History of Board Governance Issues

[BeenThere]

I thought for a while before posting this, but feel that those who are newer to the Academy community, which I admire greatly, deserve to hear this perspective.
The current board needs to be held accountable, and this reckoning is essential. However, anyone currently serving as trustee inherited a tradition of neglect, inattention to fiscal accountability, and hubris. At the ground-breaking ceremony for the Wyoming campus, Ashby Harper warned of such complacency.

In the early days, following the Simms’ testamentary gift, some trustees profited personally from the vast amount of land that had been given to sustain the institution. Anyone who lives in the proximity of the Academy, lives in the homes these trustees built, on land that was available for sale, and about which they possessed significant information. I have no reason to believe they operated outside the law, but they certainly behaved outside of what would be considered a fiduciary responsibility to the institution they “served.”

In the 90’s, leadership appointed board members who were content serving on committees like the “education committee”—busywork that kept them away from the fiduciary responsibility that should have been their primary responsibility. “Intergenerational equity” became the focus, and noble commitments were made to financial aid. Unfortunately, unsustainable spending policies were enacted to achieve those ends, which I will illustrate in the next paragraph.
The largest problem was one of over-confidence in the paid leadership’s ability to make money in real estate. After all, they did really well with High Desert. However, that parcel was essentially free because it was the remaining real estate that the school owned from the initial Simms gift. It was ill-advised real estate speculation on ten sections of land north of Rio Rancho that created Problem 1, Mariposa, which remains undeveloped desert to this day. Problem 2 is that the spending policies included the “projected value” of this real estate. It never produced any revenue, but was factored in as roughly half the value of the endowment. So an already over-generous annual spending allowance was predicated upon the future value of an investment that never produced.

So by the time the current headmaster came on the scene, decades of fiduciary inattention, despite the good intentions of most trustees, had created a culture of blindness. The bottom fell out the real estate market in 2008, and the rest is a history that most of you know.

So, this effort to change the culture must succeed. I encourage a thorough assessment of board structure and the engagement of our smartest alumni/ae in the process. I know personally five or six of them who are world-class financial minds. By the way, some of these alums have already attempted to engage but have not been heard.

Hubris, blind trust, and parochialism have not served this institution. Albuquerque Academy deserves much better. The current headmaster’s salary, pay gaps, and other issues must certainly be on the table. However, there are deeper structural issues that need not just revision, but re-writing.

[Benjamin Graham]

Thank you, BeenThere, for a superb summary. Your analysis of overconfidence in real estate, spending on “projected value” instead of a conservative value, is exactly right, and corroborates Mr. Hibbett’s letter.

All the standard practices for endowment management advise prudence over risk. Vanguard’s Institutional site emphasizes this over and over. Better to live within the means of a lower yield from a safe portfolio, than to gamble on a higher yield from a risky one.

Schools must be managed from the standpoint of “in perpetuity.” When we retire, we are advised, sensibly, that we must be conservative if we want to be sure our investments will support us for, say, 25 years.

All the more so for the Academy, which we hope will continue to serve for generations to come.

[Perspective]

Yes, to Been There and Benjamin Graham! Your statements and clarified understandings echo what many folks have heard and known for years. It is time to deal with these issues and develop sound paths with integrity and move forward.

[doctorz]

You know, with the CFO position vacant, the board has a unique opportunity to appoint a committee of our brightest alums and parents to analyze and recommend a way forward. The pool of talent available is awesome.

[BeenThere]

I am not sure how this link might perform, but it points to a 2009 article about independent school endowments. The Academy is “featured”. It provides additional historical and national context.

[BeenThere]

I am trying again to post this link http://www.nytimes.com/2009/11/07/business/07prep.html

[BeenThere]

Additional recent history: https://tomgarrity.com/tag/albuquerque-academy/

[Jeremy Logan]

I have 2 kids, soon to be 3, at The Albuquerque Academy. I pick up extra shifts at work every chance I get in order to be able to pay for that. My wife picks up the slack at home. This is a major sacrifice for us. Why do we do it? We do it because we believe in the school and its value for our children.

I served in the United States military. This meant moves and deployments and a major stress on our family. Why did I do it? I did it because I believe in this country and what it stands for.

Just like I am deeply offended when someone disrespects this country, its flag, or those who have fought and died to defend it, I am deeply offended by parents, teachers, and students disrespecting the school that my wife and I sacrifice so greatly to send our children to.

Andy Watson gets paid what is appropriate for a head of school at a top nationally ranked independent school. It is a bad idea to decrease his salary. What will that achieve? He will quit. Do you think a better qualified person will replace him? Of course not.

If you want your head of school to be paid what a public school employee makes, then you should only expect public school results from the school. That is certainly not what I expect and not why I pay the tuitions I do.

My answer to those of you unhappy about the Academy is the same to those who are unhappy about this country.

If you don’t like it, leave.

[Not Surprised Too]

And what if your belief in the Academy is just blind faith? As a graduate from the Academy, we were once taught to look at things objectively and then make our own personal determination. One of the current problems at the Academy is the mindset you exemplify in your « if you don’t like it you can leave it » attitude. Once upon a time we were taught that if we didn’t love it, we could change it and make it better. I hope the Academy can learn and grow from their current situation!

I personally would not currently send my children to the Academy and in fact didn’t re-enroll them this past year. The dysfunction of administrators and the low morale of teachers is obvious to students, especially in the upper school, and it is taking a toll on student culture. Students are afraid to stand up for other students when they see something or someone do something wrong because of retaliation from other students and from administrators. Academics are not enough if a school does not instill the values of community and integrity. How can the Academy instill these values when they are so clearly lacking in the current leadership and administrators?

[Not Leaving (Yet)]

Mr. Ashby’s remarks in 1965 reflect many of the values and goals we try to live by and teach our children, and we hope to see the Academy rededicate itself to those commitments as we move forward–we’ll see.

BeenThere and many other contributions here are very concise, but I’m still left with the question of how we can expect the current Board to act counter to the wishes of the person that selected them? What I’ve been told is that Mr. Watson makes most of the Trustee selections. If my information is incorrect, please share.

With all due respect to JeremyLogan, you and Mr. Watson have something in common. You each have 3 children that will be educated at AA. The difference is Mr. Watson didn’t pay for his children’s tuition. Their tuition was paid by the endowment that this website is trying to preserve. I have no problem with Mr. Watson’s salary and benefits (or anyone else’s) as long as it is commensurate with performance. This begs the question: Who’s benefitted more Mr. Watson or Albuquerque Academy?

I extend a special thank you to all the dedicated faculty, staff, maintenance workers, librarians, and all those I have not mentioned that work very hard (mostly behind the scenes) to make the school the most intellectually stimulating and welcoming environment for our children. Our family sacrifices to pay the tuition because of you!

Not leaving, yet…

[Amazed & concerned]

I have been extremely concerned not only about the fiscal issues but also the lack of raises for teachers. I was already aware of the closed nature of Trustee meeting and actions an now I am waiting to see if changes are really made. I am looking at alternatives for my child in case they do not.

• This reply was modified 8 years, 7 months ago by savetheacademy.

[ClassOf19]

Jeremy Logan – My understanding is that the majority of the teachers are very very unhappy with Mr. Watson and his heavy-handed tactics and have been for years. Unhappy with the current management and unhappy with the vision of the school are two, very different things.

Besides, the point of this web-site is to try to save an institution that is clearly in financial peril due to total mis-management, and will be gone in a few years. Telling the teachers, parents and students to “just leave”, doesn’t help squat, and certainly won’t prevent the imminent fate that the institution now faces.

But Andy will make millions in the process of the destruction, if you are ok with that.

[Homebody]

Been There, I just wanted to say thank you for your post. This is extremely helpful.

[Maestro]

Dear Jeremy Logan,

Thank you for a spirited post. You wrote:

Andy Watson gets paid what is appropriate for a head of school at a top nationally ranked independent school.

In normal circumstances, I would wholeheartedly agree. But please remember that the Academy’s circumstances are NOT normal. It has been bleeding red ink for years. As a result, the Academy can’t keep the promise of its mission. THAT’S the real problem.

When that happens, an organization must tighten its belt and get the budget back in balance. And the CEO has to lead the way.

To pay Mr. Watson more than the president of UNM just makes no sense. And then what about two raises when faculty salaries are frozen for 2 years? Think about the effect on Academy employees. You may say, “Well, if you don’t like it, leave.” But is that really the right answer?

• This reply was modified 8 years, 7 months ago by savetheacademy.

[Disappointed]

Read Mr. Honegger’s letter of Feb 11 carefully. It reveals a lot. Notice it’s much more accommodating than his first response to Mr. Hibbett on January 31. But then notice the phrasing:

“The fact is, last week’s situation came at many of us hard, fast, and unexpectedly. But that does not excuse the fact that we missed the mark on communications.” OK, but the real “missed mark” is responsible financial management, the board’s chief responsibility.

“As you review the summary facts that follow my letter, I’m sure you will agree that our community’s near-term challenge is to step back and have a broad common understanding of where we came from, where we find ourselves today, and what we want for the Academy of tomorrow.” Notice everything here is “we” as in “the community,” not “we” as in “the trustees.” The real near-term challenge is for the board to squarely hold itself accountable for its mistakes.

“And because our work, research, and engagement is ongoing, we expect our information sharing to grow organically over the coming weeks and months.” Why does shared information have to “grow organically”? What is so hard about answering our questions now, in plain English? What “work, research and engagement” is required? It’s not complicated

“But then came 2007…We were left between a rock and a hard place.” As if the trustees were somehow innocent victims of forces beyond their control, with no responsibility whatsoever for their choices to overspend and increase the Academy’s exposure to real estate.

“And as we get total endowment spending down to a sustainable level, the probability of endowment growth will increase, though it will still be dependent on economic conditions and a wide range of financial markets.” More hedging. Why do we see no firm commitment to balance the budget, as so many successful NAIS schools have done?

My conclusion is that somehow (arrogance? lack of understanding?) the Academy board lacks a culture of transparency and accountability. Fix that, and we are on our way to a solid future.

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