called for TUSD to endunforced errors. We just saw another one.

Performance bonus for 2013-14

Summary: After receiving a year-end report from the superintendent, which concluded that he had achieved100% of each of his 25 annual goals, the board voted by 3-2 to give him a $12,600 performance bonus, themaximum allowed under his original contract. (This process was separate from the new contract adoptedon June 9.) I voted No because I disagreed with the goals and also the evaluation process.

At Tuesdays meeting the board awarded the discretionary performance bonus for year 2014-15. Thesuperintendents original contract allowed for a bonus up to 6% of base pay at the end of each year, and theboard voted 3-2 to award the maximum bonus of $12,600, with Hicks and I dissenting.

I voted No partly because I disagreed with the goals from the start. (Last years vote adopting the goals wasalso 3-2.) Pedicones goals as superintendent, which I had mostly supported, were simpler, more objective,more tied to TUSDs enrollment and student outcomes, and harder to achieve. Pedicone achieved a 100%rating on few if any goals, which reflected the challenges facing TUSD more than any discredit on hisperformance.

Sanchez immediately announced that he would donate the bonus to Camp Coopers fundraising drive, anexcellent cause which I support. It would be better however to support TUSDs many needs through the usualbudget process.

I voted No also because I thought the evaluation process was inadequate, compared to what occurred in prioryears. The evaluation appeared to be driven mainly by the superintendent himself, who submitted whatamounts to a self-evaluation report, which rates his administration at 100% on every one of the 25 goals thatthe board set last year. The report is posted at:

tusd1.org/contents/govboard/packet06-02-15/6-2-15-BAI3-2014-15EOYReport-ProgressCompletionHighlighted.pdf

As far as I know, the board had little or no input into that report. The board thus defaulted, in my view, onone of its primary responsibilities.

I am sure that teachers and principals would love the opportunity to self-evaluate at 100%. (Personally, I haverarely done anything that I would self-evaluate at 100%.)

The board members who voted for the new contract on June 9 have used outstanding performance as onejustification. They are essentially saying that the agreed process for granting a performance bonus wasinsufficient to reward such an extraordinary performance, so that much more was needed. They have citedaccomplishments such as balancing the budget and stabilizing enrollment. These claims are exaggerated. Thenext section discusses those and offers some other observations on performance.

Some observations concerning performance

Summary: TUSD has had significant recent successes, but it continues to run a large operating deficit andto suffer large enrollment declines, and during the last state assessment it had more schools falling in gradethan rising.

Three major areas of concern are the budget, enrollment, and student achievement. TUSDs budget, last yearand as proposed for next year, is balanced only in the sense that the district has enough cash reserves tocontinue to cover its large operating deficit. Staffs own figures indicate that TUSD has used up about a thirdof its cash reserves this year, to finance that deficit. That obviously cannot continue for much longer, andit is the wrong way to use reserves in the current uncertain budget environment.

While the state has cut school district budgets historically and some proposals threaten cuts in the future,TUSDs net funding from the state actually increased slightly this year, before accounting for the losses fromenrollment declines. That means that now is the time to be fixing the operating deficit but we are not. Ihope to give a detailed assessment of TUSDs budget in a letter later this summer.

Last year TUSD lost about 850 students. This is somewhat better than the average annual loss of about 1,100students, over the past twelve years, but one cannot reasonably claim that enrollment has stabilized. Abouta third of the school-age students who live in TUSD do not attend TUSD schools. This is the highestdefection rate among Arizonas large districts. TUSD should be doing better, especially with a graduallyimproving economy, no recent school closures, and few if any new openings of major charter schools in itsimmediate area.

TUSDs recent demographic study includes historical enrollment data. It is posted online at:

tusd1.org/contents/distinfo/boundaryreview/Documents/AEFinalReport.pdf

During the last year that the state rated schools (2014), 26 TUSD schools went down in grade while 16 wentup. (Several that went up, however, jumped two grades.) This left a majority of the districts schools, andan overwhelming majority of its middle schools, earning grades of C, D, or (in three cases) F.

It is also important to emphasize that many good things are happening in TUSD. One of the best assumingthat it works is the new ERP (enterprise software) system, which is supposed to be fully operational on July1. If it rolls out smoothly and meets expectations, then it will help to solve record-keeping problems that haveplagued TUSD for years. Some of Sanchezs administrative appointments have (I think) been excellent. Bymost accounts the bus system is performing better than it has in years. Under state pressure, the staff has justproposed a budget that, after years of decline, increases the fraction of funds spent in the classroom. Someteachers believe that the current administration is more responsive to their individual and collective needsthan the several preceding administrations.

Some TUSD schools are doing very well. The state grade is only one measure of success, but TUSDs twelveA-rated schools (as of 2014) are:

Elementary or K-8: Borman, Carrillo, Drachman, Hughes, Kellond, Lineweaver, Sewell, Soleng Tom.Middle: Dodge. High: Palo Verde, Sabino, University.

On the other hand, some of the current administrations major initiatives have failed or underperformed. Theearly learning centers, which compete as businesses in the highly competitive preschool market, are losingmoney that would otherwise go to the schools; the major and much-hyped investment in a data dashboardwas abandoned; the major investment in Tyler scheduling software has reportedly been largely abandoned;very few of the efficiency audits recommendations have been implemented; the relationships with thedesegregation plaintiffs and court have deteriorated sharply; and this has led to postponement (or worse) ofDodges move into the empty Townsend site, which all parties to the case initially supported, topostponement of the Fruchthendler/Sabino grade expansion due to process errors, etc.

So the record is mixed but the boards compensation decisions do not reflect that.

Revelations about Executive Session discussions

Summary: Several board members have made comments about the Executive Session discussions that ledup to the June 9 vote on the superintendents new contract. I am concerned that these discussions violateExecutive Session confidentiality.

Some board members public comments about the contract process seem to violate Executive Sessionconfidentiality. For example, Grijalva and Juarez made the following statements at the June 9 public boardmeeting and in the previously-mentioned June 19 radio interview:

Grijalva on June 9: ... we did have a fairly lengthy discussion in Executive Session, so Ithink that all of the highlights were reviewed...

Juarez on June 9: Ms. Grijalva asked all of us [in Executive Session] if we had anythingelse to add [about the contract].

Grijalva on June 19: We actually all looked at the contract at the same time [in theExecutive Session preceding the vote]... In the previous Executive Session Dr. Sanchez hadindicated when it was going to be on the agenda... We all had an opportunity to weigh in onthe contract ...Whatever changes happened were suggested, changes were made, and thenwe went out and voted.

These statements, regardless of whether they are true, affect the publics understanding of the contractprocess. Legally, I cannot even comment on whether they are true or false or add any clarifying details.

In general, one-sided disclosures about Executive Sessions have the potential to mislead the public in a waythat prevents rebuttal or response by other board members.

Civility issues for the board

Summary: Members of the governing board often violate its own policy that says: any debate, thoughintense, will be civil and focused solely on issues.

Referring to the governing board itself, board policy BDAA says: Any dissent on an issue will beconstructive; any debate, though intense, will be civil and focused solely on issues. Anyone who watchesboard meetings knows that this rule is an ideal rather than the reality. Discussions or questions about issuesoften evolve quickly into personal and usually negative comments about other board members (cf. the quotein page 5 of this letter).

Another problem is consistent misrepresentations or distortions of facts or unsubstantiated charges thatother board members are doing the same. Over the past few months I have been charged, on the radio andin social media, with all sorts of nefarious activities and misrepresentations, but the charges happen to befalse. This requires laborious point-by-point rebuttals, posting citations to reputable data sources, etc. Ideallythe media would do more fact-checking, but this rarely occurs. Merely reporting the rhetorical dispute leavesthe confused observer of the debate no easy way to learn whose facts are correct.

As I have often written, the board would be more effective and respected if members focused solely onschools and policy decisions, while minimizing personal attacks and undocumented charges. When onestands on shaky ground, however, it seems to be human nature to deflect the discussion onto the easy territoryof personal criticism.

Bill Buckmaster will give me a chance on Tuesday, at 12:30 on KVOI, to rebut various incorrect allegationsor claims that others have made on his show.

Thanks again for your interest in TUSD.

- Mark