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Parents Question Schools Agency Leadership

Ariz. Attorney General Investigating Accusations of Fraud, Conflict of Interest

POSTED: 6:16 pm MST September 23, 2010
UPDATED: 1:25 pm MST November 24, 2010

The Arizona Attorney General’s Office is investigating accusations of conflict of interest, procurement fraud and procurement improprieties against a nonprofit government agency that was established to help school districts save money, according to documents obtained by CBS 5 News.

The agency under investigation, Valley Schools Management Group, represents nearly one-third of the state's public school system. The group was originally designed to pool district money for lower insurance rates but has grown to handle things like employee benefits and construction management.

Parents in at least one school district the group contracts with have raised concerns about the dual roles of several members of the Valley Schools board, as well as agency expenses.

One of those expenses was $18,000 for a luxury tent at the Waste Management Phoenix Open in February.

“When I find out that Valley Schools Management Group is paying for a tent at the Phoenix Open with an open bar, I have an issue with that,” said Katherine Brooks, whose children attend school in the Deer Valley School District.

Brooks and two other women have become fixtures at Deer Valley School Board meetings, demanding answers about where their district dollars are going. All three say they believe the original intent of VSMG -- to save money on insurance -- was valid. But they now believe the agency has grown too large and needs more independent oversight.

“In 2005, the entire structure changed. All of the power and authority was removed from our boards of trustees and it was handed over to four men. And those four men oversee themselves. They have the ability to hire and compensate themselves, and they have the ability to charge school districts any fee that they would like,” said Shelley Rosas, who has five children in the Deer Valley District.

Documents obtained by CBS 5 News indicate Valley Schools' CEO, Tom Boone, collected a salary of $200,000 per year, plus a $15,000 per year car allowance. Boone did not have a written employment agreement until this summer. At that point, it appears his salary was reduced to $175,000 per year.

Boone is also a member of the Deer Valley School Board and a member of the Arizona House of Representatives. Parents we spoke to say they are uneasy about those potentially competing interests.

“I think it probably skews his perspective in the different seats, especially when one of those seats pays you over $200,000,” said Ann O’Brien, one of the parents who routinely speaks out at Deer Valley School Board meetings.

CBS 5 News compared invoices from Valley Schools Management Group to the Deer Valley School District with school board minutes. They show Boone voted to send money from the Deer Valley district to the group, despite having signed a conflict of interest statement, disclosing his financial ties to Valley Schools.

A review of records from the state legislature also shows Boone has used his position as a House member to affect Valley Schools. HB 2011, which was signed into law last year, allows agencies set up through intergovernmental agreements, such as Valley Schools, to avoid competitive bidding requirements when conducting business. Boone voted for that law.

CBS 5 News discovered Valley Schools awarded outside consulting contracts to two of its own board members. The group's board is the body that approves the contracts. One of those board members, Bill Maas, is also a member of the Deer Valley School District. Maas’ company, The Educational Edge LLC, receives monthly checks of $6,000 from the group.

Valley Schools Management Group turned down a CBS 5 News request for an on-camera interview with Tom Boone.

Click here for a link to a list of School Districts that participate in Valley Schools Management Group.

Attorney General’s letter sent to Valley Schools Management Group.

Click here to read the bill passed by the AZ House of Representatives in 2009. Page 2 contains the provision that exempts intergovernmental agreements from the competitive bidding process. Valley Schools Management Group was set up through an intergovernmental agreement. Page 3 shows that Representative Tom Boone voted for the bill. This was while he served as CEO of Valley Schools Management Group.

This file contains the breakdown of the Valley Schools Management Group Board members’ compensation packages and outside contracts.

Click here to see an invoice from Valley Schools Management Group to Deer Valley School District. Page 2 shows Tom Boone was present at the school board meeting when the payment was approved. Page 3 shows Boone voted to approve the payment.

This file contains a list of questions and answers provided by Valley Schools Management Group to several valley school districts.

This file contains the response we received from Valley Schools Management Group following our request to interview its CEO, Tom Boone.

The following file contains a contract renewal notice from Valley Schools Management Group to Bill Maas and his company, The Educational Edge, LLC. Page two shows one monthly payment of $6,000 to The Educational Edge, LLC from Valley Schools Management Group. Bill Maas owns Educational Edge, and is also a board member of Valley Schools Management Group.

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