Firing Superintendents
The Cost To Buy Out Contracts
By Daniel Muniz

In the corporate world, the media constantly hyperventilates about the unfairness of golden parachutes, which is the practice of terminating a CEO in the private sector and providing him with an outrageously expensive severance package. Consequently, there is always some congressman in Washington DC as well as activist organizations demanding that all of these overpriced payouts be completely outlawed. This rationale is based on the enormous disparity that exists between the income of the top slot and that of the ordinary employee.

However, there is often little to no outcry when governmental agencies do the same thing.

And one troublesome problem is with school districts.

Getting rid of a lousy superintendent or one who incessantly locks horns with the local school board is problematic at best and inherently cost prohibitive because nearly all of these administrators usually have an ironclad legal document that specifically stipulates the gargantuan price of getting fired before the expiration of their contract. Although such severance packages are nowhere near what CEOs get in the private sector, these payouts still aren’t cheap. And even the smaller price tag is of no consolation to the taxpayer who is shelling out the cash for it.

The state of Texas had a novel approach to this dilemma. Their legislature modified a statute that requires a school district to lose some of its state funding whenever a huge payout is rendered to a superintendent due to an early termination. The logic for this exclusion is so that the state doesn’t have to finance the boondoggles that a district incurs when forcing out a top administrator.

The motivation for this change actually happened in my hometown when the San Antonio Independent School District was forced to pay Diana Lam a whopping severance package to the tune of $800,000 in order to get rid of her. Unfortunately, this modification doesn’t prohibit excessive buyouts of contracts but it does force the school districts to pay for it from their own nickel instead of having it coming from the state.

However, the real solution is not to include any golden parachutes at all in the contracts for superintendents.

And perhaps that is the approach that all states ought to employ when they have to dump the top leadership of a governmental agency.

The press and activists usually turn blue in the face whenever a corporate CEO in the private sector gets a gigantic severance package. So why can’t they have the same kind of righteous indignation and outrage whenever taxpayers in the public sector are on the hook in footing the bill of an obscene payout?

After all, unless someone actually owns shares of stock in the corporations with a miscreant CEO, then people really do not have any say whatsoever on what goes on with the internal affairs of a company. If a corporation wants to screw their own shareholders and the shareholders allow it, then they should smile and enjoy it. In spite of everything, it is still their money that is getting flushed down the toilet for a lavish severance.

However, a public entity is a totally different story.

That is because the taxpayer is directly funding the outcomes of any and all decisions.

The point is that if I am paying the taxes that fund a governmental agency, then I am very much a shareholder of that institution and I definitely have a vested interest in preventing these kinds of shenanigans from ever taking place. And as for unfairness, in a school district there has always been a very large disparity in pay the further that someone gets away from the classroom and a superintendent’s salary represents the ultimate gap.

As a result, the taxpayer has every right to complain and demand that changes be implemented in the legal structure of these contracts since it involves their money.

But perhaps it is this muted reaction from the media and from activists that is so disturbing.

The press and the activists must somehow feel that the taxpayer is suppose to smile and enjoy getting screwed by their public servants, yet everyone is supposed to be outraged when the CEO of a corporation that they don’t own any shares in gets a golden parachute. With the buyouts of a superintendent’s contract, it is the taxpayer who has to absorb the financial brunt of bad decisions. And still worse, it is the children who directly feel the adverse impact of the reduction of money that is supposed to be intended for the school system.

In summary, it is time for taxpayers to rise up and demand that school boards start using their brain cells when it comes to devising contracts for superintendents. Getting fired is not supposed to be the desired outcome for these kinds of positions in which someone gets paid an outrageous sum of money for not doing anything.

However, there is always the argument that contracts have to be structured in this way in order to obtain the best talent.

That’s nonsense!

Money is not necessarily the prerequisite for finding the best people to do an outstanding job. If that were the case, then a school district wouldn’t have any teachers in the classroom. And that same rationale also applies to the armed forces, firefighters, police officers, and a host of other fields that employ people who have a passion for a particular profession. Of course they aren’t going to work for free. They still have to be paid a competitive salary but it is their commitment to do an outstanding job that drives their motivation instead of finding ways to hose the taxpayer.

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