Tracing the Bitter Roots of School District’s Discontent

The telephone answering machine at the Rancho Palos Verdes home of Bob and Dawn Henry greets callers with the chorus of the 1961 hit song, “Hit the Road Jack.”

“What a catchy tune,” Bob Henry chimes in after the chorus. “We know it’s No. 1 in your hearts. On Nov. 7, let’s make it No. 1 on the charts.”

The message is aimed at Jack Price, 58, superintendent of the Palos Verdes Peninsula Unified School District for the last seven years and, for the last two, nemesis of the East Peninsula Educational Council, a parents’ group that wants him fired.

The group, which includes the Henrys, has fought desperately to keep Miraleste High School open, despite the school board’s decision that the east side school should be closed because of declining enrollment. Three candidates seeking Price’s ouster--Peter Gardner, Barry Hildebrand and Maryanne Kipper--resigned from the group to run for the school board this November.

At the same time, Price and school board members have been been forced to defend themselves against a lawsuit that alleges they cost the district more than $1.5 million by failing to get top dollar for surplus school property and by selectively forgiving developer fees.

“I want to see public officials held accountable,” said Janet McAuley, who lives in Palos Verdes Estates and who filed the lawsuit last year with Rancho Palos Verdes resident Richard Smith, a Lynwood High School teacher. “I really believe once the public is informed they won’t tolerate this.”

School board President Jeffrey Younggren, Price and other school district officials view the actions by the parents’ group and the lawsuit as a coordinated attempt to discredit them in the eyes of the community. Younggren calls the lawsuit a “witch hunt.” Price said he believes the lawsuit, as well as the east side parents’ actions, are an attempt “to bring the district to its knees.”

“This is a classic case study in fanaticism,” Price said. “It’s been a nightmare.”

McAuley denies that her legal action is related to the district’s decision to close Miraleste, although she and the parents’ group say they are united in their belief that the district is not managed properly.

About the only thing all sides agree on is that although district students consistently achieve lofty scores on California achievement tests, their parents and some school officials have sometimes taken the low road in their disputes.

Both sides point to slashed tires, mutilated pets, mailboxes knocked over and acts of minor vandalism. Neither side has any proof of the identity of the perpetrators.

“This is . . . a highly competitive, very aggressive, very wealthy community of individuals who in many ways made their success by not buckling under, but going for the jugular,” said Younggren, a psychologist who drives a fire engine-red Ferrari. “And we see that here.”

For example, Ted Gibbs, spokesman for the parents’ group, says his phone rings three times every morning at 5 a.m.; there is never anyone on the other end.

Price says he also used to get early morning phone calls, as well as obscene letters and poems urging him to leave the district. Twice, he said, urine was splattered over his office door.

Sequence of Loans

The personal attacks against Price have included allegations by some critics that he has used district time to write some of the six textbooks he has co-authored. Price denies that and says he is irate that McAuley and Dawn Henry have publicized his personal finances, including a sequence of loans totaling $2 million that he took out in the last four years to finance a home and pay off bills.

Price said it drives his detractors crazy wondering how he can make the payments on the loans. In addition to his $82,150 annual salary as superintendent, he says he also earns more than $100,000 a year in textbook royalties, and his wife is paid about $70,000 as an administrator for the Pomona Unified School District.

“Dave Capelouto (assistant superintendent in charge of finance) and I are supposed to be two crooks,” Price says, adding that he has never profited personally from any of the district’s real estate or other business dealings.

But there is no question that Price has tried to get in a few licks against his opponents himself.

After Bob Henry made inquiries about Price in Vista, the San Diego County city where Price was school superintendent before resigning to take the Palos Verdes position, Price wrote a letter to Los Angeles Councilwoman Joan Milke Flores.

In the letter, Price questions whether Henry, who is director of management services for the Harbor Department, had been sleuthing for the parents’ group during the workday. Explaining that his own inquiries to the Harbor Department had been rebuffed, Price asked Flores in his March 15, 1988, letter to find out if Henry took vacation time to conduct his detective work.

“I am certain that you can find out,” Price wrote. “You do not need to tell me. It is enough to know that you will be certain that public funds are not expended on private business.”

Used Vacation Time

Bill Stein, director of port administration, wrote the councilwoman that Henry had used vacation time for his research, with Stein’s prior approval.

The critics’ feelings against Price became particularly inflamed after he appeared before the Rolling Hill Estates City Council in April and argued in favor of expansion plans by the private Peninsula Heritage School.

“It shocked, saddened and sickened me to hear this man speak in support of expansion plans of a private school system, at a time when we are fighting tooth and nail to keep our present school system from closing down one school after another on the hill,” Glenda Urmacha wrote in a letter to The Times.

” . . . With friends like this, the Palos Verdes school system needs no enemies.”

Price says that in nearly four decades as an educator, he has never been subject to the character assassination or charges of mismanagement now leveled against him.

However, Lance Vollmer, a Vista school board member, says he ran for election in 1983 on a platform to fire Price. Vollmer had criticized Price, who left the district before the election, for his handling of some land trades that Vollmer said led to an FBI investigation. No indictments were issued.

FBI Investigation

In a 1983 interview with The Times, Price acknowledged that there had been an an FBI investigation but said he did not know “what they were looking for.”

Public displays of animosity have lessened somewhat since the State Board of Education ruled Sept. 8 that peninsula voters should not be allowed to decide whether a separate school district should be formed on the east side. The parents’ group had petitioned the state panel for the election after the local school board decided to close Miraleste, the only high school on the east side.

The district, faced with a legal challenge by the parents’ group, is preparing a court-ordered environmental impact report on the Miraleste closing and other closures throughout the district. The report is scheduled to be complete in early October.

At the heart of the dispute between the school district and the parents’ group is the issue of declining enrollment throughout the district. In the early ‘70s, the district had nearly 18,000 students, a number that has since declined to 8,800.

As a result, the district in recent years has closed five elementary and two intermediate schools and has sold six parcels of land that had been earmarked for future school construction. Although the district’s own demographer projects a slight increase in students to between 11,000 and 12,000 by 1993, Price believes the district will never be as large as it once was.

“The property up here is too expensive (for young families),” Price said. “Secondly, we are almost all built out. . . . There isn’t much space for new housing.”

Projections Disputed

The parents’ group disagrees with the district’s demographic projections and with its earlier decisions to sell surplus property outright instead of retaining ownership in case it is needed in the future. Nancy Bolton, a demographer who has been active in the group, contends that, by closing schools, the district is making “permanent solutions to a temporary problem.” She contends that more families with children will move onto the peninsula in coming years as its present population grows gray.

“I know housing is expensive here,” Bolton said, “but it is expensive in a lot of places. . . . It is not at all unrealistic to think in seven or eight years we could have 14,000 or 15,000 (students) because this is an area of mostly single-family homes.”

The $6.65-million sale of the Peninsula High site in Rolling Hills Estates in January, 1987, has become the chief exhibit for McAuley and Smith, who contend that the school board and administration fell short in their stewardship of public property. School officials say they did well in selling the site, which had been earmarked for a high school but had never been developed.

In 1987, when the school district faced a budget shortfall, it disposed of the 36-acre site, giving 10 acres to the city of Rolling Hills Estates for recreation, and selling the remainder, which was zoned for 72 home sites, many with views.

Expanse of Dirt

The site today is a cleared expanse of dirt. Plans call for a first phase of 44 homes ranging in price from almost $700,000 to about $850,000, with completion in 1990. A second phase of 28 larger homes, tentatively priced at $2 million each, is scheduled for completion in the next three years.

McAuley says she has obtained internal documents, prepared by the developer who bought the site, that show each home site was worth $250,000 after streets and utilities were put in. By her calculations, the school system should have made as much as $15 million on the sale.

“I am at a loss why the school system would forgo a profit of that magnitude in a rapidly rising real estate market,” she said.

School board candidate Barry Hildebrand, citing a school site sale in Manhattan Beach, said other school systems did better with similar sales. In that sale, the Manhattan Beach school district obtained a tract map for the 4.2-acre Manhattan Beach Heights Elementary School site and sold it in October, 1988, for $10 million.

Hildebrand said the school board and administration mishandled the Peninsula High sale by using an outdated appraisal that was too low to start with and by giving the developer concessions worth $500,000. McAuley and Smith make the same allegations in their lawsuit.

“The way they handled that sale says to me that the school board and the administration are not concerned about the kids of the peninsula,” Hildebrand said. “It says to me they are more concerned about their friends in real estate. They gave it away.”

Defended Sale

Younggren, speaking for school board members, defended all aspects of the sale. The critics of the school board are “looking for a commie under every bed,” he said.

“I feel the bidding was competitive and we marketed the property the best we could,” Younggren said.

Price emphasized that the school system got about 20% more than the $5.4-million appraised value of the land. He said the district got what the market was willing to pay and added that he and other school officials are educators, not developers.

A development group composed of Goldrich & Kest Industries and California Coast Development Group Inc. was awarded the bid for the site on Nov. 17, 1986, and on June 7, 1988, paid $6.65 million for the property.

One of the losing bidders, developer Ron Florance, a former councilman in Palos Verdes Estates, said the school system would have made much more money if it had accepted his offer to form a partnership.

A consultant’s memo to the board that evaluated Florance’s bid labeled it “speculative with inherent risks.”

50% of Profits

Florance was willing to pay the $5.4 million appraised value within two years and cut in the school system for 50% of the profits from the development, according to district documents.

“They would have got double for the property,” Florance said.

“We were in a rising market. You had to be deaf, dumb and blind not to recognize that.”

Price said neither Florance nor another developer who proposed a similar development supplied the district with sufficient details.

The second main accusation made by McAuley and Smith about the school board’s handling of financial matters concerns developer fees. They allege that Price and Capelouto cost the district more than $500,000 by needlessly granting exemptions to developers, even though the granting of the exemptions violated a school board resolution.

In 1987, the board voted to impose a fee of $1.50 per square foot on residential construction and 25 cents per square foot for commercial development beginning June 27 of that year. Under state law, school districts are entitled to adopt such fees under the theory that new development will draw more children into a community.

At the meeting on April 24, 1987, where the resolution imposing fees was passed, the board discussed exemptions for people who had begun development plans but decided not to grant any.

Began Granting Exemptions

Three days before the fees took effect, however, the district began granting exemptions. The practice continues under a board policy adopted in June, 1988.

Capelouto later told state auditors that he granted exemptions to local developers who could show that they had submitted a building permit application to a peninsula city before March 1, 1987, but had encountered problems that prevented issuance of the permit until after June 27.

State Assemblyman Gerald N. Felando (R-San Pedro), prompted by requests from constituents, asked the state auditor general in the spring of 1988 to investigate the district’s management practices. Auditors criticized school officials for failing to adopt written criteria for granting exemptions, and for not letting the public know that exemptions could be obtained until the district issued a press release in February, 1988.

In addition, auditors said that between June, 1987, and March, 1988, the district collected $297,000 in developer fees, and exempted $532,000 worth of fees. Auditors found that the district could not demonstrate that 13 exemptions met Capelouto’s unwritten criteria. The district later provided documentation for the 13 exemptions, according to Philip Jelicich, who conducted the audit.

Consistent Criteria

Younggren said board members initially did not know that the exemptions were being granted. However, Younggren said, after administrators assured them several months later that consistent criteria were being applied, board members allowed them to continue.

Younggren acknowledged that the school board did not issue a formal policy statement outlining criteria used for granting exemptions until after the auditors finished their report and recommended that it do so.

“There was no favoritism shown” in granting exemptions, he said.

Although the board discussed exemptions, the resolution did not address that issue. Afterward, Price said, “The feeling was it was OK for us to go ahead” and grant them. In retrospect, he said, he and Capelouto should have informed the board that they were making exemptions.

“Neither Dave (Capelouto) nor I ever thought of that,” Price said.

Price himself was not left unscathed by the auditors. They criticized the district for accepting a $6,727 developer fee check from Price in January, 1988, and then failing to deposit it until March. The payment receipt issued to Price allowed him to obtain his building permit for his home from the city of Palos Verdes Estates.

Price initially asked school officials not to deposit his check, according to the auditor’s report. Charlene Pavlick, an accountant for the district, told investigators that “the superintendent indicated that he did not have the money to cover the check on Jan. 7, 1988. Charlene said that she was unhappy with this request to hold his check, but she complied because Dr. Price was the superintendent and, therefore, her boss.”

‘Poor Judgment’

In a recent interview with The Times, Price would not elaborate on the matter, except to say that he exercised poor judgment.

After two years of acrimony, district officials and their critics say they are eager for a resolution of the issues that divide them.

Earlier this month, as the State Board of Education debated the parents’ request for an election, Price declared, “All we want to do is to get the kids off the hangman’s noose.”

But further delay on some issues is inevitable as the lawsuit winds its way through the courts.

The next milestone in the district’s travails comes Nov. 7, when three seats will be filled on the school board. Each side hopes to gain a three-member majority--and vindication.

In the meantime, the antagonists cling tenaciously to their positions.

“There is no deception or conspiracy or incredible ineptness here,” Younggren said.

Said Dawn Henry: “It is time to get honest and responsible representation in this district.”

KEY FIGURES IN THE DISPUTE Richard Smith

Rancho Palos Verdes resident filed lawsuit, with Janet McAuley, against the peninsula school board and superintendent.

Jack Price

Peninsula superintendent: “This is a classic case study in fanaticism. It’s been a nightmare.”

Janet McAuley

District critic: “I want to see public officials held accountable. I really believe once the public is informed they won’t tolerate this.”