Punishment for Making Hard Choices in a Crisis: Federal Prison

This is a scenario we all know well: Responding to a crisis, the federal government quickly doles out sizable sums of relief dollars for schools with confusing rules about how education leaders can use it.

Here’s the part that’s maybe not so familiar: The federal government then discredits, prosecutes and imprisons an education leader for what amounts to a procedural error in spending the money, an error that (by the way) yields the leader no personal gain.

This is not a made-up scenario. It happened to Julia Keleher.

It’s a scenario that could have a chilling effect on district and state education leaders across the nation who are right now tasked with moving quickly to deploy federal relief funds.

Today’s crisis is the Covid-19 pandemic, and the $190 billion in federal pandemic relief money sent to states and districts is the closest thing to a blank check we’ve seen. Clearly there’s no playbook for this moment, and successive waves of U.S. Department of Education guidance have left many leaders unclear about how they’re allowed to spend the money.

Flash back to 2017, and the crisis was Puerto Rico, decimated from Hurricane Maria and facing a deepening financial predicament. With many of its historically low-performing schools in disrepair, and massive enrollment declines as families fled the island, the education system was in bad shape. The federal government sent nearly $500 million to rebuild schools and revamp the education system. Puerto Rico’s then-Secretary of Education, Julia Keleher, signed contracts to tackle the most immediate challenges quickly, including repairing buildings and working to resume and improve learning for the island’s remaining students as quickly as possible.

She wound up sentenced to six months in federal prison, accepting a plea agreement in 2021. The U.S. government charged her with conspiracy for violating a prohibition on subcontracts. She signed off on having a subcontractor to do less than $50,000 worth of analysis of school-level damage post hurricane—work the federal government required and whose quality was never in question. The government also took issue with $12,000 in closing incentives on an apartment Keleher bought–incentives that were offered to anyone who purchased a unit in that building. In the end, there appears to be no legitimate claim that Keleher took or personally benefited from public money. I wrote a letter of support for Keleher to her sentencing judge, attesting to her tireless and dogged dedication to Puerto Rico’s students, having provided informal advice on a volunteer basis on school finance issues during her two-year tenure.

Compare that scenario to another eyebrow-raising decision a leader made with federal pandemic relief dollars. In 2020, former Los Angeles Unified Superintendent Austin Beutner signed a $49 million contract with a three-month old startup headed by a former business partner to do COVID-19 testing for students. He bypassed the district’s tedious procurement process and signed it himself using emergency powers.

Jail time? No. He’s lauded for tapping his business connections and moving fast to get things done. No federal inquiry has been initiated.

Why the wildly different reactions to these decisions on how to spend federal relief funds?

One plausible explanation is that it was never about Keleher’s infractions. To quote one columnist: “Keleher became a lightning rod of public criticism for the changes” she made in the system.

Keleher made enemies aplenty in her tenure on an island with a reputation for corruption, angering the teachers’ union and others as she closed hundreds of excess schools as students fled to the U.S. mainland. She also ushered in sweeping (and controversial) reforms to boost abysmal student outcomes, including breaking up the central education bureaucracy and introducing charter schools. As an outsider, she was dubbed a “colonizer.” She resigned in April 2019, citing toxic politics.

Federal prosecutors seemed to take their cues from those angry about Keleher’s changes, and jumped in with a legal fishing expedition. She was indicted three months later. In the months following, prosecutors smeared her name in the media with press releases of baseless charges only to then drop the original charges after the media circus died down. During this whole time she’s under a gag order, unable to even publicly dispute the claims made against her. She accepted the plea deal to move on with her life.

Readers might be wondering if there’s something I’m missing. At first, I wondered too. When federal prosecutors go after someone, many of us often assume it’s for good reason.

But what if it isn’t? Others have taken issue with the federal government’s conduct in her case, including some in outlets like Forbes and the Miami Herald. I’ve reached out directly to the federal prosecutors José Capó-Iriarte and Alexander Alum to hear their reasoning first hand, but have never received a response.

This reality has implications far beyond Keleher, to any leader making tough decisions that could anger some segment of the system. Lots of districts are seeing enrollments drop in the wake of today’s pandemic crisis. That means as federal funds dry up, many may find themselves grappling with some of the same issues that surfaced in Puerto Rico’s post-hurricane turmoil. Some will face the prospect of closing schools and laying off staff to right-size the system for a new, smaller population. These decisions will be painful and unpopular.

I’ve said it before: Leaders can be especially vulnerable to accusations of financial missteps where board members, teachers’ unions or others in the community are at odds with those leaders. When tensions are high, any potential misstep can get magnified. And the pandemic does not inoculate leaders from charges of financial blunders. Big money draws big scrutiny. So, leaders need to be aggressively transparent, especially with contracts.

Still, Keleher’s case stands out as troubling. It leaves me wondering: What does it tell leaders who make the tough trade-offs, especially in a crisis? Does shifting public sentiment mean federal officials will come knocking at the door? Is the best move one that keeps the loudest voices happy at any cost? This case would seem to offer the nation’s education leaders a sobering answer, to say the least.

Recently I shared Keleher’s case with a room full of superintendents as part of a training on using Elementary and Secondary School Emergency Relief, or ESSER, funds. The room was silent. Incredulity was written on their faces. I could see them pondering whether they regretted accepting these roles and the responsibility to steward the federal relief dollars.

District leaders I know are working absurdly long hours right now. Much of it is the nature of a crisis, but some is also to understand the federal rules, file required spending plans, submit proper reimbursements, meet reporting deadlines, and comply with financial record-keeping.

Whether intended or not, the legacy of the Keleher case may be to make leaders even more bureaucratic and risk-averse than they already are. That should be unsettling to all of us. Especially in a crisis, we desperately need leaders whose focus is squarely on meeting the needs of kids.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab.