This is a long post – get a cup of coffee. Also, please note that I am writing this from memory; if I have made errors, please let me know and I’ll correct them. – Guest Blogger
Yesterday, members of the Albuquerque Academy faculty and staff were invited to a “private meeting” with Adam Honegger, Board Chairman, and other trustees in the Little Theatre on campus. Although the meeting was publicized as “optional,” attendance was in fact quite strong; the theatre was near capacity.
The Board members in attendance were Adam Honegger, Thomas Smidt (incoming Chair as of summer 2018), Valerie Romero-Leggott, John David (Chair of the Alumni Council), Leah Sandman (President of AAPA), Pamela Garrett, Ron Moya, Eric Weinstein and Chamisa Pacheco de Alas. (Please correct or add to this list in the comments if I’ve mistaken or omitted a name – like most attendees, I don’t know the trustees by sight and I’m not sure I got all their names.)
The Board members were cordial and engaged, and came to the meeting with an evident willingness to listen appreciated by the attendees.
The meeting opened with a discussion of the concerns raised in the open letter of February 18, about Mr. Watson’s raises as documented in the Academy’s IRS 990 filings from 2008, 2009 and 2010.
The Board’s explanation: The yearly salaries reported are just wrong. Mr. Honegger said, “We have his personnel file here and the salary didn’t change.” Mr. Smidt added that he had looked at Mr. Watson’s pay records from the years in question in spreadsheet form, and that the amount in each paycheck had remained constant. Mr. Honegger referred to the information on the 990s as a “keying error.”
Further reasons given for the mistakes were:
1) The IRS introduced a new form 990 in 2008; 2) reporting was changed from a fiscal year to a calendar year; and 3) one pay period was moved from one reporting year to the next because of the calendar.
A faculty member asked why the school’s auditor’s never caught these mistakes; the board didn’t know why. But Mr. Smidt added that Mr. Watson has taken a pay cut over the last two years, of “$10,000 – $15,000” (he didn’t have the figures with him).
No visual aids or handouts were provided; no publicly-available resources were cited.
The discussion then moved to Mr. Watson’s salary more generally and how it’s determined by the Board. His yearly bonuses were also discussed (for each of the three years in question, he received a bonus of $40,000).
The Board told the audience that the Head of School’s salary is “benchmarked nationally” and that they have used a salary consultant to help set his pay. According to the Board, Mr. Watson is paid a below-average salary for the head of an independent school of this size, and his bonuses are paid for meeting the Board’s goals and for retention.
Audience members posed the question of how faculty and staff salaries are set. Mr. Smidt asserted that they were also benchmarked nationally before the crash of 2007-2008, and that he believed they had been benchmarked once in the years since. This information has yet to be verified.
Discussion then turned to the Academy’s endowment and its performance. According to Mr. Smidt, the Mariposa real estate deal was responsible for the collapse in the valuation of the Academy’s holdings; before the crash, 50% of the endowment’s value was in land. The parcel in question was 6,500 acres, “purchased in 1995 for around $700 an acre.”
(As an aside, this means a real estate purchase of approximately $4.5 million had increased on the Academy’s books to around twenty times that value in thirteen years, if these numbers are correct.)
Discussion of the endowment also led to an explanation by Mr. Smidt of the role of real estate in the school’s history; according to him, when the Academy gradually sold off the land gifted to it by the Simms family, the resulting funds were not used directly to build the school; rather, the Board at the time chose to issue bonds and use that money, leaving real estate revenues in the endowment. Our bond (approximately $34 million) was refinanced in 2010; rather than paying it off from the endowment, the school is continuing to make payments on it (and an additional loan from Bank of the West), because the interest rates are favorable to that approach. (This portion of the discussion was somewhat difficult to follow because of the lack of visual aids.) As a result of this approach, the operating expenses of the school are not the whole financial picture: we also have debt service to pay each year. The trustees did not address how much this adds to our total liabilities.
Also during discussion of the endowment, Mr. Honegger asserted that the Academy’s portfolio is “balanced” at $87 million. He stated that “We’ve been in the top quartile of other nonprofit endowments of similar size” – here he referred to a group of 36 unspecified comparables – “for the last eight years.” He added that “we are trying to get down to a five or six percent spend rate.” Again, no documentation was offered.
Discussion then turned to Mr. Watson’s evaluation of two years ago, in which the Board sought employees’ input and promised to share the results with the community. However, there was no follow-up report made to faculty and staff. A faculty member commented that the community had seen no results. Mr. Moya replied that no system is perfect, and asserted that the Board had read faculty and staff feedback and shared it with Andy. Mr. Smidt added that “Some of the things he needs to improve on are hard to measure,” and “there are always going to be a lot of things that some people don’t like about a person.”
This led naturally to a more general conversation about leadership within the school and how it affects the day-to-day realities of employees’, students’ and parents’ experiences. At this point, Board members distanced themselves somewhat from the audience, pointing out that the everyday running of the school is not their job; it’s Mr. Watson’s. Dovetailing with these concerns, some employees raised the possibility of having faculty representatives on the Board as a means of facilitating communications (it was pointed out that the current “limited-scope trustees” have been specifically directed that they are not there to represent the faculty, and have in fact been directed not to communicate with the faculty about their work with the Board). At this point, multiple Board members responded that having faculty serve on the Board would inevitably lead to a conflict of interest. They did, however, turn the conversation to the possibility of recruiting younger alumni to serve.
At this juncture a faculty member pointed out that the Board is detached from the realities of the school. Mr Moya responded that a percentage of the Board is required to consist of parents of current students, and that Chaouki Abdullah, who is a trustee but was not present, is an educator.
Finally, it was suggested by faculty members that in the interest of transparency, a page should be added to the Academy’s website detailing the endowment’s composition and performance. It was suggested that this might reassure potential donors about the school’s finances. Mr. Smidt voiced some reluctance about this, as he was concerned that past poor performance would be embarrassing. However, the idea was apparently taken for consideration.
At this point, a former administrator made a comment which summed up many attendees’ major concerns: “Leadership has a lot to do with credibility. The fiasco with the endowment since 2008 implies a lack of credibility. Andy’s credibility is not terribly high right now, but we appreciate that you (the Board members present) are working to reestablish it.”
At the end of the meeting, a faculty member reiterated a request made several times over the course of the morning that an open public forum be held in Simms Auditorium for members of the public at a time when working parents can attend. No decision was announced, but we’re hopeful.