PARS Memo of June 18, 2009

MEMORANDUM

To: Ines DeLuna, Carolyn Martini, Cindy Warren, Cynthia Lane,
St. Helena Unified School District Board of Trustees

Cc: Superintendent Allan Gordon
Assistant Superintendent Robert Haley
County Superintendent Barbara Nemko, Napa County Office of Education
Napa County District Attorney Gary Lieberstein
California Fair Political Practices Commission
California State Senator Pat Wiggins
Doug Ernst, St. Helena Star
Bill Kisliuk, Napa Valley Register

Date: June 18, 2009

From: Kevin Alfaro, Jeanne DeVincenzi, Sharon Harris and Katherine Zelazny,
Citizens for Quality Education

APPROVAL OF ORIGINAL PARS PLAN
On September 18, 2008, the St. Helena Unified School District (“SHUSD”) Board of Education (the “Board”) approved a supplementary retirement plan known as the Public Agency Retirement Services (“PARS”) Supplementary Retirement Plan (the “PARS plan”). The Board minutes from the September 18, 2008 meeting state that “Superintendent Gordon indicated that the local teachers’ association has requested that the Board consider offering this supplementary retirement plan. He provided the criteria required for a teacher to be eligible to participate in this plan and indicated that offering the plan must provide a financial benefit to the District. The Board moved to approve Resolution #08-03 as presented. ” The motion was carried 5-0. Item 11.D., Minutes of the Special Meeting of the Board of Trustees, September 18, 2008. (Attachments 1 and 2) On that same day, Superintendent Gordon signed on behalf of the SHUSD that certain “Agreement for Administrative Services” in which SHUSD retained PARS for the purpose of administering the PARS plan. (Attachment 3)
On September 29, 2008, Superintendent Allan Gordon sent a memo to all of the members of the St. Helena Teachers Association regarding the Board’s decision to look into the possibility of offering the PARS plan to the teachers. (Attachment 4)
On October 6, 2008, Assistant Superintendent Dr. Robert Haley executed on behalf of the SHUSD, the “2008-09 PARS Supplementary Retirement Plan” for “Certificated Non-Management Employees” (“Original PARS Plan”). (Attachment 5) As its heading clearly denotes, the Original PARS Plan was established for the benefit of SHUSD certificated teachers and did not apply to individuals employed as management in the SHUSD. Further, according to the Original PARS Plan, the deadline for enrolling in the Original PARS Plan was November 21, 2008.
At the December 11, 2008 regular meeting of the Board, Superintendent Gordon informed the Board that 6 staff members had elected to participate in the Original PARS Plan and “recommended that the Board approve the proposal and move forward to accept the resignations submitted.” The Board “moved to approve the Public Agency Retirement Services Supplementary Retirement Plan as proposed.” The motion was carried 5-0. Item 12.B., Minutes of the Regular Meeting of the Board of Trustees, December 11, 2008. (Attachment 6)

ADDENDUM TO ORIGINAL PARS PLAN
On January 14, 2009, Superintendent Gordon executed on behalf of the SHUSD an “Execution Agreement” the terms of which state that it is an “Addendum for Supplementary Retirement Plan,” which modifies the Original PARS Plan (the “Addendum to PARS Plan”). (Attachment 7) (On that same day, Superintendent Gordon also signed on behalf of the SHUSD the “Agreement for Custody Services” in conjunction with administration of the PARS plan.) (Attachment 8) The Addendum to PARS Plan has a retroactive effective date to September 1, 2008 and amends the Original PARS Plan to include “Certificated employee[s] of the District as of September 1, 2008.” Therefore, the Addendum to PARS Plan executed by Allan Gordon effectively broadened the Original PARS Plan by adding certificated administrative employees, including, but not limited to Allan Gordon and Jim Zoll, as employees who may elect to participate in the PARS plan.
There is nothing in the agendas or minutes of the Board meetings prior to the January 14, 2009 execution date of the Addendum to PARS Plan authorizing Allan Gordon to execute the Addendum to PARS Plan on behalf of the SHUSD. In fact, the minutes of the January 15, 2009 regular meeting of the Board state that the Board “moved to approve the AB 1200 Public Disclosure with the St. Helena Teachers Association Public Agency Retirement Services Supplementary Retirement Plan.” (emphasis added) The motion was carried 5-0. Item 10.C., Minutes of the Regular Meeting of the Board of Trustees, January 15, 2009. (Attachment 9)

GORDON’S AND ZOLL’S RETIREMENT
In April 2009, Superintendent Gordon and High School Principal Jim Zoll announced their respective retirements. At the April 9, 2009 special meeting of the Board, the Board “voted unanimously in Closed Session to accept the resignation of Superintendent Allan Gordon, and approve his participation in the PARS Retirement Program.” Item 4.A., Minutes of the Regular Meeting of the Board of Trustees, April 9, 2009. (Attachment 10) Members of the Board have also informed the public that Jim Zoll will be participating in the PARS plan.

GORDON & ZOLL INELIGIBLE UNDER PARS PLAN
In general, a PARS plans can cover teachers or administrators, or both. The Original PARS Plan adopted by the Board on December 11, 2008 covered solely certificated teachers, not administrators or management. Further Dr. James Haslip, a former Board member during the time when the PARS plan was proposed and adopted, verified that, prior to the adoption of the Original PARS Plan, the Board never discussed approval of a PARS plan for any employees other than the members of the local teachers’ association. There is currently no other PARS plan that has been approved by the Board. Superintendent Allan Gordon and Principal Jim Zoll are administrators employed by the SHUSD and, although they hold teaching certificates, they are management employees and not members of the local teachers’ association.
Upon further investigation, it has been confirmed by a senior representative at PARS that, if new participants are to be added to the Original PARS Plan, a new cost-benefit analysis must be completed and approved by the Board. Additionally, if a new class of participants is to be added to the PARS plan (i.e., administrators or management) all members of this class must be given the opportunity to join as well. These steps can only be taken if the Board follows the proper notice and approval procedures under the PARS plan.
As stated above, Superintendent Gordon informed the Board at the December 11, 2008 regular meeting that 6 staff members had elected to participate in the PARS plan. Superintendent Gordon and Jim Zoll were not among the 6 people that made such an election. In fact, Superintendent Gordon and Jim Zoll did not announce their respective retirements until April 2009. Therefore, including Superintendent Gordon and Jim Zoll in the Original PARS plan in April 2009 was not possible under the express terms of the Original PARS Plan because the enrollment period had expired on November 21, 2008 and a new cost-benefit analysis had not been completed and approved for Gordon and Zoll. Further, there was nothing in the Agenda posted for the April 9, 2009 Board special meeting regarding the discussion and/or decision of the Board to approve Allan Gordon’s participation in the PARS plan and there was no mention whatsoever in any of the Board agendas of approving Jim Zoll’s participation in the Original PARS Plan.
Therefore, the inclusion of Superintendent Gordon and Jim Zoll as participants in the PARS plan is not permitted under the Original PARS Plan nor has it been properly authorized by the Board.

GORDON’S CONFLICT OF INTEREST
Superintendent Gordon became eligible to participate in the PARS plan by virtue of the Addendum to PARS Plan executed by him. California Government Code Section 1090 (Attachment 11) and SHUSD Board Bylaw Section 9270 (Attachment 12) strictly prohibit Superintendent Gordon from being involved in any way in the development, negotiation and execution of the PARS Plan if he has a financial interest, or the expectation of a financial interest, in the plan. Government Code Section 1090 prohibits public officers from having a financial interest in “any contract made by them in their official capacity.” A contract made by a public officer in which that public officer has a financial interest is not just voidable, it is void. Thomson v. Call (1985) 38 Cal 3d 633. Further, California Government Code Section 1097 (Attachment 11) provides that every person who willfully violates Government Code Section 1090 “is punishable by a fine of not more than one thousand dollars ($1,000), or imprisonment in the state prison, and is forever disqualified from holding any office in this state.”
The California courts have interpreted Section 1090 broadly, stating that the statute prohibits certain officers and employees from being interested in contracts made in their official capacity and that a contract is “made” by the officer or employee when the officer or employee engages in “preliminary discussions, negotiations, compromises, reasoning, [and] planning…” of the contract. Millbrae Asso. For Residential Survival v. Millbrae (1968, Cal App 1st Dist) 262 Cal App 2d 222. See also, People v. Honig (1996, Cal App 3d Dist) 48 Cal App 4th 289. During the time when the Original PARS Plan was proposed and adopted, it was well known throughout the St. Helena community that Superintendent Gordon was preparing for retirement during this school year. This information was shared with many parents. Yet, Superintendent Gordon participated in the making of the Original PARS plan and the Addendum to PARS Plan by negotiating the plan with the teachers and executing the Agreement for Administrative Services, Agreement for Custody Services and the Addendum to PARS Plan. Superintendent Gordon executed the very document which awarded him a lucrative retirement package under the Original PARS Plan. If Superintendent Gordon had not executed the Addendum to PARS Plan, he would not have been eligible to participate in the Original PARS Plan that was established for “Certificated Non-Management Employees” (See Section 1.1 of Original PARS Plan). Due to Superintendent Gordon’s conflict of interest, the Addendum to PARS Plan signed by him is VOID and UNENFORCEABLE. Therefore, Superintendent Gordon and Jim Zoll are not eligible to participate in the Original PARS Plan.
If, for the sake of argument, Superintendent Gordon was eligible to participate in the Original PARS Plan without the operation of the Addendum to PARS Plan, Government Code Section 1090 would still apply because, as stated above, during the period in which the Original PARS Plan was proposed and adopted, it was widely known in the community that Superintendent Gordon’s retirement was imminent. Therefore, Superintendent Gordon engaged in the preliminary discussions, negotiations, reasoning, and planning of the Original PARS Plan in which he was financially interested or, at a minimum, had an expectation of financial interest upon his impending retirement. His September 29, 2008 memo to the teachers, the Board meeting minutes and Superintendent Gordon’s signature on the Agreement for Administrative Services and Agreement for Custody Services confirm his participation in the making of the Original PARS Plan. Accordingly, if Superintendent Gordon was eligible to participate in the Original PARS Plan, he should NOT have been involved in the PARS negotiations. Any agreement made despite such a conflict of interest is VOID and CANNOT BE ENFORCED.
When Dr. Haslip asked fellow Board member Carolyn Martini whether further analysis of the legality of allowing Superintendent Gordon to participate in the PARS plan was warranted, Ms. Martini referred the matter to Ines DeLuna and Ms. DeLuna indicated that the Board’s counsel would review the contract for the Board and subsequently advise the Board. (Attachment 13) Dr. Haslip was not informed of any additional actions taken as a result of this correspondence.

THE REAL COST OF ADDING GORDON AND ZOLL TO PARS
As mentioned above, the Original PARS Plan was based on the savings for 6 staff members. Relying entirely on the figures provided by Catrina Howatt, CBO of SHUSD, (Attachment 14) the Original PARS plan as originally proposed saves $1,324,283.00 over 5 years if Superintendent Gordon and Jim Zoll are excluded from the analysis. See attached spreadsheet replicating numbers from Ms. Howatt. (Attachment 15)
Once again, using figures provided by Catrina Howatt, if a cost-benefit analysis of the PARS plan is performed with respect to solely Superintendent Gordon and Jim Zoll (assuming that they were eligible to participate) there will actually be a net cost to the district of $80,089.80.
Put another way, without the PARS plan for Superintendent Gordon and Jim Zoll, the SHUSD pays $0 for Superintendent Gordon and Jim Zoll to retire, and, with the PARS plan for Superintendent Gordon and Jim Zoll, the SHUSD pays them an additional $327,737.00, plus a 5.5% service fee to PARS. Total cost to SHUSD is $345,762.55.
Another way to see that the SHUSD will lose money by offering the PARS plan to these select administrators is by comparing Catrina Howatt’s figures for teachers only and for both teachers and administrators. (Attachment 15) It is evident that the SHUSD will lose money when one compares the savings of $1,324,283.03 (teachers only) to $1,244,193.23 (teachers and administrators) showing a net cost to the SHUSD of $80,089.80.

BROWN ACT VIOLATIONS
As stated above, the Board voted unanimously to approve Allan Gordon’s participation in the PARS plan during the closed session of the April 9, 2009 special meeting of the Board. Item 4.A., Minutes of the Regular Meeting of the Board of Trustees, April 9, 2009. There was no mention in the agenda posted for the April 9, 2009 special meeting of the Board’s consideration of adding Allan Gordon to the Original PARS Plan. Further, there was no mention whatsoever in any of the Board meeting agendas of approving Jim Zoll’s participation in the Original PARS Plan. Finally, there is nothing in any of the Board meeting agendas approving the Addendum to PARS Plan and/or authorizing Superintendent Gordon to execute the Addendum to PARS Plan.
California Education Code §§35144 and 35145, and California Government Code §§54954.2 and 54956 govern the notice requirements for regular and special meetings of the Board. These statutes state in part that the notice of regular or special meeting of the Board shall specify the business to be transacted. Further notice requirements are stated in Education Code §35145(b), which provides in part that an agenda of the meeting must be posted in accordance with the requirements of §54954.2 of the Government Code. Government Code §54954.2(a)(1) requires that the posted agenda contain a “brief general description of each item of business to be transacted or discussed at the meeting, including items to be discussed in closed session.” That statute further provides that “[n]o action or discussion shall be undertaken on any item not appearing on the posted agenda…” California Government Code §54954.2(a)(2).
Since (i) the Agenda for the April 9, 2009 special meeting failed to provide any language regarding the Board’s consideration or decision regarding adding Superintendent Gordon to the Original PARS Plan; (ii) there was no mention in any Board agendas of including Jim Zoll in the Original PARS Plan; and (iii) there was also no mention whatsoever in any of the Board meeting agendas of the Addendum to PARS Plan or including certificated non-management employees in the Original PARS Plan, the Board had no authority to transact such business.

LACK OF OVERSIGHT BY BOARD
The Board allowed Superintendent Gordon to negotiate and execute a retirement plan that would directly benefit Superintendent Gordon. The Board was well aware of Superintendent Gordon’s plans to retire and members of the Board have recently gone so far as to defend Superintendent Gordon’s participation as a beneficiary of the PARS plan. The Board expressly authorized Superintendent Gordon to participate in the making of the PARS plan as evidenced by the Board meeting minutes referenced above. Further, when Dr. Haslip questioned the legality of Superintendent Gordon’s participation in the PARS plan due to Gordon’s conflict of interest, Dr. Haslip never received an answer from Board President Ines DeLuna.
Section 9000 of the Board Bylaws states that the Board “has been elected by the community to provide leadership and citizen oversight of the district.” Further, Section 9005 of the Board Bylaws provides that “[t]o maximize Board effectiveness and public confidence in district governance, Board members are expected to govern responsibly and hold themselves to the highest standards of ethical conduct.” The Board failed to provide any oversight in this case. In fact, the Board unambiguously supported Superintendent Gordon’s actions, while keeping the public in the dark and violating the Brown Act in the process. The Board is culpable for Superintendent Gordon’s violation of Government Code Section 1090.

HALEY’S PARTICIPATION
As stated above, Assistant Superintendent Rob Haley was also intimately involved in the making of the PARS plan. He signed the Original PARS Plan and was present at the Board meetings at which the PARS plan was discussed and approved. It was well known during the period that the Original Plan was proposed that Superintendent Gordon had expressed the intent to retire soon. Dr. Haley knew about the PARS plan and the Board’s actions to approve the plan and include Superintendent Gordon in the plan, and yet Dr. Haley sat by and did nothing. If Allan Gordon were to retire, Dr. Haley would be the most likely candidate to replace Superintendent Gordon. This has been borne out by guest commentaries written by Board members for the St. Helena Star. See “School Board Will Listen But Don’t Bash Haley,” Guest Commentary by Board Member Carolyn Martini, St. Helena Star, April 30, 2009. (Attachment 16) Eligibility to participate in the PARS plan would give Superintendent Gordon added incentive to retire early.
The California courts have stated that “the term ‘financially interested’ in section 1090 cannot be interpreted in a restricted and technical manner. The law does not require that a public officer…share directly in the profits to be realized from a contract in order to have a prohibited interest in it.” People v. Honig (1996, Cal App 3d Dist) 48 Cal App 4th 289, 315. Further, “[t]he fact that the officer’s interest ‘might be small or indirect is immaterial so long as it is such as deprives the [state] of his overriding fidelity to it and places him in the compromising situation where, in the exercise of his official judgment or discretion, he may be influenced by personal considerations rather than the public good.’” Id. (quoting Terry v. Bender (1956) 143 Cal. App 2d 198, 207-208).
Dr. Haley benefited from Superintendent Gordon’s wrongful actions to include Gordon in the PARS plan and should be held accountable for his participation in such activities.

CONCLUSION
Under the express terms of the Original PARS Plan, Superintendent Gordon and Principal Jim Zoll are not eligible to participate in the PARS plan because the Original PARS Plan applies to certificated non-management employees of the SHUSD, the enrollment period for the plan had expired on November 21, 2008 and a new cost-benefit analysis had not been completed and approved for Gordon and Zoll.
Pursuant to Government Code Section 1090, and relevant case law, the Addendum to PARS Plan is void. Therefore, Superintendent Gordon and Jim Zoll are not eligible to receive any benefits under the PARS plan. Additionally, Superintendent Allan Gordon may be subject to criminal penalties for his actions with respect to the PARS plan.
The Board has also violated the Brown Act by failing to post any information in a meeting agenda regarding the Addendum to PARS Plan and the inclusion of Superintendent Gordon and Jim Zoll in the PARS plan.
The Board breached the trust of the public by misleading them about the true cost of including Superintendent Gordon and Jim Zoll in the PARS plan. Including Superintendent Gordon and Jim Zoll in the PARS plan will cost the SHUSD $345,762.55. Excluding Superintendent Gordon and Jim Zoll from the PARS plan will cost the SHUSD nothing, as these individuals have already submitted their letters of resignation to the Board.
The Board and Dr. Haley have engaged in such a level of involvement in this matter that they are liable for the consequences of their actions, as well as the actions of Superintendent Gordon.

Therefore, the following is hereby requested:
1. The Board acknowledge that the Addendum to PARS Plan is void and therefore Superintendent Gordon and Jim Zoll are not entitled to receive any benefits under the PARS plan;
2. Due to their participation in this very serious matter and their violation of the public trust, the Board members tender their resignations immediately;
3. The Board remove Superintendent Gordon from office immediately pending an investigation into the conflict of interest issues raised herein; and
4. The Board remove Dr. Haley from office due to his involvement in this very serious matter.

For a copy of the attachments listed below, please send an email to: citizens4qualityed@gmail.com.

Once we determine how to post a pdf file to our blog, we will post the attachments. Sorry for the inconvenience. Thank You.

Attachments:

Attachment 1 (Minutes September 18, 2008)
Attachment 2 (Board Resolution #08-03)
Attachment 3 (Agreement for Administrative Services)
Attachment 4 (September 29, 2008, memo from Superintendent Gordon to St. Helena Teachers Association)
Attachment 5 (2008-09 PARS Supplementary Retirement Plan)
Attachment 6 (Minutes December 11, 2008)
Attachment 7 (Execution Agreement -Addendum for Supplementary Retirement Plan)
Attachment 8 (Agreement for Custody Services)
Attachment 9 (Minutes January 15, 2009)
Attachment 10 (Minutes April 9, 2009)
Attachment 11 (Government Code Sections 1090 – 1099)
Attachment 12 (Board Policy 9270)
Attachment 13 (E-mails between J. Haslip, C. Martini and I. DeLuna)
Attachment 14 (Estimated cost of early Retirement Package prepared by C. Howatt)
Attachment 15 (Spreadsheet showing the real cost of adding Gordon and Zoll to PARS)
Attachment 16 (“School Board Will Listen But Don’t Bash Haley,” Guest Commentary by Board Member Carolyn Martini, St. Helena Star, April 30, 2009)