Friend of Rep. Borris Miles runs Costa Rican ‘medical tourism’ firm; HISD approves $600K contract with doc linked to same firm
Wednesday, Jul 13, 2011, 07:55AM CST
By Trent Seibert & Jennifer Peebles

A state lawmaker and Houston schools vendor who arranged all-expenses-paid trips to Costa Rica for Houston schools trustee Larry Marshall has a friend and business associate who runs a Costa Rican medical tourism company — the same company that played a major role in the medical tourism event Marshall attended in Costa Rica in November.

State Rep. Borris Miles, a Democratic state House member from Houston whose insurance agency services some of the Houston schools’ flood insurance policies, is an associate of DiCarlos Davis, a Houston businessman who is CEO of International Healthcare Access. The firm’s website touts weight loss services, cancer treatments, dental care and cosmetic procedures that are available from its affiliated doctors in Costa Rica.

Records show Davis’ firm was a major participant in the November medical tourism “familiarization trip” that Marshall attended in Costa Rica, a trip Miles has said he arranged. Miles has said he wants to help people lower their health care costs by exploring medical tourism.

Also representing Davis’ company at that November event in Costa Rica, public records indicate, was Kenneth D. Wells, a Houston doctor to whom the Houston Independent School District is giving a $600,000 no-bid consulting contract as an adviser on employee health care issues.

Agenda item regarding consultant Kenneth Wells

Wells is an advocate of medical tourism, in which people travel to other nations to receive medical treatment or undergo procedures that would be much more expensive in the U.S. His consulting firm’s online bio says his “work on medical tourism” is “one area of innovation” for him, and Wells is slated to deliver a speech Wednesday on medical tourism to a group of Houston human resources professionals at the DoubleTree Guest Suites hotel on Westheimer Road. He did not return a call for comment for this story.

Miles has said the Costa Rican government picked up the expenses when Marshall and others went on the four-day “familiarization” trip — called a “fam trip” in medical-tourism industry lingo — last November. Miles had extended the same offer to most of the Houston Independent School District’s trustees, and has said he has also offered it to other school systems’ trustees and other politicians as well.

The revelation of the ties between Miles and Davis come at a time when HISD’s business practices are under increased public scrutiny.

Texas Watchdog recently reported that HISD trustees president Paula Harris — she is a friend of Miles; he is godfather to Harris’ children — voted four times on $28 million in contracts that included work for a firm owned and run by another of Harris’ close friends, while HISD also hired the friend’s firms to do more than $100,000 in no-bid work ranging from tracking down truant teens to dry cleaning drapery. Texas Watchdog also recently reported that another friend of Harris’, Demetra C. Jones, the wife of Harris’ campaign treasurer, had been paid $75,000 in no-bid work to arrange after-school classes and programs.

The closeness of HISD officials to people who have business interests before the district worries some.

“Whatever the talk, whatever speeches are being made, so much of what is happening at HISD doesn’t really seem to be about educating kids,” said Mary Beckner, an HISD parent. “Students are being used as a shield for the money to be made.”

GROUP TRIP TO SAN JOSE

Marshall, Wells, Davis and Davis’ wife, Myra, all flew to San Jose, Costa Rica’s capital, on the same flight last November, records show: Continental Flight 1528, nonstop, economy class, out of Bush Intercontinental. Also on the flight with them was Charles Coonrod, an executive for an employee benefits brokerage firm called Foundation Strategies that has done business with HISD, along with a staffer of the trust that provides health insurance to Metro Transit Authority employees.

Zeph Capo, a staffer for Houston’s largest teachers’ union, the Houston Federation of Teachers, has also said he went on the trip, but Capo’s name does not appear on the same flight reservation with the others. His boss, union chief Gayle Fallon, has said the Costa Rican government has been “hustling” HISD on medical tourism.

Wells and Coonrod also appear with Marshall and others in a group photo taken on the trip that Texas Watchdog found on Miles’ Facebook page several weeks ago.

Marshall has said he made two trips to Costa Rica last year, in April and November, both arranged by Miles.

The abbreviation “IHCA” appears next to both Davis and Wells’ names in the November event’s glossy color schedule, which says both Wells and Davis would give presentations during the opening day talks at San Jose’s DoubleTree Cariari hotel on the benefits of medical tourism.

International Healthcare Access’ name and logo is displayed prominently on the November medical tourism conference schedule, along with those of the Council for International Promotion of Costa Rica Medicine, also called ProMed, and Costa Rica’s tourism bureau.

International Health Care Access’ website lists Davis as CEO of the firm; business corporation registration records on file with the Costa Rican government list Davis as the firm’s “gerente” — Spanish for manager or director.

Texas state records show Davis runs, has run or has been involved in a number of small businesses in Houston, including the firms TMA Risk Services, DatasorsConsulting, Vortel Inc., and Epix-GHS Inc.

When a photographer for the Houston Chronicle captured Miles celebrating his win over incumbent Al Edwards in March 2010, Miles was shown enjoying the triumph with Davis, whom a caption for the newspaper’s online edition described as Miles’ “business partner.”

Reached by phone Tuesday, Miles said he was in the insurance business with Davis and sometimes uses Davis as a consultant. He said he has no business interest in International Healthcare Access.

Davis and his wife have given Miles $11,250 in campaign donations over his political career, all in 2005-06, according to records from the Texas Ethics Commission. (Miles bested Edwards for the House District 146 seat in 2006, but Edwards returned to beat Miles in 2008.) And a person identifying himself as Borris Miles donated $250 toward Davis’ charity run in the 2011 New York City Marathon, according to the charity’s Web site.

Reached by Texas Watchdog on his cell phone Tuesday, Davis asked that questions be sent to him via e-mail. He had not responded to the e-mail as of presstime.

Davis also has a business tie to Harris. When Davis’ firm DatasorsConsulting sought to do business with the city of Fort Worth last year, online records show the firm listed as its address 315 W. Alabama St., the Montrose office building owned by Harris and her husband, and from which the Harrises run multiple businesses. (However, the company’s official registered address with the state is near the West Loop.)

While Miles told the Houston school trustees that his office would handle the arrangements on behalf of Costa Rica’s tourism ministry, e-mails made public by the school system indicate the plane reservations for the November trip for Marshall, Wells, Coonrod, Allen and others were on one itinerary, connected to Davis’ e-mail address, and all linked with Davis’ Continental Airlines frequent flyer account number.

DOC INKING DEAL WITH HISD

Meanwhile, the exact nature of Wells’ affiliation with IHCA is not clear.

The conference schedule doesn’t elaborate on his connection to the firm or why he was there as its representative. He is not one of the two people identified publicly on Costa Rican government documents available online for IHCA’s corporate registration.

And IHCA is not mentioned on Wells’ LinkedIn profile or his official online bio from his Houston-based health-care consulting firm, called Alken Health Resources, which advises employers on health care issues.

HISD trustees, including Marshall, voted June 23 to approve contracting with Alken, paying up to $640,000. The contract is still being negotiated, the school system said in an e-mail last week. HISD and many other government agencies do not require competitive bids to be sought for professional services.

Wells “provides unique services in medical cost containment as a licensed physician with extensive corporate health care plan management experience,” reads a summary of Wells’ services given to HISD trustees prior to their vote.

The summary listed numerous steps the Houston district had taken to help employees stay healthy and cut health care costs, such as employee assistance programs and over-the-telephone “wellness coaching,” and told the trustees that “Alken Health Resources’ healthcare industry expertise as well as the knowledge of the medical community will provide key resources and strategies to integrate these programs, establish appropriate measurable goals, evaluate program effectiveness, and provide key support and intervention to ensure the success of these programs.”

With roughly 30,000 employees — the district is one of the largest employers in Houston — the rising cost of employee health care is a major issue for HISD which, like many school systems in Texas, is trying to make ends meet in the face of severe cutbacks from the state and a down economy.

Medical tourism isn’t mentioned anywhere in the material given to the trustees before they voted, though it does mention “domestic medical travel” as a cost-cutting HISD initiative.

A brochure available on Alken’s Web site lists “international travel health services/medical tourism” as one of numerous example solutions for employers trying to stop the spiral of workers’ health care costs. And he’s a member of three LinkedIn groups concerning medical tourism, including “Medical Tourism & Travel Developers.”

In addition to being president of Alken, Wells also is medical director of Xenith Group, a financial services firm launched by two whistleblowers from Allen Stanford’s failed financial empire.

“Other health and wellness specialties include providing companies with a corporate medical director on a contractual basis and medical tourism consulting,” reads Xenith’s description on the LinkedIn networking service.

With both a medical degree and a master’s in business administration, Wells’ resume includes a stint as medical director for oil-and-gas giant Tenneco. He is also a former board member of the Christus Health System and of Houston’s Saint Thomas University, and is a former U.S. Army National Guard Flight Surgeon of the Year, according to his LinkedIn resume.

The “fam trip” in Costa Rica last November took participants on tours of clinics and hospitals where medical tourism procedures are performed. All three hospitals listed for visits on the schedule are also listed on International Healthcare Access’ site as being affiliated with the firm.

The trip also featured relaxation in hot springs for the attendees along with trips to a volcano, zipline rides and sightseeing at a suspension bridge, according to the event schedule.

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Contact Jennifer Peebles at jennifer@texaswatchdog.org or 281-656-1681. Follow her on Twitter at @jpeebles or @texaswatchdog. Contact Trent Seibert at 832-316-4994 or trent@texaswatchdog.org. Follow him on Twitter at @trentseibert or @texaswatchdog.

Lynn Walsh contributed to this story.

Wife of Houston ISD trustees president Paula Harris’ campaign manager does $75K in no-bid consulting for HISD
Tuesday, Jun 28, 2011, 08:55AM CST
By Lynn Walsh and Jennifer Peebles

The Houston school system has paid the wife of the school board president’s campaign treasurer $75,000 in no-bid work over the last two years as a consultant, arranging classes and after-school programs on subjects including CPR, English as a second language, jazz dance and parenting.

Demetra C. Jones, the wife of prominent Houston lawyer Franklin D.R. “Frank” Jones Jr., and her businesses have been paid $78,110 by the Houston Independent School District since 2009, records released by the school system show.

Frank Jones is the campaign treasurer for Paula Harris, who was elected to the HISD trustees in 2007 and who became the trustees’ president in January. Frank Jones has also done legal work for the Houston schools, including serving as lead negotiator for the school district when it hired current Superintendent Terry Grier away from the San Diego, Calif., schools two years ago.

Demetra Jones is the former longtime head of human resources and risk management for Harris County Precinct One, working under County Commissioner El Franco Lee for two decades. She previously served as office manager in City Hall for state Sen. Rodney Ellis when he was a Houston city councilman some 20 years ago, and was public affairs manager for Ellis’ Houston investment bank, Apex Securities, according to two resumes available online.

She has a master’s degree in education from the University of Houston, and she has taught in the past at both U of H and Lone Star College, her resumes said.

None of the work done by Demetra Jones and her firms was subjected to competitive bidding, and none of it was ever subjected to a vote by the HISD trustees. Individual school principals and HISD department heads made the decision to hire Jones’ firms, a district spokesman said.

Trustees’ votes aren’t required for individual consultant agreements worth less than $25,000 each or less than $100,000 in the aggregate, HISD spokesman Jason Spencer said in an e-mail. A formal “request-for-proposal” process is not required for hiring educational consultants.

Records show the work done by Jones’ companies was billed in dozens of separate expenses of usually several hundred dollars or a couple thousand dollars at a time. “The services were requested in accordance with current procedures,” Spencer said.

The school district put the amount paid to the Jones’ businesses at $74,700.

Demetra Jones did not return phone messages left for her by Texas Watchdog. Frank Jones did not return phone messages or an e-mail for comment.

“HISD needs to have an arm’s-length policy between their board and their contractors or vendors,” said Andy Wilson with Public Citizen of Texas. “It may be that (Jones) was the most qualified person to run these programs — but when she’s awarded a no-bid contract and has financial and political ties to the chair, the public is going to catch a whiff of that and be outraged.

“This could be innocent, but there’s no way to be certain.

“Between this and other recent issues, HISD needs to take a good, hard look at rewriting their ethics rules. Especially in our schools, and especially in this budget crisis where dollars are so precious, we need to insure our school money is going to the most qualified, lowest cost people, not the politically or financially connected ones.”

The revelation of Jones’ work for HISD makes her the second close friend of Harris found to have been paid thousands of dollars by the school system for no-bid work. Texas Watchdog has previously reported that HISD paid companies connected to Pearland businesswoman Nicole C. West for services including private investigations work to find truant teens, dry cleaning drapes and tutoring elementary school students. Harris also voted four times to approve a total of $28 million in HISD contracts that included work for one of West’s firms.

Meanwhile, both Texas Watchdog and the Houston Chronicle have recently reported that HISD trustee Larry Marshall traveled to Costa Rica last year on an all-expenses-paid trip funded by the Costa Rican government and arranged by state Rep. Borris Miles, an insurance agent who also services some of HISD’s flood insurance.

Harris declined to comment to a reporter who approached her after last Thursday’s school board meeting. She also did not return phone messages for comment or respond to a list of e-mailed questions from Texas Watchdog. But in public comments she made during the Thursday meeting — a couple of hours after Texas Watchdog supplied HISD with an extensive list of questions for this story — Harris defended what she said were her many friendships with HISD vendors and others working in and for HISD.

“That presentation we saw (during the meeting) is dedicated to the 12,000 teachers, all of the principals, all of our partners, all of our vendors, all of the folks that provide a great service and provide great added value to the Houston Independent School District. And I’m not ashamed ever to say that I’m friends with some of ‘em. … Sometimes it’s hard to be my friend. They’re gonna do a story every week about my friends, I’ve got so many friends in this district, so many places I sit on (in) this district. But that’s fine. Just know,” she said, echoing something Jesus told his disciples in the book of Matthew, “if you don’t deny me, I won’t deny you.”

ABOUT THE CLASSES

The class offerings Demetra Jones has arranged for HISD are varied.

Among the classes she and her company Training & Leadership Consulting, also sometimes called Training Leadership & Consulting or TL Consulting, arranged for HISD, records show:

$2,100 to put on CPR and rescue breathing classes this fall for second- and third-graders in the health science magnet program at Whidby Elementary;
A total of $10,000 to lead GED and English-as-a-second-language classes for parents at Ortiz Middle. Records are unclear as to whether the payment was for 200 total hours or instruction or for 220 hours of each subject.
$2,250 to put on jazz dance classes at Scarborough High this past spring;
and $2,600 for 13 Saturday ESL classes for parents at Lewis Elementary.
TL Consulting is “… deeply involved in learning about the educational state-of-the-art, investigating research and designing instructional materials,” reads a testimonial attributed to Ortiz Middle on the company’s website, along with this one from Lewis Elementary: “Training Leadership & Consulting have exceptional certified instructors … making a difference in our schools.”

Meanwhile, records show another of Jones’ firms, the FDR Group, was paid $5,040 for preparing Sterling High students for the Texas Assessment of Knowledge and Skills tests last October, and another $3,900 to put on parenting classes last September. HISD’s online check register shows checks for those amounts — but written on different dates — made out directly to Demetra C. Jones last fall, with Jones having the same HISD vendor number as the FDR Group.

The school district can’t just make teachers work in after-school programs without paying them more for it, Spencer said: “In many instances, vendors who provide after-school programs do so at a lower cost rate than teachers.”

TL Consulting application for all-girls academy after-school programs
TL Consulting application for all-girls academy after-school programs

The school district said it has no consulting agreements for the new all-girls’ academy that is slated to launch this fall. But TL Consulting has had on its website recently a downloadable PDF application for after-school programs at the all-girls’ school, with offerings as varied as robotics, lacrosse and “Wacky Writing.”

“Young Women’s College Preparatory Academy After School Program provided by Training and Leadership Consulting Inc.,” the application reads. “For questions regarding all offerings, please contract Demetra Jones, TLC Inc.,” it says, and lists TL Consulting’s phone number and e-mail address.

The PDF was available on TL Consulting’s website as recently as early yesterday afternoon — but it appeared to have been removed from the website later in the day.

KEEPING UP WITH THE JONESES

Frank Jones has been Harris’ campaign treasurer since at least 2008, online campaign finance records show. Harris also confirmed Frank Jones was her campaign treasurer in a recent interview with Texas Watchdog for a previous story.

Demetra Jones was also the contact person for a $250-a-head campaign fundraiser for Harris that was held one evening last week at the posh Tony’s restaurant on Richmond Avenue. Invitations for the event, one of which was obtained by the West University Examiner, asked people to mail checks to Demetra Jones at the same 315 W. Alabama St. address as the office building where Paula Harris and her husband, Dwayne, base multiple businesses they run. The Harrises own the building, according to property records.

When it first sought certification as a minority business from the Houston city government in 2009, TL Consulting reported that one of its largest previous jobs was $300 in training it put on for DPM Investments, Paula and Dwayne Harris’ investment firm, though the company submitted $600 worth of invoices from DPM to back up its application.

“Demetra’s experience includes planning, developing and implementing human resource strategies; preparing new hire recruitment policies; structuring development training programs; and developing educational, health and safety seminars,” Demetra Jones’ online bio says. “Mrs. Jones’ services have been acquired by local governmental offices, school districts and private business entities.”

TL Consulting’s address is listed in much of the HISD paperwork as a residence on MacGregor Way, south of the Texas Southern University campus — the same address where both Frank and Demetra Jones are registered to vote. However, one document Jones filed this month with HISD lists the company’s address as 315 W. Alabama St., the Harrises’ office building.

Harris County records show Training and Leadership Consulting is a registered assumed name, commonly known as “doing business as,” with Demetra Jones as the owner. (Though the firm calls itself “Training and Leadership Consulting Inc.” on its Web site, and uses the “Inc.” on HISD paperwork, the Texas Secretary of State’s office had no record last week of a corporation by that name, or a TL Consulting, tied to a Demetra Jones. Demetra Jones also signed off on HISD paperwork as recently as this year indicating the firm is a sole proprietorship or individual, not a partnership or corporation, and city of Houston records show the company is a sole proprietorship.)

Frank Jones is listed as the registered agent of the FDR Group, a limited liability company, in business records from the Texas Secretary of State’s office.

A current co-chairman of the Houston Library Board, Frank Jones is a prominent attorney specializing in public finance and government issues. His official biography from his law firm, Greenberg Traurig, lists among his major accomplishments as playing a major role in the creation of the Reliant Park complex, Minute Maid Park and the Toyota Center.

Frank Jones is also HISD’s appointee to the authority in charge of redeveloping Houston’s Old Spanish Trail/Alameda Road neighborhood. He was appointed by the Harris County Commissioners Court to the board of the Gulf Coast Waste Disposal Authority.

APPROVING THE WORK

In three cases, records indicate the classes put on by Jones and her firms began even though there wasn’t enough money in the proper budget fund to pay for them — but school principals moved money around and made it happen.

TL Consulting was to put on GED and ESL training at Ortiz Middle School between Sept. 27, 2010, and May 21 this year. But budget officers wrote as late as Nov. 19 that there were “not enough funds” to pay for it, records show. Two weeks later, the funds had been made available.
FDR Group was hired to put on TAKS preparation classes Oct. 4-18 for the juniors and seniors at Sterling High School. But as late as Nov. 10 — which would have been after the classes had ended — HISD’s legal office complained to the high school that there weren’t enough funds in the budget, records show. That day, money was moved around to pay for it.
TL Consulting was hired to put on $20,000 worth of after-school enrichment programs at Alcott Elementary between Sept. 7, 2010, and July 8, 2011. But as late as Sept. 13, HISD’s legal office said there were “no funds in (the) budget” for it, records show.
At the same time, five sets of classes appear to have begun before two of HISD’s top administrators, the district controller and general counsel, signed off on the contracts for them. In two cases, records show the two administrators signed off on the contracts after the classes were already supposed to be over:

The TAKS prep classes at Sterling High were slated to end Oct. 18. But HISD General Counsel Elneita Hutchins-Taylor didn’t sign the contract for the classes with FDR Group until Nov. 11, and HISD Controller Kenneth Huewitt didn’t sign until six days after that, records show.
For a second set of GED and ESL classes at Ortiz Middle, slated to run Sept. 27-Dec. 17, HISD’s top lawyer didn’t approve the contract until Jan. 3, and the controller approved it four days after that.
In most of the cases, Jones and her firms were hired not at the request of HISD’s central office but at the request of individual school principals and the manager of HISD’s after-school programs, records show.

Sterling High Principal Leviticus Williams wanted Jones’ companies hired to prepare juniors and seniors for the TAKS test last fall, and wanted Jones’ firms hired to put on parent enrichment classes at the school this spring, records show. Williams did not return an e-mail message or multiple phone messages left at his school office.

Also not returning an e-mail or phone message was Jonnelle Hollins, the after-school chief. Her name appears on documents as requesting to hire Jones and her firms for eight after-school and GED/ESL programs, including those at Oates, Alcott and Blackshear elementaries and Worthing and Scarborough high schools.

“Evaluating the qualifications of (an educational) consultant is the responsibility of the school/department” hiring them, Spencer said. To hire an educational consultant, the school is required to submit to HISD’s Finance Department the consulting contract and a W-9 tax form, he said.

HISD, which has nearly 300 schools, has long had a culture of empowered principals. HISD principals, for instance, largely set their own schools’ budgets, based on the funds they’re allocated by the central office.

FRANK JONES’ LEGAL WORK FOR HISD

While the school system was hiring his wife to arrange after-school programs, HISD also hired Frank Jones to take the lead on cutting the deal to bring Grier to Houston from California two years ago.

F. JONES
The firm was to be paid a flat $20,000 for its services in negotiating with Grier, along with any travel or out-of-pocket expenses incurred, according to HISD’s agreement with the firm.

HISD relied on Frank Jones even though his firm, Greenberg Traurig, does not appear on the list of law firms that the district trustees approved for legal services in June 2009 for school year 2009-10. But the vote on that annual list also allows the school system to hire additional lawyers on an as-needed basis without additional approval from the trustees, Spencer said.

Greenberg Traurig was picked for the job by the school board’s Superintendent Search Committee, Spencer said. HISD signed a contract with Jones and Greenberg Traurig in August 2009, and the district inked its contract with Grier the following month.

However, Greenberg Traurig’s name does appear on the list of law firms for school year 2011-12 that district trustees voted to approve last Thursday night. Harris abstained from the vote but did not offer an explanation of why she abstained.

Greenberg Traurig is one of five law firms that had to recently pay back money to Harris County for “unsubstantiated travel and entertainment expenses incurred during trips to sell county bonds,” the Houston Chronicle reported. An internal audit showed outgoing county Financial Services Director Edwin Harrison went on out-of-town trips, including travel to Costa Rica, with attorneys doing bond work for the county. The firm paid back about $128,000, and could lose another $175,000 in billing the county is challenging.

“Our hope is that we’ve repaid the money back and we’re done with it,” Frank Jones told the Chron. “Certainly, we felt we had a legitimate issue, but if the county decides that it doesn’t warrant payment, we’re done. They’ve been a great client to the firm, and we just want to put it behind us.”

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Texas Watchdog Editor Trent Seibert contributed to this story. Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850. Contact Jennifer Peebles at jennifer@texaswatchdog.org or 281-656-1681.

Houston ISD tech vendors spent ‘significant funds’ to entertain trustees Larry Marshall, Manuel Rodriguez, court filing alleges
Thursday, Jun 23, 2011, 09:08AM CST
By Lynn Walsh and Jennifer Peebles

Vendors selling computer equipment to the Houston public schools spent “significant funds” to entertain school trustees Larry Marshall and Manuel Rodriguez, attorneys representing whistleblowers and the federal government allege in court documents, calling the payments “unlawful” and “designed to secure business from” the Houston schools.

Meanwhile, the court documents also allege that one of the Houston Independent School District’s top officials in the early part of the last decade, Cathy Mincberg, had an extramarital affair with a consultant whom the school district paid more than $5 million — a consultant she was reported by the local press to have had a hand in hiring.

The federal government has taken over as lead plantiff in the lawsuit, and court filings do not elaborate in court filings on what, specifically, the “significant funds” included or how much money was involved. Calls for comment to the plantiff’s lawyers were not returned.

The revelations come on the heels of reports that a Houston schools vendor, insurance agent and state Rep. Borris Miles, offered to arrange all-expenses-paid trips to Costa Rica to most of the school system’s trustees last year — and that Marshall went on two of the trips. It also follows reporting by Texas Watchdog that school trustees president Paula Harris voted on $28 million in contracts that included work for a company owned and run by one of her closest friends.

Rodriguez disagreed with the federal government’s claim that “significant funds” were spent on him. “I wouldn’t say anything over $50, I don’t think,” Rodriguez told Texas Watchdog earlier this week, recalling receiving nothing other “other than a dinner or two and a possible (ball) game.”

Marshall referred questions to the Houston schools’ press office.

Neither Marshall nor Rodriguez — nor former trustee Diana Davila, who was named along with them in court documents — have been charged with any crime; in fact, the case in question is a civil matter. In it, the plantiffs accuse an intertwined network of tech vendors of showering Houston Independent School District trustees and administrators with gifts and freebies and of using their close connections to HISD personnel to keep competitors at arms’ length from the school system.

“These unlawful payments, designed to secure business from” the Houston Independent School District, the court filing reads, “were part of the reason that HISD has been unable to participate in E-Rate funding and has incurred substantial fines/penalties, all to the detriment of HISD students.”

Federal officials recently unfroze $70 million in federal technology funding for HISD through the program, called E-Rate, which puts computers and networking equipment in schools. To settle the case, the school district also agreed to pay an $850,000 fine and stepped up its ethics policies governing swag from E-Rate vendors, such as implementing a “quiet period” during the bidding process, in which E-Rate vendors can’t communicate with school officials.

The E-Rate scandal at HISD has largely focused on a handful of former top administrators in the district’s technology department, who are alleged in court documents and other public records to have received tickets to sporting events, trips out of state, fine meals, gifts of the latest gadgetry and even a $60,000 personal loan from those doing E-Rate business with the school system. But HISD’s trustees’ names have rarely come up in the mess — until now.

Davila she didn’t recall any of the E-Rate vendors spending any money on her or giving her any gifts, perks, meals or ballgame tickets, beyond some campaign contributions worth a total of $1,500.

“I wasn’t privileged,” Davila, who stepped down from the HISD trustees last year. “Maybe I wasn’t privileged, or I should be saying ‘Thank God I didn’t,’” she said with a laugh. “I guess I didn’t look like the athletic type or something — they figured I’m a female I don’t like sports, and they’d be right.”

Even when she got the campaign contributions eight years ago, she said, she had no idea who the donors were — and no idea of the controversy they would cause in the years to come.

“I had no idea who they were, just like so many others who give money,” Davila said. “I don’t know what business or what type of business they do with HISD, or if they do any business with HISD. When you have these fundraisers and people host them for you, you don’t think to sit there and ask, ‘OK, are you doing business with HISD?’, because, you know, that’s not relevant at a fundraiser, I don’t think.”

The vendors spent the “significant” entertainment funds for the three trustees even though HISD specifically warned vendors about such actions when it put out “requests for proposals” for E-Rate projects in late 2002, the plantiffs alleges in another court filing.

“Supplier conduct: No gratuities of any kind of will be accepted including meals, gifts or tips. Violation of these conditions will subject the supplier to immediate disqualification from the proposal process,” the school district’s RFPs said, according to the feds.

However, Houston school trustees have said in the past that they have accepted travel and gifts, such as tickets to sporting events like Houston Rockets basketball games, and that they feel allowed to do so under a provision of the HISD ethics policy that allows them to receive freebies as “guests.” For instance, when queried about his acceptance of the Costa Rica trip, Marshall told the Houston Chronicle that he understood he did not have to disclose such gifts because Miles, the arranger of the trip, was present on it.

The suit also alleges Mincberg, who was HISD’s chief business officer from 2000 to 2004, was having an extramarital affair with an HISD consultant.

The consultant in question was one the school system was paying $1,400 a day, Wade Jacobs, whom the Houston Press in 2001 called “HISD’s $2 million man”:

… in the last three years he’s become HISD’s Mr. Fix-it, master of its computer universe and major project guru to everyone from the superintendent on down. Since inking a district contract in 1999, Jacobs’s California-based Infinet Technology Group has been paid $1.74 million. A contract extension is potentially worth another $1.3 million through next year.

Jacobs and his firm stopped working with HISD in 2004, as did Mincberg, “around the time a story broke about on an HISD E-Rate investigation,” the lawsuit says.

“Jacobs was able to use his intimate relationship with Mincberg to benefit his friends who wanted technology business with HISD,” including several of the companies in the intertwined tech vendors who are the defendants in the case, the suit says.

A former biology teacher at Lamar High, Mincberg served as an HISD trustee from 1982-95 and did two stints as president of the trustees, but, according to the Press, she may be most widely remembered for once floating the idea that teachers should also drive school buses for an extra $10 an hour. She also made an unsuccessful bid for Houston City Council.

The suggestion that Mincberg and Jacobs were having an affair is not new and was mentioned in the Houston Press story from 10 years ago, which noted that Mincberg had divorced former Harris County Democratic Party chairman David Mincberg around the same time.

Mincberg later became a top official with the Portland, Ore., school system. She is currently the head of a Portland-based education nonprofit, the Center for the Reform of School Systems. She did not return a call for comment this week.

Houston E-Rate civil suit – third amended complaint
Houston E-Rate civil suit – third amended complaint

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Texas Watchdog Editor Trent Seibert contributed to this story.
Contact Lynn Walsh, lynn@texaswatchdog.org, 713-228-2850 or on Twitter, @lwalsh. Contact Jennifer Peebles at jennifer@texaswatchdog, 281-656-1681 or on Twitter at @texaswatchdog or @jpeebles.

HISD vendor state Rep. Borris Miles offered trustees all-expenses-paid Costa Rican trip, email shows
Thursday, Jun 16, 2011, 06:27PM CST
By Lynn Walsh, Trent Seibert and Jennifer Peebles

A state representative who services the Houston Independent School District’s flood insurance policy — and who is a close friend of two HISD trustees — offered to arrange an all-expenses-paid trip to Costa Rica to a majority of HISD’s trustees, according to an e-mail obtained by Texas Watchdog.

State Rep. Borris Miles, a Houston Democrat, offered in November to take most of the trustees to Costa Rica, saying he was arranging the free trip at the behest of the government of that Central American nation, the email shows.

It also shows Miles also offered to allow each trustee to bring along a guest, and wrote that the Costa Rican government would waive deductibles on “medical tourism” procedures, effectively offering the trustees and their guests deep discounts on the services.

It was not immediately clear whether any of the HISD trustees took Miles up on the offer. Three trustees reached by phone Thursday afternoon said they didn’t remember getting the e-mail. A fourth said he deleted it.

“I remember receiving it and thinking it was strange and deleting it,” said trustee Harvin Moore.

The revelation of the trip offer comes on the heels of Texas Watchdog’s recent story revealing that HISD trustees president Paula Harris, a close friend of Miles, voted on contracts that included work for a company run by another close friend, Pearland businesswoman Nicole West.

Multiple news stories in the past year have raised ethics as an issue in HISD, the nation’s seventh-largest school district.

One trustee resigned last year soon after she had tried to get her husband appointed to an HISD oversight board. And the federal government recently unfroze millions of dollars in HISD technology funding it blocked after it was revealed that HISD tech officers accepted big-ticket personal loans and other gifts and freebies from tech vendors.

HISD’s ethics policy says that “a public servant who exercises discretion in connection with contracts, purchases, payments, claims, or other pecuniary transactions shall not solicit, accept, or agree to accept any benefit from a person the public servant knows is interested in or likely to become interested in any such transactions of the District.”

Further down in the policy, it says that officials can accept “a gift or other benefit conferred on account of kinship or a personal, professional, or business relationship independent of the official status of the recipient,” and says that officials can accept “food, lodging, transportation, or entertainment accepted as a guest.”

“I’ll let the policy speak for itself,” HISD spokesman Jason Spencer said in response to a slate of questions sent via e-mail Thursday afternoon. In a statement sent to Texas Watchdog last week for a previous story, Spencer said the district “has one of the strongest ethics and conflict of interest policies of any school district in Texas.”

The e-mail from Miles does not specify why the HISD trustees would have a special interest in medical tourism.

“As you may be aware the concept of Medical Tourism/Travel is to provide employers, insurance companies and employees with competitive options for medical treatment by targeting select high value procedures,” Miles wrote in the e-mailed invitation. “Many of these procedures are being performed in other locations (Costa Rica being one), by highly trained physicians (many of them educated in the top U.S. medical schools) at hospitals that are JCI certified (the same international accreditation group that certifies US hospitals for international treatment) …

“For agreeing to be a part of the tour, the Costa Rican government is sponsoring all travel related expenses (airfare, hotels, ground transport, and meals). All travel arrangements are being coordinated
by our office.”

Phone messages left at Miles’ legislative office and his Houston insurance office were not returned Thursday afternoon.

“I don’t remember this email in particular, and I doubt that anyone took him up on his offer. We don’t take those kinds of trips,” trustee Manuel Rodriguez told Texas Watchdog Thursday afternoon.

“This is the first I’m hearing about Costa Rica,” said Greg Meyers, a trustee and former president of the trustees. “I’ve unequivocally never been invited anywhere out of the country by a vendor.”

Trustee Carol Mims Galloway also said she’d never seen the e-mail, and said she never uses her official Houston ISD e-mail account anyway, preferring to use a personal e-mail account. (Texas Watchdog is attempting to contact all nine of the trustees this afternoon, and will update TexasWatchdog.org with those comments.)

The e-mail was sent to Galloway, Rodriguez, Harris, Marshall, Meyers and Moore.

Miles is a close friend of both Harris and Galloway. In remarks at a school board meeting earlier this year, Harris said Miles was like a brother to her, and Miles said Galloway was like a “mother” him and had almost become his mother-in-law.

Trustees Mike Lunceford and Anna Eastman do not appear to have been copied on the e-mail offer, for reasons that were not clear. Current trustee Juliet Stipeche was not on the school board last November and was not copied on the e-mail, but the person whose unexpired term she filled, Diana Davila, was copied on the e-mailed invitation, even though she had resigned from the school board some months earlier.

Records made public by HISD Thursday afternoon show that HISD’s flood insurance is serviced by “Texas Farmers,” though the records do not identify the agent who sold or serviced any of HISD’s insurance policies. Miles’ agency is a Farmers Insurance firm.

His e-mail called the trip ” an important trade mission that could be a critical tool in helping us control healthcare cost in the U.S. … These procedures are being performed at a 50% – 75% reduction in cost. The result of which is, a reduction in claim cost which drive premiums down. While this will results in greater savings for U.S. employers (public and private), the win for the employees is that all deductibles are being waived and they are allowed to take a companion with them for the procedure, in addition to visiting some of the best locations in the world (in this case Costa Rica).”

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Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog or on Twitter at @lwalsh.
Contact Jennifer Peebles at 281-656-1681 or jennifer@texaswatchdog.org.
Contact Trent Seibert at 832-316-4994 or trent@texaswatchdog.org.

Houston ISD trustees president Paula Harris voted on millions of dollars in contracts involving close friend’s firms
Thursday, Jun 09, 2011, 06:07AM CST
By Lynn Walsh

When the Houston Independent School District has a problem, it increasingly looks to Nicole West to solve it.

Need schools painted or fences installed? HISD hired Nicole West’s firm Westco. Need security cameras and burglar alarms installed at schools? It hired Westco. Need drapes dry cleaned for a school auditorium? It paid Westco to do it.

Need elementary school students tutored in reading? HISD paid Nicole West to tutor them. Need a high school decorated for a rededication ceremony? It paid Nicole West. Need an ambulance on standby for a high school football game? It hired another of West’s firms, a small, private ambulance service.

And when the nation’s seventh-largest school district wanted to hire a private investigations firm to track down truant high-schoolers, it didn’t pick any of the big PI firms in Houston, some of whom have dozens of investigators and have been in business for decades. It instead hired a small firm, only a few years old, owned and run by Nicole West. With two licensed investigators today, the firm’s current legal address with the state is West’s residence in Pearland.

Those business contacts would suggest that West is a person of many interests and talents. Perhaps fittingly, a 2008 profile of West in a local magazine said she “ascribes her success to her ability to multi-task (and to) generate multiple streams of income.”

But she’s also one of the closest friends of the president of HISD’s board of trustees, Paula Harris. Harris is the godmother of West’s children.

Harris has voted four times to approve millions of dollars in school district contracts involving Westco, a Texas Watchdog investigation has found.

Aside from those contracts, West, Westco and three other West-owned firms have done thousands of dollars in business with the Houston schools — business that was not required to be put up for school board approval — since Harris was elected to the school board in 2007, records show.

In a phone interview with Texas Watchdog, Harris said her votes on contracts involving Westco were ethical and were not conflicts of interest. She said she never used her influence to help West or her firms gain business from HISD, but said a vote would be a conflict of interest only if the person involved were a relative.

“I can say that I don’t get involved or go over to (HISD’s) Procurement (department) or over to the business side,” Harris said. “The public can think what they want. She’s my friend … I’m very, very proud of her. And I think everybody should have smart friends.”

Harris voted last month, in April, last August and in 2009 to approve the Houston Independent School District hiring Westco Ventures to share in contracts to paint, put up fences and install security systems at Houston schools, records show. The total value of the contracts is $28 million, though Westco would be in line to receive only a fraction of that work; the school district’s online check register showed payments of $1.67 million to Westco as of last month.

Harris’ votes on the contracts involving Westco are entirely legal under state and local laws and ordinances and are allowed under HISD policies governing trustees’ ethical conduct.

But the allegations of a potential conflict for Harris, a first-term trustee who is up for re-election this year, come after a series of other ethical problems have rocked HISD and its leadership. School board member Diana Davila resigned last year soon after she had tried to get her husband appointed to an HISD oversight board, and the federal government recently unfroze millions of dollars in HISD technology funding it blocked after it was revealed that HISD tech officers accepted big-ticket personal loans and other gifts and freebies from tech vendors.

As head of the trustees for the nation’s seventh-largest school system, Harris is a prominent young Houston political figure. She has been nominated for induction this year to the Greater Houston Women’s Chamber of Commerce Hall of Fame. A petroleum engineer by training, she is head of community affairs for oldfield services giant Schlumberger.

In an e-mailed statement in response to Texas Watchdog’s questions, the school district stressed it works hard to be ethical, but reiterated that votes such as Harris’ break no laws or ethics rules.

HISD “has one of the strongest ethics and conflict of interest policies of any school district in Texas,” read the statement released by district spokesman Jason Spencer. (Read the complete statement, and Texas Watchdog’s questions posed to the district, here.) “The district’s conflicts of interest policies are significantly tighter than any restrictions in state law. To our knowledge, HISD was the first school district in Texas to adopt a local policy prohibiting businesses in which trustees, or trustees’ relatives, have a financial interest from contracting with the district.”

Aside from the contracts Harris voted to approve, records show that West, Westco and three other West-owned firms have done roughly $125,000 in business with the Houston schools since Harris was elected to the school board in 2007 that did not require the school trustees’ approval, records show, because of the relatively small amount of money involved in the individual projects.

Those payments include $19,200 to West’s private investigations firm to track down truants, $2,300 for Westco to restore and clean drapes for an elementary school auditorium, and $5,400 for another West firm to tutor elementary school students in reading.

The total amount paid to Nicole West’s firms by HISD is unclear. The district’s check register noted payments of almost $1.7 million to Westco, but the school district also turned over to Texas Watchdog a number of invoices — which appear to have been paid — from West and her companies that do not exactly line up with payments in the check register, for reasons that are not clear. The school district did not answer a recent question from Texas Watchdog addressing the discrepancy.

“Nicole has been sub(contracting) for the city, the county, the district and the state well before I got on the board,” Harris said. “So, if I needed to break off my friends because they’re smart and they have good companies, then I would be in big trouble, because most of my friends are smart and make lots of money, and, so, I can’t say that I would discontinue our friendship.”

WESTCO’S WORK FOR HISD

Harris was among the HISD trustees who voted unanimously in 2009 to approve a $10 million contract with nine firms — Westco and seven others — to install indoor and outdoor security cameras, fire alarms and intercoms at school buildings, meeting minutes show. The money was paid from bonds issued with voters’ approval two years earlier, HISD said.

Harris was also among the trustees who voted last August to renew that $10 million contract with Westco and seven other firms, minutes show.

In April, Harris and HISD trustees also unanimously approved Westco as one of four companies to share in a $5 million contract for painting at schools. A month later, in May, Harris and the trustees approved Westco to share with three other firms in a $3 million contract to put up fences at HISD schools.

The school district sought competitive bids on each of the four contracts, and the groups of companies chosen for each contract were voted on by the trustees only after HISD administrators reviewed the bids and made recommendations about which firms could do the best job for the lowest cost. The trustees did not vote up or down on each firm — they merely voted to approve the en masse recommendations from the HISD central office, the district said.

In the case of the $5 million painting contract, Westco had the lowest cost percentage for the job, records show, and had the lowest pricing in most categories of the services and materials involved. (Specifics regarding the bids on the two security camera contracts had not yet been released by HISD following Texas Watchdog’s public records request for them, filed last September. A follow-up request for those bid specifics, as well as a request for the specs on the fencing contracts approved in May, was sent to HISD earlier this month.)

View HISD payments to Nicole West and companies in a larger map

Registered with the state seven years ago as a limited liability company, Nicole West was listed as Westco’s president on the paperwork the company submitted to HISD as a potential vendor. Her husband, Anthony West, was listed as vice president, and another woman with the last name of West was listed as the corporate secretary. Records with the Texas Secretary of State’s office show Anthony West as the firm’s current “registered agent.”

Westco reported to HISD that it has 10 employees and offices on South Wayside Drive, just inside the Interstate 610 loop in the Gulfgate/Pine Valley neighborhood. A list of previous clients supplied by Westco to HISD said the firm had previously worked for the Plano, Richardson and Magnolia school districts as well as Paul Quinn University in Dallas.

Efforts to reach West by phone and e-mail were unsuccessful. Messages left in person last week at the locked doors of the South Wayside offices for Westco and another West-owned firm, First Alert EMS ambulance service, went unreturned.

“Our ethics statement talks about family…I really couldn’t vote on anything if it was people I know,” Harris said. “As long as I am not telling people to give her work, it is ethical,” Harris said.

HISD Superintendent Terry Grier has previously spoken critically of HISD’s contracting processes, saying without elaboration that there’s “no rhyme or reason except, quite frankly, influence where influence has no business coming from.” The school district’s two-paragraph statement, issued Monday in response to written questions from Texas Watchdog, did not include a direct response to questions regarding Grier’s opinion of Harris’ close friendship with an HISD vendor.

“There is no requirement in law for a school district trustee or, to our knowledge, any other elected official in Texas, to abstain from voting on a contract that has been recommended by staff, simply because the trustee or elected official might have a personal friendship with someone who works for or owns a business,” the district’s statement said.

However, there are recent instances in which at least one HISD trustee, Larry Marshall, a retired HISD school principal, abstained from voting on issues because of close personal relationships or legal battles with vendors or individuals.

TIES BETWEEN 2 OLD FRIENDS

Giving remarks in January as she was installed as the new president of HISD’s trustees, Harris recognized Nicole and Anthony West and identified herself as a godparent of the Wests’ children. She also said she and Nicole West were members of “a group of friends” who annually give toys to needy families, with Nicole West as the organizer of the effort.

Harris added that both she and Nicole West are godmothers to the children of state Rep. Borris Miles, D-Houston, whom Harris likened to a brother, and that Miles is also godfather to Harris’ children. Aside from his service in the legislature, Miles is also an insurance agent who has provided insurance coverage to HISD. He did not return calls to his insurance office in Houston or his legislative office in Austin for comment for this story.

Three years ago, Harris nominated West for inclusion in a “Moms Who Mean Business” feature for the Houston style publication DBA Magazine. West was featured in a 2008 edition of the magazine, which said:.

Many ask how she does it and without a doubt West is a multi-tasker that gets things done. If you ask West to describe the force behind her drive, she’s quick to provide this reply, “success”. West believes in accomplishing all her set goals to include family, marriage, and business. West ascribes her success to her ability to multi-task, generate multiple streams of income, and the support and leadership of a great husband with parents and in-laws playing an important supportive role.
Harris told Texas Watchdog that she and West have been “friends for close to 20 years,” and if West were a sister or a family member, it would be a conflict of interest. But because West is merely “an acquaintance or a friend or someone who I think does great business,” it is not, Harris said.

With Westco, Harris said she did not consider abstaining from voting and does not think she should have abstained.

Nicole West also donated $1,500 in February 2010 year to Harris’ re-election campaign, financial disclosures show. The two women also previously served together on the board of directors of Houston’s Ensemble Theatre group.

No one in HISD has raised an objection to Harris about her relationship with West, the HISD school board president said. “They probably would,” Harris said, “if I went to them and said, you know, ‘This is a company, this is a good company.’ But, since I don’t do that with anyone … They have no reason to raise a concern, because I’m not on the business side of this.” Besides the top administrators who oversee HISD contracts and the procurement department, she said she doesn’t know HISD’s procurement officers, she said.

Harris went on to say that she believes a “disgruntled contractor” who has lost HISD contracts to Westco has been complaining publicly about Harris’ friendship with West.

“He has been going around telling people, including the media, ‘I’m gonna take Paula Harris down because that’s how Westco has the contract,’” Harris said. She would not identify the individual or the company, saying it “is all hearsay, and that’s one thing” she doesn’t “report on.”

DROP-OUT INVESTIGATIONS

Another West firm that has done work for the school district is NCA Investigations, a private investigations firm that HISD hired to search for truant high schoolers, invoices and other documents show.

Because of the small amount of money involved — slightly more than $19,000 — HISD was not required to seek competitive bids for the work, and the school district trustees were not required to vote to hire the firm.

Site-specific work done

by Nicole West’s firms

View HISD payments to Nicole West and

companies in a larger map

NCA was started by Nicole West in 2001, according to state documents, with West as the president and Anthony West as treasurer. The company’s offices are listed on state records as the same Pearland address where Nicole and Anthony West live; Nicole West is licensed by the state as a private investigator, and state records available online this week showed at least one other licensed PI currently working for the firm.

When HISD hired NCA in fall 2008, the firm was to “commit up to 10 private investigators” to locate missing students’ addresses and conduct on-site interviews to determine why the students were not showing up for classes, according to its contract with HISD.

Tracking down high schoolers who have gone AWOL and getting them back to school — and getting them diploma-worthy — is a key goal for Houston’s urban school system where, a couple of years ago, the dropout rate was about 16 percent. And attendance figures are a crucial part of state and federal funding formulas that largely determine cash-strapped school districts’ budgets.

But how successful West’s firm was in its search for HISD’s truants is unclear today. Invoices the firm submitted to the school district list only the schools involved and do not describe the results or identify or quantify the students being tracked down. Nor do the invoices offer the kind of point-by-point accounting of investigators’ time that is a standard in many private investigators’ billing practices.

NCA’s contract with HISD said the company would provide a “thorough report” to the school district on its work. But the school system doesn’t have that report, HISD’s public information coordinator told Texas Watchdog last fall.

Despite that, HISD paid NCA a total of $19,200 in late 2008, according to invoices marked as approved by HISD staff and internal HISD payment records.

“To the best of our knowledge, these have been the only two times we have” hired private investigators to find truants, Spencer said in an e-mail response to a question from Texas Watchdog, though he added that it would be difficult for the school district to easily find among its files records for companies hired for that specific type of service.

The company was chosen by staffers at two of HISD’s regional offices at the time, and neither of those regional superintendents still work for the Houston school system, Spencer said — their jobs were done away with entirely in a recent reorganization. “They would have had to answer this question,” Spencer said in an e-mail in response to a question about how NCA was chosen.

However, the contracts with NCA were approved and signed by two top HISD officials at the central office who are still on the job — the district’s top lawyer, Elneita Hutchins-Taylor, and the current controller, Kenneth Huewitt.

The “Moms Who Mean Business” profile of West said NCA “has contracts with ATT, HISD, City of Houston, City of San Antonio and several insurance companies.”

HISD did not answer follow-up questions about NCA’s work, including a request to identify the regional superintendents who approved the hiring or whether the school system approached NCA or the other way around.

OTHER WORK FOR HISD

West’s business entities have also performed extensive work for HISD on other matters in which the costs of the individual projects didn’t meet the threshold requiring the district trustees’ approval, records show.

Westco was paid $76,000 for emergency repairs to ceilings and floors of schools damaged by Hurricane Ike in 2008, invoices and payment records show.

The firm’s first job for HISD was in December 2007, records show, when the company did $1,185 in cleaning school air ducts. Harris was elected to the HISD school board the previous month.

Westco also did dry cleaning and restoration on auditorium drapes at McDade Elementary School in Kashmere Gardens in late 2008, costing $2,300, district records show.

Another of West’s firms, First Alert EMS, was paid $600 to post an ambulance on standby for four hours at the football game between Milby and Reagan high schools at HISD’s Barnett Stadium on Aug. 29, 2009, records show. Nicole West is president of First Alert, a firm that was set up in 2006, state records show. West’s “Moms Who Mean Business” profile said the firm had a fleet of 18 ambulances; its offices are next door to Westco’s.

And the district paid West herself $5,400 by check in early 2008 for tutoring third, fourth and fifth graders at Hohl Elementary in the Independence Heights neighborhood in reading, HISD invoice and payment records show. The goal of the 24 hours of tutoring to the 40 students was to “increase knowledge to ensure success on state exams.”

Though the check was written personally to West, the district’s contract was with another West firm, Onsite Technology, records show.

The “Moms Who Mean Business” profile identified West as president and CEO of Onsite, which it said “provides support to schools with her team of tutors and professional trainers.” However, a search of business records with the Texas Secretary of State’s office this week turned up no records connecting a firm called Onsite with a Nicole West.

HISD did not respond to any of Texas Watchdog’s questions about how or why West, or Onsite, was hired to tutor students.

Previous to Harris’ 2007 election to the school board, the school system had paid or directly contracted West and her firms just once, records indicate — she was paid $1,200 for decorating Wheatley High School in the Fifth Ward when it was rededicated in fall 2006, records show.

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Contact Lynn Walsh at 713-228-2850 or lynn@texaswatchdog or on Twitter at @lwalsh.

Texas school systems hang on to big-bucks reserve funds while laying off teachers
Tuesday, May 10, 2011, 08:06AM CST
By Lynn Walsh and Steve Miller

Texas’ largest school systems are laying off teachers by the hundreds and thousands while hanging on to the tens of millions of dollars in their “rainy day” and reserve funds — and some in those communities, including some teachers, say that’s a bad idea.

The Houston public schools, the state’s largest school system, has laid off more than 700 teachers to solve its budget crunch while having $279 million in reserves. The Dallas schools are considering laying off more than 1,110 employees and expect to have $85 million to $95 million in reserves at the end of the fiscal year. And the San Antonio public schools have more than $63 million in reserves, though they have found other jobs for teachers who faced threats of layoffs.

None of the three systems currently plans to dip into those bank accounts to save teachers’ jobs, though their budget proposals for the next fiscal year are in varying states of flux.

“I think they should be using the rainy day fund,” said teacher Susan Wingfield, who will be laid off at the end of this school year after 11 years in the Houston schools, the last seven teaching art at Lamar High. “We need to educate these students … We need to spend money on teachers’ salaries to do that instead of laying them off.”

The Austin and Amarillo public school systems both plan to use some of their reserves to plug their budget holes and prevent or reduce layoffs, spokesmen for those districts said. The Austin schools have $165 million in reserve and plan to use $43 million of it, while the Amarillo schools don’t yet know how much of their $55 million in reserves they will spend.

But school officials in some districts say they need to keep their rainy day funds for an even rainier day than today. And some say the state should spend its rainy day money first, before school districts dip into their own reserves.

A reserve fund “is not money that just sits there,” said Amy Beneski, director of governmental affairs for the Texas Association of School Administrators.

The state of Texas does not require a public school district to keep money in a savings or reserve account, nor does it specify how much money a school district should keep in reserve, according to both Allen Spelce, a spokesman for the state comptroller, and DeEtta Culbertson, a spokeswoman for the Texas Education Agency.

However, the amount of a school district’s reserves factor into its bond ratings, a sort of credit rating for public entities. The worse the bond rating, the more it costs to borrow money.

“The rule of thumb is about two (to) three months of operating capital,” Culbertson said.

That’s a problem for some school districts already. Dallas would need about $150 million to run its schools for two months, but has less than $100 million in the kitty. Two months of running the San Antonio schools would cost $67 million, spokesman Leslie Price said, but the school system is short a few million dollars toward that goal.

“For us, the challenge is that we have to make ends meet for a year or two, but can’t go too deep into the fund,” Dallas ISD spokesman Jon Dahlander said. “It’s just not there. With that $85 million or $95 million, with the current projected cuts in the legislature — the House wants $126 million – we’d bottom out completely.”

The amount of reserves also figures into the state’s rating system for school districts’ financial integrity, called FIRST. It requires school systems to “maintain approximately 60 days of operating expenses in their general fund account,” Culbertson said.

The school systems have a right to worry about drawing down their reserves and hurting their ratings, said Lonnie Hollingsworth of theTexas Classroom Teachers Association. “I’m sure that’s justified. But some districts have more than the suggested two months in reserve. And in a regular year, I’d say they need to be spending that on teacher salaries, but this time around, it’s going to save teacher jobs.”

The Austin schools will still have three months of expenses on hand after drawing down $43 million from its reserves this year, AISD spokesman Andy Welch said. The system has cut more than 1,100 jobs through attrition and layoffs, including 500 teachers laid off, he said.

The Houston schools have reserve funds in two accounts — the rainy day fund, holding about $80 million, and the “undesignated fund balance,” which holds about $199 million, the district’s financial head, Melinda Garrett, recently told trustees.

Houston has “never tapped into the rainy day fund,” HISD spokesman Jason Spencer said in an e-mail. With about $130 million a month in operating expenses, the $279 million on hand would likely keep the 200,000-student system running for about two months.

Six of Houston’s nine school trustees told Texas Watchdog in recent interviews that they did not oppose using some of the district’s rainy day fund to ease the school systems’ budget crunch, though all six also said the state legislature should first dip into the state’s rainy day fund to help school districts across Texas.

“I am not opposed,” trustee Manuel Rodriguez said. “There might be a possibility of taking $10 million out of one of the funds to help plug the hole or reduce the gap, but, you know, once that money goes away, it doesn’t come back very easily.”

Also supporting the use of some reserve money were HISD trustees Harvin Moore, Mike Lunceford, Carol Galloway, Anna Eastman and Juliet Stipeche. Unable to be reached for comment were Larry Marshall, Greg Meyers and trustees president Paula Harris.

“I am not saying we won’t use it,” Moore said. “But the state needs to do all they can from their rainy day fund before school districts use their reserve funds.”

The state’s rainy day fund receives money from oil and gas production taxes, said R.J. DeSilva, a spokesman for the state comptroller. Currently there is $8.2 billion in the fund, though $3 billion of that is likely to be tapped to fill the state’s budget shortfall for the current fiscal year.

“The state can afford to let some of that money go,” Galloway said. “They should release some of that money for education, because if we don’t educate our young people, I can just imagine what situation we will be in ten years from now.”

But local school districts’ rainy day or reserve funds generally must come from property taxes, and they can be slow to build up.

“No one is expecting the budget to get any better in 2013, so they are holding on to it,” Beneski said.

And there’s always the chance of some major unforeseen catastrophe on the horizon. Rodriguez recalled how, when Hurricane Ike hit the Gulf Coast in 2008, the Houston schools had to shut down for several days — but still had bills to pay during that time. (Hurricane expenses were actually paid by the school system’s insurance carriers and not out of the rainy day fund, Spencer said.)

“Something has to be able to sustain unforeseen emergencies and needs,” Rodriguez said.

He compared the reserve funds to an individual retirement account.

“You have your IRA and you lose your job. You don’t run to liquidate your IRA right away…You look for other jobs, you find ways to survive without having to go and dismantle your retirement plan. So, that’s where we are. I am willing to dip into it, but not in large quantities to where we destabilize the district’s financial stability.”

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Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850 or on Twitter at @lwalsh. Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org

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Houston ISD’s Teach for America teachers stronger in some test areas, weaker in reading, than counterparts: Study
Monday, Jul 11, 2011, 03:50PM CST
By Lynn Walsh

Teachers from the nonprofit “Teach for America” program leave the Houston Independent School District at higher rates than their non-TFA counterparts, and their students’ performance record is mixed when compared to their counterparts, a district study shows.

While TFA teachers make up twice the share of HISD’s new teachers than they did a few years ago — nearly 1 in 3 new HISD teachers was a TFA’er in 2009-10, the study says — the TFA teachers are also leaving at faster rates than their counterparts, the internal study found.

“Forty-four percent of the 2005−2006 non-TFA new hires returned to HISD in 2010−2011 for their sixth year of service in HISD, while only 9 percent of the 2005−2006 TFA new hires returned to the district in October 2010,” the report says.

At the same time, however, for the first time in five years, retention rates for TFA teachers was greater than non-TFA teachers for those beginning their second year of teaching in HISD.

HISD has hired more than 600 teachers from TFA, a national education nonprofit that helps urban and rural school districts meet their teaching needs, in the last five years.

The hiring of TFA teachers by HISD has increased 15% since 2005, while the overall number of new-teacher hires in the district has decreased during that same time period, the March memorandum shows.

Students taught by TFA teachers in 2009 and 2010 performed better on the state Texas Assessment of Knowledge and Skills test in both math and writing than those taught by non-TFA members, the memo says. In 2010, students taught by TFA teachers also scored better on state tests in science and social studies.

The report goes on to say that in 2009, “the difference was not significant … Both groups had comparable passing rates on the reading and science tests.” The report says the difference between the scores of students taught by TFA teachers and non-TFA teachers earned in 2010 was “statistically significant” in math, science and social studies, with students taught by TFA teachers performing better.

However, in reading, students taught by non-TFA teachers performed better, a difference that was “significant,” the report says.

The findings of the study aren’t “surprising or alarming” based on what TFA aims to do, HISD spokesman Jason Spencer said in an e-mail. He also said it is “not surprising that TFA teachers outperform non-TFA teachers in some areas and that non-TFA teachers do better in other areas. This is why HISD is committed to staffing schools with a mix of great teachers of various backgrounds and experience levels.”

This month HISD trustees approved $600,000 to be used next school year for the district’s Teach for America program.

The partnership between HISD and TFA began in 1991 and in recent years has expanded to include more teachers, including a push for math teachers to work in the schools in the district’s turnaround program, called Apollo 20.

Local and state leaders have questioned the benefits and cost of the program while others sing the organization’s praises. A recent state study on the Texas investment into the program showed similar results to HISD’s: TFA teachers leave earlier but show better student achievement results in math.

From Russia, with love? HISD procurement chief tries to find Russian bride online for subordinate
Friday, Jul 08, 2011, 08:32AM CST
By Lynn Walsh and Jennifer Peebles

“I live in Russia and am simple woman with good heart.”

“I the young woman, me of 29 years, I the blonde live in Russia, city Vologda.”

“I hope that you that the man which are possible can not only my friend, but also grow fond of me.”

Earl Finley needed to get married, his boss thought. So Stephen Pottinger did what any caring boss would do: He asked Finley for his personal e-mail address — and then, without telling Finley his plans, he went to online dating sites that specialize in connecting American men with Russian women, assumed Finley’s identity, and communicated with lovely Russian ladies who then sent Finley rambling e-mails (and photos of themselves) about how they were lonely and were looking for a guy with a good heart like him.

Just one problem: Finley had a girlfriend. One more problem: He didn’t care for his boss secretly trying to set him up with a Russian online dating service. Oh, and one more: Pottinger also played a practical joke on him in which he sent a subordinate to take Finley empty boxes, indicating Finley had been fired.

Pottinger is head of procurement for HISD, the nation’s seventh-largest school district, and Finley, his employee, is HISD’s head of procurement for cafeteria services. As Ericka Mellon writes in the Houston Chronicle, Pottinger is also being criticized for allowing hundreds of thousands of dollars in supplies being allowed to languish in HISD’s warehouse.

(Mellon writes that the stuff in the warehouse included $800,000 worth of hand sanitizer that was about to expire. Note all the teachers and parents commenting on her story to say their schools sure could have used it, though, as of this writing, I don’t see any who clearly identify themselves as HISD teachers or parents. Note to self: Research how much hand sanitizer $800,000 will buy you. Given how much of the stuff you can buy in a jug at Sam’s Club for $3, I am afraid to ask. Also: Research why hand sanitizer expires.)

As punishment, HISD made Pottinger write Finley an apology letter and take a management class.

Read the complaint letter, and the e-mails from the Russian ladies, below. (Click on the link to see it larger.)

From Russia With Love: Houston ISD procurement chief tries to find mail-order bride for subordinate.
From Russia With Love: Houston ISD procurement chief tries to find mail-order bride for subordinate

Houston teachers’ union rep went on all-expenses-paid Costa Rica trip with trustee Larry Marshall, Rep. Borris Miles
Friday, Jun 24, 2011, 08:03AM CST
By Lynn Walsh

A representative of Houston’s largest teachers’ union went on one of the all-expense-paid trips to Costa Rica offered by Houston school system vendor state Rep. Borris Miles last year — after a union leader says the group “didn’t want to get cut short” by the Houston school system.

Zeph Capo, an executive board member for the Houston Federation of Teachers, said he went on the trip, which Miles arranged and for which the Central American nation’s government picked up the tab.

“I went because they were potentially looking at a plan where they would ship our employees overseas to have medical stuff done,” Capo told Texas Watchdog. “So, went down there to look and see what that stuff was.”

Capo said he believes he went in April of last year and that no other Houston Independent School District trustees except for Larry Marshall were on the trip with him.

“I knew the Costa Rican government was hustling the district about this,” federation president Gayle Fallon said in an interview with Texas Watchdog. “It was like, ‘OK, I’m not takin’ the trip.’ I didn’t feel right about it. I don’t think it’s good for the president of the local (union) to ever take trips for potential vendors.” Instead, she said, she sent Capo.

An e-mail obtained by Texas Watchdog shows that Miles, a Houston Democrat, offered to take most of the HISD trustees to Costa Rica. Miles also services HISD with flood insurance and is a close friend of two HISD trustees.

In an interview with Texas Watchdog, Miles said he has offered the trip to “school boards across the state” including Dallas ISD. Miles said he “offered it to many of the representatives here in the House. I’ve offered it to union groups. To any people of influence,” and he said that by offering the trip he “didn’t do anything wrong.” (He also offered the trip to a Texas Watchdog reporter who talked with him.)

Fallon says it was Miles who approached her about the trip. “My first thing was, ‘No we don’t do that,’” she said. She said she was unsure about the offer at first, but then Miles “said, ‘Look, it’s the government of Costa Rica,’” she said. “(Miles) said, ‘They really have something that could help your teachers,’ and I said, ‘I’m not gonna do it but I’ll send one of my staffers.’”

“I don’t take trips from vendors,” Fallon said. “In fact, we have probably a stronger conflict-of-interest policy than the (Houston school) district does.” She said the union policy puts a “$50 limit” on gifts.

HISD’s ethics policy allows trustees to accept “a gift or other benefit conferred on account of kinship or a personal, professional, or business relationship independent of the official status of the recipient,” and says that officials can accept “food, lodging, transportation, or entertainment accepted as a guest.”

Marshall, a long-time HISD board member, told the Houston Chronicle last week that he didn’t see the need to disclose the two trips because the vendor, Miles, was present on the trip. District records show an approved board agenda item from February 2011 where “Miles Insurance Agency,” the same firm owned by Miles, was awarded the district’s flood insurance contract through the National Flood Insurance Program.

Miles is also close friend of both HISD trustees president Paula Harris and trustee Carol Mims Galloway. In remarks at a school board meeting earlier this year, Harris said Miles was like a brother to her, and Miles said Galloway was like a “mother” him and had almost become his mother-in-law.

The revelation of Marshall going on the Costa Rica trip is one of many recent media stories about HISD trustees and their close relationships with district vendors. A Texas Watchdog investigation found that board president Paula Harris voted to approve $28 million in district contracts with a business owned by a close friend. Harris also told the Houston Chronicle she had taken trips with the same friend, Nicole West, including a trip to Italy this year, but paid her own way. Marshall has called the recent media coverage “blatant racism.”

“It’s too easy to get in trouble with a vendor,” Fallon said. “Even if something isn’t wrong, it sometimes looks wrong.”

Fallon defended the two trips to Costa Rica Marshall accepted from Miles, and a trip HISD Trustee Harvin Moore took to China organized by the College Board, a national education nonprofit, though she said she would have sent one of her lieutenants.

“What Larry and Harvin did…isn’t illegal, depending on their actions when they get back,” Fallon said. “And you know, that’s only if there’s no kickbacks and things like that … I, personally, if I had been offered that as a board member, I would have done the same thing that I did in my (union) office — I’d (have) a sent a staff person…You never get in trouble sending a staff person to look at it in person. That is defensible, because then people believe you were looking it instead of ‘Oh, paid vacation time.’”

The e-mail from Miles offered each trustee the chance to bring along a guest, and wrote that the Costa Rican government would waive deductibles on “medical tourism” procedures, effectively offering the trustees and their guests deep discounts on the services. Capo said he did not bring a guest and says, “I didn’t leave the hotel other than for the hospital visits or for dinner.”

Capo said there was an “exhibit hall” set-up for him and other guests to visit but the “other big part of it was the visits” to doctor’s offices and hospitals. “You had the option of going to several different hospitals or maybe to some of the hospitals and the dental clinics and that sort of thing.”

When he got there, Capo said he realized “it was certainly a lot more than HISD there … There were people from a whole lot of organizations, coming from Houston and all over the country.”

Miles also told Texas Watchdog there were more than HISD and Houston people at the conferences. “More than 200 benefits professionals, business owners and public officials from across the U.S. have attended this conference,” Miles said in a written statement. (Read the full statement here.) “As best we can tell, the public officials number … less than 2 percent. Which is really bad, because innovations tend to come to the public sector last.”

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Contact Lynn Walsh, lynn@texaswatchdog.org, 713-228-2850 or on Twitter, @lwalsh.

‘Blatant racism,’ Houston ISD trustee Larry Marshall says of Texas Watchdog, Houston Chronicle ethics coverage
Friday, Jun 17, 2011, 05:35PM CST
By Lynn Walsh

A Houston school trustee who went on all-expenses-paid trips to Costa Rica arranged by a politico who does business with the school district says he has probably voted on school contracts involving companies owned or run by friends — and there’s nothing wrong with that.

Larry Marshall, a four-term trustee of the Houston Independent School District, said there was nothing wrong with those votes or with the votes cast by trustees president Paula Harris, who voted to approve contracts involving a company owned by a close friend. He also labeled as “racism” the recent coverage by Texas Watchdog and the Houston Chronicle concerning ethics in HISD.

In a brief phone interview this afternoon, Marshall said having a friend involved with a school district vendor shouldn’t prompt a trustee to recuse themselves. “Number one, it’s not a requirement” to do so, he said. “Number two, simply because you serve on the board, you don’t end your relationships with friends. You are a volunteer on (the) board of education, and that should be an issue that should be totally separate.

“I think it would be extremely inappropriate to start removing yourself from voting on a contract simply because you have a friend. Members of your culture have done it for years — it’s never been an issue. It only becomes an issue when it happens to someone who is a part of an underrepresented group.”

A retired HISD educator and administrator outside his service as a trustee, Marshall also called recent coverage of the ethics issue by Texas Watchdog and the Houston Chronicle “blatant racism.”

“It’s very crystal clear. Read today’s paper,” Marshall said, referring to the story by Chronicle education reporter Ericka Mellon about Marshall’s acceptance of free Costa Rica trips arranged by state Rep. Borris Miles. “It leads with (a) trustee or something in Ericka’s column, but when you read through all of her column, they mention Harvin Moore at the very end of the article. It’s blatant racism. blatant. and I want you to understand that. It is blatant racism. … Harvin Moore gets mentioned at the end of the story. Hell, that group that sponsors him, they are a vendor (to HISD).”

Marshall is African-American. Moore, a fellow HISD trustee, is white and told Mellon he recently went on a trip to China arranged by the College Board, the organization that sponsors programs like the SAT tests, and which has done business with HISD. The school district paid $900 for the trip, Mellon reported.

Texas Watchdog left a message for Moore this afternoon but it had not been returned as of press time. If he calls back, we’ll update this story or post again. Same for Mellon and her editor at the Chron, whom we have e-mailed to give them the chance to respond if they wish.

Asked whether he personally had ever voted on contracts involving firms owned or run by friends, Marshall said, “I have many friends in this community from various racial and ethnic background … and I’d have to think that I have. … Friendship is not mentioned anywhere in the statutes. Nowhere does it say you are precluded from voting on a contract because of a friend.”

Asked if he were concerned about public perception in the wake of the coverage of his Costa Rica travels, Marshall asked, “Why should I be concerned? They can vote me out. They’ve had that opportunity on four different occasions and they have chosen that it’s not become an issue because you’ve chosen to make it an issue.”

Marshall declined to identify anyone who attended the campaign donor dinner he held in April in Costa Rica while on one of the trips arranged by Miles, which were funded by the Costa Rican government, saying only, “they were members of the delegation that attended, and I think if that were released, that really needs to come from the sponsor.”

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Contact Lynn Walsh at lynn@texaswatchdog.org or at 713-228-2850 or on Twitter @LWalsh.