Wheeling and Dealing
The wheels on the bus go round and round. But have those wheels been greased with money?
By Mary Cashiola
The Memphis City Schools system is investigating its Transportation Division, looking for just about anything and everything.
Superintendent Johnnie B. Watson sent a memo Monday morning to Waldon Gooch, director of internal affairs for the district, requesting a "comprehensive audit/investigation of the Transportation Division from April 3, 2000-February 15, 2002." The superintendent asked that any information uncovered that appeared to be unlawful be forwarded directly to the attorney general.
The superintendent specifically directed Gooch to look into the timeline of events relating to Laidlaw Transit, Inc., the company that provides bus transportation for the district's students, and the district's decision whether to extend its current contract with that firm or to issue a request for proposal (RFP) from other companies.
The current contract, signed on behalf of the board in 1997 by Dr. Dennis Hirsch, then-associate superintendent of business operations, expires in June of this year. So far, no RFP has been issued by the district, and with time running out it will be difficult to find another company to provide the service. That means, basically, another year of Laidlaw, whether the school system wants it or not.
After Watson issued his directive, school board commissioner Wanda Halbert sent a memo to the superintendent and other board members outlining her own concerns with the Transportation Division.
Halbert says she began investigating after hearing numerous complaints about student transportation. In addition to concerns about children being left unattended, special-education students getting home later than federally mandated times, and overbilling by the current vendor, she alludes to a "fluffed" contract not in the best interest of the district and possible collusion between employees of the system and Laidlaw.
According to the correspondence, when Hirsch left his position in September 2000, he began working for Southern Education Services (SES). A veteran of the system, Ray Holt, was then tapped as the interim associate superintendent of business operations.
"At the same time Mr. Holt was appointed, a request for proposal had been completed by the Transportation Division to prepare for the ending of the upcoming contract with the current transportation vendor," says Halbert's e-mail. "Mr. Holt informed the Director to halt the RFP process and renegotiate with the current vendor."
At the time, she says, Hirsch and Holt were in the employment of Laidlaw.
According to a March 2001 article from The Tennessean, Hirsch, working for SES, prepared a cost-analysis report on transportation -- paid for by Laidlaw -- for the Franklin, Tennessee, Special School District. In April of the same year, SES also began preparing a similar study for the Hamilton County school system. Laidlaw picked up the tab for that report as well.
Holt, who was once superintendent of MCS, is also the founder and one of the partners of SES. He says the company of about 100 employees does all types of consulting work all over the South.
Asked about a possible conflict of interest, Holt says, "I don't understand how the two could be tied together. I'd have to look back but I doubt the timing is the same. I did not consult for Franklin. I was not consulting for Memphis about Laidlaw. I was consulting for Mr. Watson."
An interdepartmental memo from the transportation office in January 2001 verifies that the decision had been made to renegotiate with Laidlaw instead of putting out an RFP. It does not say who made that decision or when exactly it was made.
Holt says his company gets anywhere from $500 to $12,000 for consulting work. Although he didn't remember what the Franklin job paid, Holt did recall that the Hamilton County study was a larger project that required two or three people.
Asked if he had anything to do with the RFP being stopped, he says, "No. No one ever asked me about it. If someone had asked me, I would've done a study."
At the time, Holt was working to secure money from the city and county governments and working on the new student information system. SES currently has a contract pending with the school system to help the district get federal funding under the Medicaid recovery program.
But the question remains why no RFP was issued. According to correspondence between Laidlaw and the school district, problems occurred with summer school routing in June 2000. In the past year, parents of special-education students have approached the board numerous times complaining about transportation services.
In a January 18, 2001, memo from Bobby Douglas, MCS coordinator of transportation, to John Britt, MCS security, transportation, and risk-management director, Douglas wrote that he understood the decision had been made to negotiate with Laidlaw instead of putting out an RFP but brought out items he felt the negotiations team should consider.
"To put [the negotiations] off to a later date will place Laidlaw squarely in the driver's seat. They will know that for another company to come up with enough equipment to service our contract, approximately one-year lead time will be needed," writes Douglas.
Douglas' memo also outlined several problems with Laidlaw. He said there were ongoing problems with late buses, the routing for exceptional children "has always been terrible," and criminal-records checks for drivers were not adequate, among other issues.
"I also need to mention the 'Shared Savings' clause in the contract," writes Douglas. "I cannot believe that any school system, much less ours, agreed to the wording of this clause. In my twenty-plus years in school transportation, this is probably the most ridiculous thing that I have ever seen a school system agree to have in a contract."
Under the shared-savings clause, any savings generated by a reduction in the number of routes needed will be split 60/40 between the district and Laidlaw for the first year and "all subsequent years of the contract." Essentially, Laidlaw would be compensated indefinitely for reducing the number of routes, while at the same time being able to sell the equipment or use it in other locations.
During recent budget hearings, Watson acknowledged there were problems with transportation.
"One of the first areas I observed was transportation," said Watson. "I noticed it was bloated at that time. We were not requesting services from Laidlaw, and we were not holding them accountable for other services."
But during those same hearings, it came to light that the decision had been made to eliminate Douglas' position as coordinator of transportation in June.
"We're expending quite a bit of resources on that position and we decided it wasn't needed," says Ricks Mason, director of personnel for the district.
MCS plans to take the extra money from Douglas' position, along with a vacant technician's job the staff wants to eliminate, and apply it toward financing the in-house legal-services division, if the board creates one.
But after telling him of his imminent layoff, personnel services also gave Douglas the option of resigning effective February 1, 2002. The proposed resignation agreement would have granted Douglas $45,000 for his final salary, accrued vacation, and additional severance benefits. The agreement also stipulated that Douglas would never seek future employment with the board of MCS.
"There was no disciplinary transactions taken with Mr. Douglas," says Mason. "None of it had to do with performance. That department is going through a reorganization."
Mason says Douglas has not asked to be considered for any other positions within the district.
"That opportunity [to resign] was presented to him, but he chose to remain on," says Mason. "We can do it now or we can do it at the end of the fiscal year."
As for Laidlaw, manager Ronald Thornton says, in response to allegations, that the company does not get paid by the number of children but by the number of routes and would never tell the district they were running more routes than they actually were. Thornton also says that anyone who knows of any problems transporting exceptional children should tell him about it so they can take care of the problem.
"We operate a reputable business," says Thornton. "We don't associate ourselves with the means of doing anything devious. I'm sure after the investigation is complete, it will vindicate us of any wrongdoing."
According to board-meeting minutes from previous years, both Mayflower and TNT Contract Services replied to an RFP brought before the board in November 1993. Mayflower won the contract and was later bought out by Laidlaw.
In March 1997, Hirsch told the board that MCS was in its third year of a three-year contract that would expire June 30th. The contract provided for two successive one-year extensions, and in April the board authorized the staff to enter into negotiations for a one-year extension of the current contract.
By the beginning of June 1997, a five-year partnership had been negotiated; the board discussed the proposal, noted with an objection that there had been no bidding process, and then passed it unanimously at the next board meeting, 14 days before the contract was to expire.
Shelby County Schools uses its own bus system to transport its students.
Still Battling For Baby
Couple faces more hurdles in custody battle.
By Janel Davis
The amorous spirit of Valentine's Day came and went for Jack and Casey He. After appearing in court for a contempt hearing, in which they lost their lawyer, gained a new lawyer, failed to produce required documents, and were given another chance to find them, they still went home without their daughter.
The Hes continue to fight for custody of their 3-year-old daughter, Anna Mae, who currently resides with Jerry and Louise Baker, the Memphis couple who voluntarily took her in three years ago.
The Hes had been represented in the case by Dennis Sossaman until a few weeks ago when Casey He dismissed Sossaman as her attorney. Her husband, however, opted to retain his services. Sossaman was then forced to withdraw from the case due to the conflict of interests. In court last Thursday, Casey chose to represent herself during the proceedings.
They were in court to "show cause" why they should not be held in contempt of court for failing to produce Anna Mae's passport and their marriage license. Anna Mae's court-appointed attorney, Kim Mullins, had requested that the passport be taken from the Hes and held by the court.
"The passport is important because [Anna Mae] could be taken out of the country," said Mullins on the witness stand. "Visitations broke down because the Hes wanted to take Anna Mae from the Bakers' home."
He testified that previous attempts to comply with the court's order were thwarted when his wife would not release the document. "We should be able to take her to another place," she said through an interpreter. "I will not produce the passport because [the Bakers] could transport Anna Mae somewhere."
Chancellor D.J. Alissandratos declined to jail the couple that day and granted them another day to produce the passport and a weekend to acquire a Shelby County marriage license certificate. The Hes have filed both documents with the court.
Stipulations of a custody case have put a lid on all proceedings, and a gag order has kept both parties from making public statements. At this time, Anna Mae continues to reside with the Bakers.