School takeover group’s payment to ex-lawmaker raises ethics questions

An ex-North Carolina lawmaker received financial benefits for his work with a nonprofit that stands to win a state contract with the public school takeover program he helped create, documents obtained by Policy Watch show.

A state disclosure form shows Rob Bryan, a former Charlotte legislator who now sits on the UNC Board of Governors, received at least $5,000 in 2017 as a “stipend” for his work with Achievement for All Children, Inc. (AAC), a Forest City-based nonprofit that’s in the final stages of negotiating a school takeover contract with the State Board of Education.

The contract is with the state’s Innovative School District, a controversial initiative that would allow private groups like AAC, as well as for-profit companies, to win control of a handful of low-performing, traditional public schools in the coming years. In 2016, Bryan co-sponsored the bill that created the hotly-debated program, which is set to launch in a Robeson County elementary school this fall. Proponents like Bryan say the initiative will spur a fresh approach in long-struggling schools.

The disclosure form Bryan completed, which was due to the State Board of Elections and Ethics Enforcement this month, does not require that the former lawmaker specify the amount received, only that he received more than $5,000.

On the form, Bryan—who did not respond to Policy Watch requests for comment—also noted that he was paid at least $10,000 for “board service/consulting” in education last year, although it’s unclear whether that amount pertains to AAC. Bryan also sits on an advisory board for the May 20^th Society, a Charlotte-based historical society that he described, like AAC, as “educational” on his form.

As Bryan lost his re-election bid in November 2016, the payment would not be a violation of state ethics rules, although it’s likely to spur renewed criticism of the move to ink a contract with a nonprofit that’s deeply entangled with the N.C. General Assembly and the state’s school choice movement.

“I do have now another bad taste in my mouth for this bill,” said N.C. Rep. Bobbie Richardson, a Franklin County legislator and former public school administrator who serves as Democratic Whip in the state House.

Eric Hall, superintendent of the Innovative School District, indicated he wasn’t aware of the payment when contacted by Policy Watch this week, although he said no state dollars disbursed to Achievement for All Children would be used to compensate board members like Bryan.

Bryan, an attorney who served in the state legislature from 2013 through 2016, was a participant in the Teach for America program, which places college graduates in low-income schools across the U.S. Today, however, he’s an executive with Cardinal Innovations Healthcare, an organization that disburses state Medicaid dollars for mental health services.

Hall’s state office will control the bulk of the $2 million in state and federal funding for the struggling Robeson school, Southside-Ashpole Elementary, but AAC would receive a state-paid management fee, as well as access to funding used to hire the school’s principal.

A five-year budget prepared by AAC during the application process this year requested a $100,000 “management fee” in Year One, although the fee would grow by $10,000 annually.

Hall said State Board of Education attorneys and AAC are still negotiating over the contract’s final details, including the management fee. Members of the State Board of Education are expected to vote on that contract at their monthly meeting next week.

State board members tapped AAC for the job in a split vote this month, with several members expressing angst over the group’s very limited experience. AAC formed in February 2017 with close ties to TeamCFA, a national charter network that’s signed a contract to partner with AAC on the Robeson County takeover. That work, according to AAC’s budget, will include professional development and accounting services.

Powerful players wearing multiple hats

AAC’s CEO, Tony Helton, serves in the same role for TeamCFA. Helton is also a former state charter adviser who stepped down from his appointment last year after some questioned the ethical implications of AAC and Helton’s involvement in the prospective takeover of a Charlotte charter.

TeamCFA and AAC share board members Brad Miller, of California, and Philip Byers, who also holds a seat on the UNC Board of Governors with Bryan. The AAC board includes a third member of the UNC board too, school choice advocate Darrell Allison.

Allison’s statement of economic interest, like Bryan’s report, also disclosed at least $5,000 in “professional fees” from AAC, although Byers’ disclosure form was not available at press time. An ethics commission official said Byers failed to turn in his report by the April 16 deadline.

Byers may be subject to fines if he does not ultimately provide the report, although the ethics commission official said individuals who don’t turn in their reports on time often need to be reminded.

Meanwhile, TeamCFA’s founder, Oregon school choice booster John Bryan (no relation to Rob Bryan), bankrolled lobbying for the Innovative School District in North Carolina.

Indeed, in a 2017 letter to the charter network’s employees, John Bryan wrote that the new state law could allow private entities like TeamCFA to “gain permanent ownership and control” of traditional public schools if they are able to boost performance.

“If our organizations can show how this works for the good of a community, this approach could expand to other states, hopefully across the country!!” John Bryan wrote. “How exciting that would be!”

Public school advocates and many Democrats have been bitingly critical of such privatization efforts in the state’s public schools.

State campaign finance reports show John Bryan donated generously to Rob Bryan and other, mostly Republican, school choice proponents like former Gov. Pat McCrory, Lt. Gov. Dan Forest, N.C. House Speaker Tim Moore and Senate President Pro Tem Phil Berger.

From 2013 to 2016, Rob Bryan’s campaign received more than $22,000 in contributions from John Bryan, state reports show. At one point, in December 2015, Rob Bryan’s campaign was forced to return $5,100 to the Oregon school choice booster because the contribution exceeded the state’s $5,200 limit for donations in an election.

Helton, Byers and Allison did not respond to Policy Watch interview requests for this report. Earlier this month, Helton said he wouldn’t comment until after the application process was complete.

Conflict of interest?

This month, AAC and TeamCFA’s entanglements with the legislature and Rob Bryan prompted criticism from top public school advocates in the N.C. Association of Educators and the Public School Forum of North Carolina.

Yet it seems clear that the former state lawmaker’s receipt of cash from AAC isn’t breaking any laws, according to Norma Houston, an expert in government ethics at the UNC School of Government.

“The State Government Ethics Act, which imposes restrictions on financial conflicts of interest for public officials subject to this Act, only applies while the individual is either a candidate for a covered office or serving in a covered office,” Houston wrote in an email to Policy Watch.

“There is nothing in state law that prohibits the post-office holding situation you describe … where the financial benefit occurs after the individual has left office (assuming there is no impermissible conduct while the individual was still in office that lead to the financial benefit once he left office, but the information provided does not suggest that this is the case in this situation).”

State Board of Education Chairman Bill Cobey declined to comment because he said he’s not involved in the contract negotiations with AAC, although Rep. Richardson—who voted against the ISD’s creation in 2016—said she’s left with many concerns about the state deal with AAC and Rob Bryan.

“I think it puts a question over his motives,” Richardson said. “My question would be: Did he have knowledge of this prior to leaving the General Assembly? Was this part of the whole process?”

Richardson added that lawmakers should consider a new law that would require a six- to eight-month buffering period for ex-legislators before they could benefit from any of the laws they helped to pass, similar to the existing “cooling off” time before lawmakers can become lobbyists.

Hana Callaghan is the director of government ethics at the Markkula Center for Applied Ethics at Santa Clara University in California. Regardless of North Carolina law, she says the ethics of the Bryan case make for a “tough call.”

“As public officials have a duty to maintain trust in government, they have a duty to avoid even the appearance of impropriety,” Callaghan said this week. “Now, taking a seat on a board of directors and getting (at least $5,000), does that raise to the level of impropriety? That’s a subjective test.”

Callaghan said her center, which advises public officials on knotty ethical dilemmas, often stresses the need for a “balancing act.”

“On the one hand, we want good people to run for office, which means we don’t want to penalize them when they leave public service,” she said. “They need to be able to enter the private sector again. But on the other hand, we don’t want them to benefit financially from their public service because that creates improper incentives.”

And while Callaghan pointed out that other lawmakers, and not just Rob Bryan, approved the 2016 bill creating the Innovative School District, Callaghan said cases like this might lead some in the public to believe—right or wrong—that legislators are taking “quid pro quo” payments from lobbyists in exchange for their lawmaking.

“Public officials, because they’re in a position of trust, they have fiduciary obligations to the public they serve,” she said. “And one of their fiduciary duties is the duty of loyalty, which is to put the public’s interest before their own personal or political interests. The question is: Was this legislation entered into because it was going to further his personal financial interests or was it something that he truly believed was for the public good?”