Pa. auditor general wants to know who gave to Ackerman's buyout fund

"What's happening in Philadelphia sets a dangerous precedent," State Auditor General Jack Wagner said.
"What's happening in Philadelphia sets a dangerous precedent," State Auditor General Jack Wagner said. (SARAH J. GLOVER / Staff Photographer)
Posted: August 24, 2011

HARRISBURG - With nearly half the cash needed to buy out Philadelphia School Superintendent Arlene C. Ackerman cloaked in secrecy, Pennsylvania Auditor General Jack Wagner is launching a probe to get to the bottom of the $405,000 in private contributions to pay her.

At a news conference Tuesday, Wagner called the Ackerman buyout "the granddaddy" of recent deals to remove school district executives in the state.

"There is a proliferation of buyouts in school districts," Wagner said. "What's happening in Philadelphia sets a dangerous precedent."

In Allentown, School Superintendent Gerald Zahorchak, a former state education secretary, resigned Thursday after a rocky first year. He will receive a $50,000 payment as well as a contract to remain as a strategist.

Wagner said he would request information from Philadelphia school officials within the week. His office has subpoena powers.

"We hope in this case it never comes to that," said Steve Halvonik, Wagner's spokesman.

Wagner said the public had a right to know the details of the Ackerman deal, which includes $500,000 from the School District. "This is a public deal," Wagner said. "What's behind these secret deals? The public should know. It's their tax money."

Wagner said Ackerman's package "could easily pay for 10 teachers."

"We know how many teachers have been cut," he said. The district cut 2,700 jobs overall to bridge a $629 million budget gap. "With all the challenges the district faces, to suddenly spend almost $1 million without being transparent?"

Wagner said he would again ask the General Assembly to enact legislation to reduce or eliminate the need for buying out contracts.

The tight circle of people who would know about the private contributors - starting with Mayor Nutter - are not talking.

Mark McDonald, a spokesman for the mayor, referred all questions to the School Reform Commission.

A call to the SRC office was immediately directed to School District spokesman Fernando Gallard, who said the district "was not involved."

He deflected all questions back to City Hall. "The mayor indicated that he was involved, along with the SRC," Gallard said.

The contributors are "anonymous, and my understanding is that the information is going to be kept anonymous," Gallard said.

The secrecy of the arrangement with Ackerman has angered many in the Philadelphia business community, said Zack Stalberg, president of the Committee of Seventy, a nonprofit government watchdog organization.

"There's definitely a lot of private bewilderment about this," Stalberg said.

Phil Goldsmith, a former chief executive officer of the School District, added that the Nutter administration has prided itself on transparency and high ethical standards. "They should be setting the way," he said.

The private money will be channeled through a district-affiliated nonprofit group, Philadelphia's Children First Fund, established in 2003 to support the district.

A board member of the fund, William J. Leonard, a lawyer with Obermayer Rebmann & Hippel, said he did not know who the donors were.

"We did as a board meet and approve the receipt of private funds from private donors, but honestly I don't know who the donors are," Leonard said.

"We were not intending to use any of our own funds," added Leonard, meaning the fund's existing assets.

Leonard served for more than 12 years as a member of the Pennsylvania Intergovernmental Cooperation Authority, the state board overseeing city finances.

He said potential donors were approached with the condition that their contributions would be kept confidential. "Given that understanding, I don't believe that those identities should be revealed," Leonard said.

The Children First Fund, a 501(c)3 charity, had assets of $2.4 million for the year ended June 30, 2009. The eight-member board included Ackerman, SRC Chairman Robert L. Archie Jr., and now-interim Superintendent Leroy Nunery II.

More is known about who did not contribute to the fund than who did.

According to sources, soda magnate Harold Honickman, a board member of the Children First Fund, did not contribute to the Ackerman buyout fund.

Helen Cunningham, executive director of the Samuel S. Fels Fund, said her foundation had not contributed money.

But as a former school board member of the Philadelphia School District, she said, she could understand the motivation for not wanting to use public funds to cover the entire cost.

"It's a horrible time to be spending public money for this kind of thing," she said.


Contact staff writer Jennifer Lin at 215-854-5659, jlin@phillynews.com, or @j_linq on Twitter.

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