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February 4, 2009Members of Board of TrusteesLancaster Independent School Districtc/o Dr. Dana MarableInterim Superintendent422 S. Centre AvenueLancaster, Texas 75146RE:
Explanation of rationale for recommendation of settlement with Dr. LarryLewis, in
Lancaster ISD v. Lewis
, TEA Docket No. 068-LH-1208, Before JessC. Rickman III, Certified Hearing Examiner
Dear Ms. Morris,At the request of Board President Carolyn Morris, I am writing this letter to summarize the bases upon which our firm made the recommendation, on February 2, 2009, that the Board of Trustees of the Lancaster Independent School District enter into a settlement agreement with Dr.Larry Lewis and, pursuant to that settlement agreement, accept Dr. Lewis’ resignation effectiveJuly 31, 2009.Our recommendation was based upon a number of factors. Some of those factors weremonetary. Some were not. The non-monetary factors centered on the fact that the preparation for,and trial of, Dr. Lewis’ case would have required a significant number of LISD staff hours. Thiswas especially so for those employees in the District’s business and finance departments. We judged that, given the pending audit and the task of reconciling the District’s General Ledger andother accounts, the District would be better served by completing the reconciliations without thedisruption that a hearing would bring. We also judged that, if a leadership change was to beundertaken, there was value in preventing the process from being drawn out and divisive.We did not substantially consider the likelihood of success on the merits in making our recommendation. After being retained on December 23, 2008, we prepared and presented to theBoard a draft Second Amended Notice of Proposed Termination for its consideration on January12, 2009. At that time, we informed the Board that there was competent and admissible evidenceto support each of the allegations in the draft Notice. We also informed the Board that, in our
Letter of February 4, 2009Ms. Carolyn MorrisPage 2 of 4 pagesopinion, there was “good cause” to support the proposed contract termination. Throughout our subsequent trial preparation, our opinion remained unchanged.In assessing the terms of a settlement to the District, it is necessary to consider the price of the alternatives to such settlement. In this case, the alternative to the settlement would be the costof pursuing a hearing on the proposed termination of Dr. Lewis’ contract. On January 12, 2009,in recommending the Board’s consideration of the Second Amended Notice of ProposedTermination, we estimated that trying the case would entail the following costs:1. Estimated Costs of Litigation to DistrictA. Estimated Attorneys fees, O’Hanlon, McCollom & Demerathfor termination litigation before Certified Hearing Examiner $ 35,000.00B. Estimated fees of Certified Hearing Examiner $8,000.00 to$10,000.00
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C. Estimated fees for Court Reporter $ 8,000.00D. Estimated fees for testimony from Harry Jones andAshley Goodwin as expert and fact witnesses $10,000.00Total Costs $61,000.00 to $63,000.00 In addition to the costs of the local hearing before the Hearing Examiner, in our opinion, itwas probable that Dr. Lewis would have appealed an adverse decision to the Commissioner of Education. I calculated the costs of an appeal through the Commissioner of Education in our basecost estimate, listed above. However, once a case is determined by the Commissioner of Education, it can then be appealed to a District Court in Dallas County, Texas: then to the Courtof Appeals, and, finally to the Texas Supreme Court. In the event of such an appeal, the estimatedcost to LISD would be approximately $7,000.00 for each of the three levels to which the casecould be appealed. Based on our experience handling the
Matthews
case (Wilmer-Hutchins ISD),we judged it to be likely that the case would have proceeded through all of these levels.2. Costs and Savings to the District Under the SettlementUnder the provisions of the Texas Education Code, Dr. Lewis was entitled to remain onthe LISD payroll until the Board of Trustees took final action on his proposed termination, after receiving the Hearing Examiner’s recommendation. In Dr. Lewis’ case, the Hearing Examiner’srecommendation was due on March 2, 2009. There is a LISD Board meeting scheduled for thatdate, but it is unlikely that the parties would be ready for a full Board hearing on the date whichthey received the recommendation. It is more likely that a Special Called Board Meeting wouldhave been called in the middle of March 2009 to consider the matter. For purposes of
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Mr. Jess C. Rickman, III, requested a recommendation that the District approve payment in excess of the $8,000.00cap on his fees, in case the hearing exceeded three days, which we agreed to recommend. Most such hearings do notexceed two and a half days.
Letter of February 4, 2009Ms. Carolyn MorrisPage 3 of 4 pagescomparison, we will assume that Dr. Lewis, even if his employment was terminated, would have been entitled under Texas law to remain on the LISD payroll through the first half of March 2009.Under the settlement approved by the Board, Dr. Lewis will continue to receive hismonthly salary through July 31, 2009, along with the statutory health benefit paid by the State. If he is employed elsewhere before July 31, 2009, he will receive his salary and some contract benefits until the last business day before his new employment commences, plus the remainder of his salary only from the last business before his new employment through June 30, 2009. Under the agreement, Dr. Lewis has to assume payment for his own disability insurance and lifeinsurance benefits, and all insurance benefits for his spouse (which were to be paid by the Districtup to a maximum amount of $6,396.00 per month under his contract), for the duration of hisemployment. He also had to forgo a cell phone provided at District expense. Dr. Lewis’ contractdated March 11, 2008, ran through June 30, 2011. Under the settlement agreement, he agreed toforgo twenty-three (23) months of salary and benefits under the contract, as well as acceptingreduced benefits for the six months of his remaining employment.
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If the District had pursued the termination proceeding, Dr. Lewis would have remained onthe payroll, with full contractual benefits, through approximately mid-March. Under the terms of the settlement, the District will pay Dr. Lewis approximately $75,000 more than it would havehad to pay him if he had been terminated in mid-March. Given the estimated litigation costs, theDistrict will have to pay out less than $12,000 more than it would have cost to litigate thetermination through the Commissioner alone. Given the probability that additional attorneys’ feesand costs would have been incurred for likely judicial proceedings, the District will be paying Dr.Lewis less than the likely cost of termination. In engaging Dr. Lewis’ counsel in settlementnegotiations, we were given express instructions by the Board of Trustees that our offer shouldnot exceed the probable costs of the actual litigation. We believe that the settlement adopted bythe Board on February 2, 2009 met these parameters.3.
Non-Monetary Considerations.In addition to the foregoing financial considerations, there are substantial additionalintangible litigation costs that would have been unavoidable. In a termination proceeding of aSuperintendent, in any school district in this State, school district employees are extremelyconflicted about being required to testify. This is true no matter whether their testimony may befavorable or unfavorable to the Superintendent or to the District. They are naturally fearful of future adverse personal consequences as a result of their testimony,Witness preparation is difficult and time consuming in these types of cases. This results ina loss of employee productivity in supporting District operations. The loss of productivity isinevitable, since even the best and least reticent witnesses require preparation for testimony.Further, in our experience, the turbulence of a Superintendent employment termination proceedinginevitably spreads even to employees who are not going to testify, so that the loss of productivityspreads broadly. It is impossible to put a price tag on this collateral damage on employee and
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Less if he is employed elsewhere any time prior to July 31, 2009.
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