Ferndale Schools Accepts $25,000 Determination, Gary Meier Documents Brought to Light
(Crystal A. Proxmire, Feb. 14, 2016)
Ferndale, MI – The lawsuit between Ferndale Schools and Equity Management Solutions, a company started by former Superintendent Gary Meier and his top staff while employed at the district, concluded on Thursday with both parties accepting a case evaluation panel’s determination that Equity owed the district $25,000. The case was officially dismissed after the mutual acceptance had been made.
Evidence showed that while working for Ferndale Schools, Meier and staff members used public school time and resources to set up their own consulting firm to operate charter schools that competed with Ferndale Schools. While Ferndale Schools struggled with questionable alternative education programs, declining enrollment, discontented staff and educational challenges, and a failed alternative middle school project, the people charged with running the district were busy with their own plans.
Emails and other documents obtained by a Freedom of Information Act request show that from as far back as at least 2011, the side work of creating a charter school and consulting business was a key project for Meier and his team, operating as ICE (Innovative Consulting in Education) .
This team included much of the top staff, including Communications Director Stephanie Hall, Deputy Superintendent Henry Gold, Finance Director Maureen Adams, Director of Elementary Education Pauline Nagel, and Director of Secondary Education Renee Burgess (Heard) who also was in charge of the failed Digital Learning Center program. Meier’s daughter-in-law Trisha Meier, who was employed as Data/Project Analyst for Ferndale Schools is currently at Equity as Human Resources Director. Also working for both Ferndale Schools and Equity at the same time was attorney John Carlson.
Meier resigned from Ferndale Schools in May 2014 after his side business had been discovered and the board began discussion of having a different attorney come in to investigate, since the School Board’s attorney was also the attorney for ICE and Equity. The employees who had been working on his side project during school time have also left to work with him.
Meier originally was in the hot seat when his consulting work became a campaign issue in 2012. School Board candidates and a group called CLEAR questioned why the School Board Trustees at the time allowed Meier to intercept a contract that Ferndale Schools originally had. They also questioned how much school district time and resources was being used. The answer to that question may never be known, but the newly released emails reveal that it is even more than originally thought.
The relationship with Michigan Future began when Ferndale opened University High School in 2005 as a way to get revenue from having out of district students while having them in their own building. The school did not offer the same opportunities for students as Ferndale High School did, lacking in arts and sports opportunities. The district was targeted for protest by a group called BAMN (By Any Means Necessary) over the segregation of students and the disparity in programming. UHS has evolved over the years to be more equitable, and continues to tout a high rate of students going on to college.
After opening UHS, the relationship with Michigan Future continued. From Sept. 2009 to 2011, Ferndale Schools had a contract with Michigan Future to provide technology access and support, telephone and cell phone access and support, photocopies and supplies, office supplies, staff access and support, email account services, website development and maintenance, graphic design/communications services, clerical services, bookkeeping and accounting, vendor payment, payroll and auditing services, human resource services, access to administrative support personnel, and other similar services. They also paid for rent to operate out of Ferndale Schools. This contract brought in $225,000 per year, with no accounting done of the actual time or costs involved.
In 2011 Michigan Future no longer wanted to rent office space from the District. They also opted to deal with Meier directly. Meier’s consulting company at the time was ICE (Innovative Consulting in Education). ICE provided the same services minus rent, and gave $180,000 per year back to the district. Meier collected at least $370,000 each year from Michigan Future while fulfilling the contract. There was no defined limitation to how much resources could be used.
With Meier as the middleman (working as both the Superintendent and a contractor) the groundwork was laid for Meier’s future plans.
In 2012 ICE was doing the foundational work for the creation of charter schools to compete with Ferndale Schools. They were also preparing applications and presentations, and attending meetings, in a variety of attempts to gain contracts and funding for projects.
As the ICE contract became a public issue, and on the eve of the election where new school board members were elected, Meier cancelled the ICE contract with Ferndale Schools. The understanding was that Meier and the others could still do consulting work, but on his own time and without school district resources.
The cancellation was not free from controversy. The Election of Amy Butters, Jim O’Donnell, Raylon Leaks-May and Kevin Deegan-Krause timed with Meier’s announcement that he had provided the board notice of cancellation on October 1st through a hand-delivered letter to board member Keith Warnick. Warnick signed an affidavit that he had received the letter, however no mention of it was ever made prior to early November. An Oct. 1 rescinding, with a 90 day effective period, would have made the contract end just before the new board members could review it or take any action on it.
Then Meier’s decision to cancel ICE changed. On Dec. 29, 2012 at 5:08 pm Henry Gold wrote to Meier “I think you would have to rescind before its effective date unless the new Board was willing to accept it later. The new board will be in a difficult position. They can accept the loss of $90000 and do nothing or allow the contract to continue, as it has, without the kind of logs or time monitoring they talked about.”
Meier contacted Warnick who then accepted Meier’s rescinding of the cancellation, stating “my signature on this letter of notification rescinding the October 1, 2012 termination, as current Board President, continues the original agreement through June 20 2014.” Meier later cancelled it with an effective end date of June 30, 2013. As Gold said in his email, Meier did not provide documentation of the actual costs to the district, since the contract did not require that level of accountability.
On June 27 2013 Warnick, who was no longer on the school board, wrote to Meier asking if the contract had been cancelled.
“Michigan Future is pulling the back office support from my contract with them. The Detroit Chamber will be doing the work. Therefore the need to provide notice. I am negotiating other services with MFI that may result in a successor agreement, but will not likely be of the same scope,” Meier replied.
The $180,000 payment from ICE was removed from the budget and the district received no compensation from that point forward. However documents show that the work continued.
From June 2013 until May 2014 Equity operated out of Ferndale Schools without the permission or knowledge of the board. Meier’s contract permitted outside consulting but had a requirement to notify the board of his consulting work, so that they could be aware of it lest it interfere with his responsibility to be a full-time Superintendent to Ferndale Schools.
Employees, including Meier, used their school emails to communicate with each other and people outside the district about Equity projects. The emails sent through the school email system were subject to FOIA.
In his final year, Meier and his team finalized creation of two charter schools: School for the Future and Delta School. They also contracted with YMCA to manager their educational program. Many emails show that top staff who were supposed to be running the Ferndale School District, were using their time to work on these business ventures.
Meier originally set his retirement date for June 30, 2014. When a document came to light at the school district’s policy meeting on May 19 showing potential conflict of interest, Meier moved his end date to May 20. The school board accepted his retirement.
The document that tipped off the board was minutes for a Schools of the Future Detroit meeting dated April 10. The board questioned whether there was a conflict of interest and if Meier had broken his contract by not disclosing that he had started a new consulting company and taken on new work.
The minutes of the Schools of the Future meeting listed Gary Meier and Stephanie Hall as having attended on behalf of Equity Education Services, and John Carlson as being there as Equity Legal Counsel. The discovery of this document and the hastened departure of Meier prompted the School District to dig further into his activities. Not only was he doing unauthorized side consulting, he was operating a full time business staffed with Ferndale Schools employees on the school district’s dime, and competing directly with the district.
The lawsuit contended breach of contract and unjust enrichment, and the issue was how much time and resources were diverted away from the children, families and teachers of the district so that Meier and his friends could start their own company.
While timesheets were never produced, clues did remain about some of the activities. Heard’s calendar and Hall’s calendar for June 2013 through June 2014 included meetings during the school day for the various Equity projects.
In June 2013 Meier wrote to Lou Glazer, President of Michigan Future, in regards to updating their contract. Meijer broke down their arrangement at the time as having 692 hours annual for bookkeeping, 240 hours for human resources, a flat fee for operational support and technology support, $3,4000 per year in photocopies and supplies, $3,600 for office supplies and 32 hours per month for consulting and other services. It is unclear how much of this was done with Ferndale resources.
On June 23, 2013 Meier instructed Hall to go to School for the Future and inventory all of the equipment and supplies on the following Monday or Tuesday.
On Aug. 13, 2013 Heard used her employee email to send a list of estimated hours for work for Schools for the Future, including:
MDE Grant: 50 hours total
Walton Grant: 50 hours total
Charter Application: 150 hours total
Pupil Accounting and Student Information System Management System: 80-100 hours
Student Recruitment: 40 hours
Curriculum and Instruction Work with ISA and alone: 160 hours
Compliance and Accountability: 40 hours
School/Community Relations: 80 hours
In Sept. 2013 an email was sent to Gary Meier to remind him they were going back to weekly staff meetings, and Meier sent the message to another Ferndale Schools staff person to ask her to update his calendar.
The emails were recovered after a major computer crash just before the school year began after Meier left. Not all of the documents were found, but in over 1000 pages there are many other examples of work being done on school time.
It also shows that Equity knowingly competed with Ferndale. The Charter School Planning Grant Narrative Questionnaire for Delta Prep includes listing University High School and Ferndale High School under a section stating “List and describe the existing schools in the area (public, private and parochial) serving the community, and detail the competitive advantages that will set the proposed charter school apart and attract students.”
The $25,000 agreement was the minimum asked by the District in the lawsuit, which was against both Meier and his company.
Although there has been a cost to the district, legal fees have gone down significantly since Meier departed. In Meier’s last year there were $261,000 in fees. In 2014/15 there were $155,000, due in part to several agreements with other school districts. Thus far in 2015/2016 legal fees are $48,000.
“The Board was compelled to act when it became clear that District resources and personnel had been used in a manner inconsistent with the District’s interests and for the benefit of a company created by Mr. Meier: Equity. Although the District incurred legal fees as a result of the activities that necessitated the lawsuit, most of those costs were attributable to dealing with systemic problems discovered after Mr. Meier’s departure,” said Superintendent Blake Prewitt. “Based upon what the Board discovered after Mr. Meier’s departure and the departure of other administrators, the Board felt it had a fiduciary duty to pursue legal action. The primary focus of the District is and should always be on our students and their progress.”
Paul Mersino, attorney for Meier and Equity stated “Mr. Meier is pleased to have this lawsuit behind him and stands by his position that he has held throughout this matter that he fully fulfilled and discharged his duties as superintendent of Ferndale Schools up until the time he retired. He is proud of all of the work he did for the district for over a decade. He feels vindicated in the dismissal of this lawsuit and he is happy to move forward and move on. He wishes the students, parents, and faculty of Ferndale Schools nothing but the best. “
When questioned about the panel decision to award damages, Mersino said “The distinguished members of the panel expressly told Mr. Meier, based on all of the evidence and arguments that they reviewed, that they did not believe that Mr. Meier did anything wrong, that he fulfilled his duties, and held that Mr. Meier should not pay one dollar himself, and that is reflected in the award. Case Evaluation panels almost never make a recommendation or award of $0, but they did for Mr. Meier. With regard to the corporate defendant, the panel’s duty is to make a recommendation that they believe will get both sides to settle the matter. The dollar amount that the panel recommended with regard to the corporate defendant was a fraction of what Ferndale Schools allegedly sought and what the parties had spent on litigation to that point. Based on this nominal recommendation, Equity agreed to put the matter behind it and to move on. This was particularly so given the fact that Mr. Meier was personally vindicated and very pleased with the panel’s finding.”
Scott Hamilton, attorney for Ferndale Schools, called the response “horse hockey.”
“I take issue with the perspective they let Meier off the hook. It was Meier’s corporation. He was the president and founder of the company. It was his actions that led to the determination of liability,” Hamilton said. “They made the award against the corporation. But to say that exonerates him is horse hockey. If he did nothing wrong why did they have any judgment at all?”
For more of oc115’s award-winning coverage of Meier’s activities in Ferndale Schools, see https://oaklandcounty115.com/?s=gary+meier.
Ferndale Schools Accepts $25,000 Determination, Gary Meier Documents Brought to Light