By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
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By Dennis Romero
By Jill Stewart
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Anyone paying attention knew why Hal Kwalwasser was brought to L.A. Unified at the highest salary ever paid for the school district’s top in-house attorney. Superintendent Roy Romer nabbed the former Pentagon lawyer to be his fixer — the legal eagle who would find or finagle the legal foundation for whatever Romer wanted to do.
When Romer wanted to rewrite a court-monitored settlement over the education of disabled students — control of more than $1 billion a year was at stake — he turned to Kwalwasser to lead the charge. When Romer asserted the legality of his attempts to revive the canceled Belmont Learning Complex project, that claim was certified valid by Kwalwasser.
But as of July 1, in a move that invites all sorts of speculation, Kwalwasser will depart at Romer’s behest. A district statement speaks vaguely of Romer’s desire to “better facilitate moving his agenda forward in the future.” In interviews, Romer has offered equally cloudy and somewhat shifting rationales.
The consolation prize for the 56-year-old Kwalwasser, who earned $228,375 this year, will be the sweetheart severance package used to lure him to Los Angeles three years ago. Kwalwasser will get 18 months of salary and benefits. If he accepts another job during that time, the deal is modified: In that case, he gets the difference, if any, should his new salary pay less than his L.A. Unified wage. Part of Romer’s recent unhappiness with Kwalwasser, it seems, was over this contract itself, which includes terms accorded no other employee.
Kwalwasser’s role in the district is well illustrated by a largely sub-rosa debate over the last year about rising costs in school-modernization projects. One district counsel, Richard Sheehan, expressed concern that state law seems to require rebidding portions of a project when that project runs more than 25 percent over its original budget. When Sheehan sought an outside legal opinion, the outside firm expressed similar concerns.
The rebid requirement is meant to discourage fraud in both the bidding and the construction process. But the problem wasn’t that simple in L.A. Unified. Scores of projects have been running over budget because of early mismanagement in the district’s construction program. Officials say the “change orders” were an unavoidable reality, not an indication of fraud. Widespread rebidding would add further delays and costs, they said.
Kwalwasser got his own outside legal opinion, which, not surprisingly, supported a different and preferred interpretation: that new bidding was triggered only if cost increases exceeded 25 percent in a single change order. Thus, it didn’t matter how much project costs rose in total, as long as these increases were submitted in increments of less than 25 percent of the original bid price.
Weekly sources recount how this interpretation sounded suspect to district Inspector General Don Mullinax, not to mention a school-board member or two. It was just too convenient, too easy to justify any outrageous cost overruns simply by splitting these change orders into pieces. This legerdemain would appear to negate the intent of the state law.
Yet the facilities division insisted that the more lax interpretation was necessary and defensible in the current crisis. So Kwalwasser went back to work, contacting the state Attorney General’s Office, which, in times past, had issued a ruling that seemed to support the view presented by Sheehan and Mullinax. Kwalwasser got the A.G. to change tack. The A.G.’s Office agreed to back Kwalwasser’s interpretation — provided that considering change orders separately was not merely an artifice to undermine competitive bidding. Kwalwasser defends the outcome as a needed corrective to help the new management team quickly and efficiently finish projects that went awry before Romer’s arrival.
“Rebidding would have hopelessly delayed at least two or three dozen school projects,” said Kwalwasser.
Kwalwasser’s signature effort was revamping district legal services. “I took a law office that wasn’t performing up to potential and turned it into a first-rate law office,” said Kwalwasser this week. “I started with eight lawyers of middling quality at best. The office was not doing anything by the best practice. The lawyers were not performing the way I wanted them to. And they were held in disrepute by their clients.” He quickly built up to 37 staff attorneys, establishing seven teams of in-house attorneys in areas such as facilities, special education, business services and field services to schools. Kwalwasser also raised salary ranges for these attorneys by about 50 percent, as high as $177,000 a year.
“Our prior salary levels were not sufficient to get the kind of talent we needed to run a good legal shop,” said Kwalwasser. “You get what you pay for in this business. I paid Andrew Cheung almost what he was getting at Southern California Edison, and because I had Andrew Cheung, I got the Corona energy contract and that’s worth $5 million a year in savings to the district every year I have it.”
Even though some top officials considered Kwalwasser arrogant and expensive, Romer’s move last week to replace him took most by surprise, including Kwalwasser. His get-what-you-pay-for approach is very much in line with the philosophy of Romer and a school-board majority, under whom top administrative salaries have skyrocketed, easily outpacing salary gains achieved by teachers.