Pending Litigation: The Other Budget Crisis

The ESUHSD community might have missed an important line item in one of the many documents submitted by the ESUHSD administration to the budget task force this past year. As one of hundreds of proposed cost-cutting measures, the line item suggested the District could save a few thousand dollars by cutting its legal expenditures. But one look at any Board meeting agenda suggests the ESUHSD District will not have the luxury of lowering legal expenditures any time soon.

Look, for example, at page three of the May 19th board agenda. On top of an on-going discussion regarding ESTA v. ESUHSD, the lawsuit dealing with money acquired from the Quimby Oak land sale and its use in shoring up the general fund budget deficit, three other lawsuits were discussed in closed session, as was the impending threat of another lawsuit. That’s five lawsuits (four actual, one potential) in one Board meeting. Since these are discussed in closed session, it’s hard to determine the nature of these lawsuits. Are they unresolved grievances? Do they deal with parents, community members, or employees? Or are they special education lawsuits? Whatever the issue, the bottom line is each lawsuit carries an unnecessary cost that over-burdens an already cash-strapped district.

Special education lawsuits are fairly common, given the nature of California and Federal statutes. Most districts can expect at least one special education lawsuit per year, usually over a compliance technicality. Given that the state severely underfunds special education programs, lawsuits are an unavoidable reality until the disparity in the funding bureaucracy changes. But what of the lawsuits that result from contractual ignorance or inappropriate human behavior? Those lawsuits are costly, embarrassing, and ultimately avoidable. How many of the District’s lawsuits fall into this category? While Team Unruly cannot derive an exact figure, we can provide you, faithful reader, an insight into the Unruly research process.

Start by taking a trip to the district website. Pick a date, download an agenda, and check the “closed information” section for mention of litigation (go here: ) Once you find a phrase that catches your interest, head over to the Santa Clara County Superior Court Case Information website (here: ). Narrow the scope of your search as best you can, and see what comes up.

What you will find is a list of the lawsuits currently pending in the courts, or suits long ago resolved. Occasionally, a lawsuit winds up on the site for awhile, gets settled out of court, and is removed from the calendar. This seems to be the case with a recent lawsuit filed against a “principal” in the ESUHSD. The website, however, does not provide details, which is why the Unruly Advocate has a team of correspondents and sources. The particulars of this case? Though we cannot fully substantiate the details, Team Unruly believes the case has to do with a site administrator who accidently ran over a student’s foot in a golf cart. The parent sued the district for damages.

Other cases deal with mismanagement against a number of companies or organizations, and ESUHSD is named as one of the defendants. Such is the case with case #1-04-CV-012879, Phoenix Heating and Air Conditioning v. D.L. Falk Construction et. al. One might say this type of suit is as common as a special education case, but the cynic could argue that an incompetent Board without much ability to oversee contracted services led to the hiring of a disreputable construction company, as they famously did when building Evergreen Valley High School at 13 million over budget. (Read this Metro article: )

Then there is the tricky situation of personnel matters and contract violations. Esperanza Zendejas, Superintendent of the East Side Union High School District, is no stranger to violating contracts. While superintendent of Indianapolis Public Schools, Zendejas sent out a letter to all employees informing them that they did not have to pay union dues, what was deceptively titled as “fair share”. Though Zendejas was cleared of most of the accusations brought forth by the union, the case details fail to clearly mention that the “fair share” agency fee language, a means of union busting through legislation, was part of the comprehensive “Accountability Act” passed by the Indiana State Legislature. This Act gave Zendejas the power to throw out the IPS collective bargaining agreement. In other words, she adhered to the letter of the law, but not necessarily to the spirit of good faith bargaining; had it not been for the Accountability Act, Zendejas would have been responsible for a number of successive contract violations. (read here: )

While those who feel unions are responsible for public education’s failures might celebrate the violating of Collective Bargaining Agreements as a brazen type of “education reform,” the fact of the matter is a contract violation is illegal and costly. Those types of cases can skyrocket under the inattentive leadership of a belligerent petty tyrant. Take, for example, case #1-04-CV-017785, Ramon Martinez v. ESUHSD. Ramon Martinez had an extensive career in the ESUHSD. He started as a teacher, worked as a site administrator at a number of schools, and eventually found a comfortable job in Coto’s administration as the District’s grant writer. Some contend that Martinez was part of the infamous Coto “Good ol’ Boy” network. Other opinions run the gamut: most say he was ineffectual as a site administrator, some say Martinez collected a six-figure check for running and maintaining the district Karaoke machine, while a few claim, despite his flaws, he found his niche as the grant writer. At one point, Martinez was bringing close to 3 million dollars a year into the district coffers.

When Coto left, the dismantling of the perceived “Good ol’ Boy” network began, and Martinez was one of the first victims. Evidence suggests that Trustee Craig Mann in particular was searching for a way to destroy Coto’s credibility, fueled by political jealousy over losing an opportunity to run for the state assembly seat Coto now holds. (read here: ) Mann and Zendejas combed through an auditor’s report to find any politically damning or suspicious material. They found one finger in the district budget chili bowl: the Ernesto Galarza Institute.

The Galarza Institute, according to the Metro, is “a nonprofit booster group for Latino kids, [that] sells its social worker and support services to the East Side District.” (read it here: ) According to the Mercury News, the district paid $521,000 to the Institute over a five-year period, but only $178, 000 remains unaccounted and in question. According to the Institute’s representatives, the money was spent on a full-time social worker and a slew of interns. (You can read the whole Mercury article here: ) The controversy, from the district’s perspective, is the fact that when the institute was incorporated, Coto was listed as the CEO. Zendejas tells the Metro it is a suspicious conflict of interest; Martinez, who sat on the Institute’s Board with Coto, argues in the same article that the former superintendent incorporated the Institute in this manner to avoid red tape, but is not guilty of any wrong doing. Zendejas called for an investigation to see if Coto was drawing a salary from the institute, which would have come from district funds.

The simple math seems to favor the Coto camp’s version of events: $521,000 translates into $104, 200 dollars a year, which would about cover the costs of a full-time social worker, intern salaries, and minor expenses. What, then, makes this story newsworthy?

Perhaps it’s not the story, but the source.

Every article includes a line like this one from the November 2003 Metro: “Zendejas tells Eye that she ordered an internal review of the Ernesto Galarza Institute.” Or this one from a follow-up Metro article: “Zendejas tells the Fly that the preliminary results are in from district's internal audit of the Ernesto Galarza Institute, a nonprofit foundation founded by Coto to supervise social workers at East Side schools. So far, the district has found that of the $487,000 the district spent on Galarza, the institute provided only $343,000 worth of services. This means that $144,000 fell through a gaping hole. "We have discovered--now the word 'missing' would be too strong, perhaps a better word would be 'there's a hazy view.' We're not yet clear about where the moneys were spent," explains a baffled Zendejas.” (read the whole article here: ( ) The Mercury article best exposes Zendejas’ propaganda techniques. None of the District Attorneys, investigators, Coto or Martinez spoke to Mercury reporter Barry Witt; Zendejas was his primary source.

The headline atop the Mercury’s Valley section on May 25 screamed scandal: DA SEEKS SCHOOL RECORDS IN PROBE. Probe further into the article and one discovers some curious twists. First, “Jesus Orosco, who took over as board president of the institute when Coto left, said Tuesday that he had not been contacted by the district attorney.” In other words, Zendejas told the Mercury that the District Attorney was conducting an investigation, but the investigators had yet to contact the organization under investigation. Then we learn that “Orosco, director of services for the Mid-Peninsula Housing Coalition, said that the current institute board ordered its own outside audit of the organization's books and offered to turn the information over to the school district, but no one from the district asked for it.

"We didn't find anything that was improper,'' Orosco said. "Everything was in place.''

Zendejas said she recalled no such offer from the institute. If the institute paid for their own audit and the auditor found nothing criminal, where is the scandal? If this issue has been under scrutiny for over two years, would it not stand to reason that evidence of criminal activity would have turned up, especially when three different auditors were digging through the District’s financial books over the past six years?

The only scandal is the vendetta behind this duplicitous dirty laundry being aired in the Mercury News. Once Zendejas and Coto’s enemies found the hint of a scandal to exploit against Coto, Zendejas ran to the press. Team Unruly has learned that she did pay for an outside agency to conduct an investigation: they failed to turn up any evidence of wrong doing after a few months. This is the real reason why the district is not currently conducting their own investigation into the matter—they already did, but do not want to admit it. Immediately after she leaked the scandal to the Metro in November of 2003, Zendejas pulled one of her infamous administrative personnel shifts and sent Ramon Martinez to Mt. Pleasant as the “interim Principal” after promoting Art Darin to the Chief Academic Officer position.

That’s where the lawsuit comes in.

Administrators do not have the tenure protections that teachers have under state and federal law. They can be fired without cause at the end of any school year. There is one little hitch: their job description cannot change in the middle of the year unless they sign an agreement. Martinez signed nothing. He submitted a letter of intent to retire at the end of 2004, and the minute he did he filed a lawsuit for a contract violation under the legal umbrella of wrongful termination. And he won a nice cash settlement to fluff up his retirement nest egg.

Did Zendejas learn from this costly mistake? Although it has not been reported in the Mercury News, Art Darin was technically demoted to be the “interim principal” at Silver Creek. Employees across the district received an e-mail last month indicating that Art Darin requested to remain the principal at Silver Creek for next year. However, Darin’s pay was not decreased and he still sits on the dais in his cabinet chair, his former title a formality to stave away a potential lawsuit.

The Advocate has also learned that Martinez considered pursuing a “Defamation of Character” suit against the District because of the Galarza scandal, but either the monetary costs were too much to bear, or, more legitimately, the political costs of dragging Coto’s name through unnecessary mud was too much of a gamble.

Zendejas has not learned the “Defamation of Character” lesson, however. If you look further into the closed session consent calendar, you will notice an item about the “threat of pending litigation.” These are letters served to the District in an attempt to reach a settlement without entering the courts. Team Unruly has known the details of one of those cases for quite sometime. Last summer, Dr. Zendejas hosted a party for all of the principals’ secretaries at her Evergreen home. She attempted to make light conversation with her guests, but that conversation quickly turned into a fishing expedition. Zendejas asked the group to share some of the rumors traveling around their school sites about their administrators. To encourage the group to start gossiping, she started giving specific examples, claiming that some principals were having affairs and others spent more time off campus than on the job. None of the secretaries took the bait, but the next day the story spread throughout all the schools in the district. Rumor has it a class-action suit has been subsequently filed against Zendejas and the District.

Perhaps we now know why the District so desperately wants teachers to take a pay cut, accept a benefits cap, and be willing to raise class sizes. Their legal expenses are growing faster than the increases to employee health care costs.