School superintendent could be ousted within a week over spending scandal

Confronted with new findings of top-level mismanagement, Seattle School Board members moved quickly Friday to quell the damage over misuse of public money and strongly suggested Superintendent Maria Goodloe-Johnson may be fired.

The findings, by Seattle attorney Patricia Eakes, stated Goodloe-Johnson should have known about losses of up to $1.8 million, mostly for contracts that had questionable, if any, public benefit.

Goodloe-Johnson told Eakes during her inquiry the district's troubled small-business program was "too far down" in her organization for her to keep track of how it operated.

Eakes' findings, released Friday, "certainly undermine my confidence in the effectiveness of the management," School Board President Steve Sundquist said.

"All options are on the table," he said in a meeting with The Seattle Times editorial board, capping a tumultuous week for the district.

Citing the need to restore public trust, Sundquist and School Board member Michael DeBell expressed outrage over what DeBell called "cronyist" dealings in the small-business program, which was run by Silas Potter Jr., 59, who investigators have been unable to locate since he resigned in June.

Sundquist wouldn't say if the board is talking with Goodloe-Johnson about buying out her contract, but he acknowledged she's consulting with an attorney. Goodloe-Johnson earns $264,000 a year, and her contract runs through 2013.

Eakes, a former King County prosecutor, was hired by Seattle Public Schools in December to determine who should be held accountable for problems uncovered by the state Auditor's Office in a special investigation that had been requested by school officials.

Goodloe-Johnson, who joined the district in 2007, couldn't be reached for comment Friday. School-district staff said she is with her mother, who is seriously ill and in the hospital.

Sundquist said the board likely would announce at a public meeting Wednesday its decision regarding the superintendent and Don Kennedy, the district's chief financial and operations officer.

Kennedy also was singled out in Eakes' report, notably for failing to properly supervise subordinates, missing warning signs about problems in the small-business program and saying he wouldn't have handled anything differently.

In her 17-page report, Eakes cleared Goodloe-Johnson and Kennedy of any involvement in the alleged improprieties, saying they had limited knowledge of the program. It was created to help small companies — primarily owned by women and minorities — to better compete for school-district construction contracts. Under Potter, the program awarded its own contracts to outsiders, including prominent members of Seattle's African-American community, to teach classes or provide assistance.

Eakes also found that many of the concerns raised by employees about Potter did not reach Goodloe-Johnson. But the superintendent was aware of a consultant's highly critical review of the program in 2009.

The review led the district to reprimand Potter and strip him of his authority to award small construction contracts. But he was still allowed to award other contracts as part of the program's training and outreach efforts.

At that point, Eakes concluded, it was the superintendent's responsibility to ensure Potter's work was properly supervised.

Goodloe-Johnson said she trusted Kennedy to oversee the program, and Kennedy said he delegated oversight responsibility to Fred Stephens, the former executive director of facilities, according to Eakes' report.

Stephens, who now works for Commerce Secretary Gary Locke, "bears responsibility" for failing to oversee Potter and the program, even though Potter was "duplicitous," Eakes found. She termed that a "major management failure."

Eakes found that Stephens was warned about potential fraud as early as February 2007 by the district's risk manager, even before Goodloe-Johnson or Kennedy joined the school district.

Stephens had "sufficient warning signs and concerns about Potter's past misconduct to warrant close oversight," she wrote, adding that Stephens failed to ask questions or scrutinize Potter's contracting practices.

In a written statement Friday, Stephens said, "I am deeply troubled by the audit's findings. During the period in question, I recognized management irregularities, initiated additional oversight of Mr. Potter's activities, and ultimately took action to discipline him. But at the end of the day, if the audit's characterizations are accurate, our efforts were thwarted by Mr. Potter's dishonest behavior."

Eakes also concluded the School Board was left in the dark about the risk manager's 2007 warnings, was not given the 2009 consultant's report and what little information it was given about the program was sometimes wildly inaccurate.

Eakes' report was released just days after the state auditor made public its findings, which focused on how much money the district may have lost.

The program's activities also are the subject of a criminal investigation by the King County Prosecuting Attorney's Office.

DeBell said Friday the program strayed from its mission to boost the pool of qualified contractors and save money through the added competition.

"It became instead a cronyist sort of operation that then, somehow, was not given the due diligence from management to address those issues," he said.

Steve Miletich: 206-464-3302 or smiletich@seattletimes.com

Linda Shaw: 206-464-2359 or lshaw@seattletimes.com