Education council’s CEO ends contract

The chief executive officer of the federally funded Education Leaders Council (ELC) is giving up a $235,000-a-year renewable consultant contract that she arranged for herself three years ago as a board member, because the arrangement violates federal ethics rules.

Lisa Graham Keegan “is in the process of completing the paperwork necessary to become a full-time ELC employee,” with the apparent intention of stepping off the ELC board, Brian Jones, the council’s chief operations officer, told the Education Department on March 25 in response to a department probe.

In the past year, eight ELC directors have resigned because Mrs. Keegan rebuffed their requests for management changes after the council’s auditing firm flagged her contract.

Directors who resigned also wanted ELC to get more of its money from private sources and to reduce its dependence on $10 million in annual federal appropriations.

Conservative education advocates founded ELC in 1995 to push for school choice, higher achievement standards and other reforms at the federal and state level against the teacher-union-led education establishment.

As the department disclosed ELC’s woes, Eugene W. Hickok, the department’s No. 2 official, expressed personal dismay and anguish over “apparent chaos” within the ELC, which he helped establish as Pennsylvania’s education commissioner under then-Republican Gov. Tom Ridge.

“I have not had much to do with the organization other than watching it from a distance since I came here,” the department’s acting deputy secretary said in an interview Friday.

“I’ve got to say that, from where I sit, from what I read in the paper, it distresses me to see the organization I helped create and care so much about going through what it’s going through,” Mr. Hickok said.

“I can’t pass judgment on who’s to blame. I can’t pass judgment on the group politics. I don’t know all that stuff,” he said. “But when you start something, and you see it catch [among grass-roots people] who really care about education, it hurts a little bit to see an organization going where it’s going.”

Several ELC board members who had criticized Mrs. Keegan resigned over the ethics concerns while the Education Department probe was under way, unknown to them.

William F. Goodling, a retired 13-term Republican congressman from Pennsylvania, was among four ELC directors who resigned Wednesday.

The former chairman of the House Education Committee blamed ELC Chairman Jim Horne and less active board members who supported Mrs. Keegan but rebuffed directors who raised ethics and financial questions.

“Had Lisa taken this advice a year or year-and-a-half ago, none of this would have happened and we’d have a solid and sound ELC committed to reforms that would give a quality education for all,” Mr. Goodling said in an interview.

The department investigation was in response to a Jan. 23 article in The Washington Times that Mrs. Keegan negotiated her $235,000-a-year “consultant agreement” with ELC in April or May 2001 as Arizona’s state superintendent of public instruction and a member of ELC’s board of directors.

At the same time, she offered six-figure-salary ELC jobs to four members of her staff at the Arizona education department, including John Schilling, whom she named as ELC chief of staff. In that capacity in June 2001, Mr. Schilling awarded and signed Mrs. Keegan’s “consultant agreement,” which she told The Times in a Jan. 16 interview was done “for [personal] tax purposes.”

Mr. Horne, Florida’s education commissioner and a certified public accountant, said on Jan. 16 that Mrs. Keegan’s contract-employee status “doesn’t bother me.” He described criticism of the arrangement by fellow board members as “pettiness.”

However, in a Feb. 17 letter, Michael J. Petrilli, associate deputy undersecretary for educational improvement and innovation, told Mr. Horne: “It is true that it would be a violation of federal guidelines if Ms. Keegan, as a member of the ELC board of directors, played a role in the ’selection, award, or administration’ of her own contract for services to ELC.”

The letter, released to The Times on Friday with other documents, cited two specific sections of the Code of Federal Regulations.

“We need confirmation that ELC has adopted policies and procedures to ensure that such conflicts of interest do not occur,” Mr. Petrilli wrote.

During negotiations, the ELC agreed to end the consultant contract with Mrs. Keegan and adopt a conflict-of-interest policy that meets federal requirements, Mr. Petrilli said.

Directors who resigned March 31 said Mrs. Keegan and Mr. Horne did not inform them of the department’s ethics demands and ELC’s agreement to comply.

Mr. Jones, Mrs. Keegan, and Mr. Horne did not respond to faxed questions and requests for comment sent to them on Friday. Mrs. Keegan had said in a March 3 e-mail that ELC would not respond to any further inquiries from The Times.

In his Feb. 17 letter, Mr. Petrilli told Mr. Horne that “at a minimum,” Mrs. Keegan could take no action as an ELC board member that would benefit herself financially.

According to ELC records, Mrs. Keegan made such decisions as ELC’s chief executive officer since June 2001. She repeatedly voted as board member to solicit federal funds, which constituted more than half of her compensation in 2003 and this year. She also directed ELC subordinates to lobby for federal funding.

In his March 25 letter, Mr. Jones sent the department a new three-page “Policy Regarding Conflicts of Interest” that he said was adopted March 22 by a six-member executive committee of the ELC board, including author Abigail Thernstrom, a member of the Massachusetts state board of education and also of the U.S. Civil Rights Commission.

Mrs. Thernstrom, who was among those who resigned last week, said in an interview she was not told of the department inquiry, which started two days before ELC’s last board meeting on Feb. 19.

She also said she did not know of the new conflict-of-interest rules that ELC told the Education Department were passed March 22 by its board’s executive committee.

“That’s outrageous. I don’t want my name attached to anything I haven’t seen,” said Mrs. Thernstrom, who was a member of that executive committee at the time.

“No one from ELC has been in touch with me since the Feb. 19 meeting. No one told me about any meeting of the executive committee on March 22. My name was put on that without my knowledge,” she said.