School Board in the dark about $100,100 legal payout for trustee

Without telling trustees, Clark County School District officials stamped School Board President Erin Cranor’s signature on a six-figure check to get her dropped from a lawsuit that includes allegations she went rogue to cut short a health consultant’s contract with the district.

In return for $100,100, Business Benefits Inc. had agreed to drop Cranor as an individual defendant in a much larger legal action against the school district. The district ponied up exactly $100,000 in a check dated Sept. 12. Another $100 was paid by the district’s outside counsel, Kolesar and Leatham.

No one, it seems, told the district’s elected leaders about the payout.

“Per regulation, we don’t need their approval,” CCSD spokeswoman Kirsten Searer said Wednesday.

Nevada law requires settlements of claims against public officers be “a public record and must be open for inspection,” and declares settlements not made public are “void.”

The district’s own regulations require board approval of a “claimant’s award, total settlement or collective payments” in excess of $100,000.

But because the district’s check was for $100,000, Searer said, neither it nor the money paid through the district’s law firm had to be disclosed to the board.

Asked if the payments were split to get around CCSD policy, Searer said the district “is not playing a game” or trying to settle in secret.

School Board Vice President Linda Young, who said she expected a board vote on the settlement, was flabbergasted when she learned the check was cut more than a month ago. Other board members did not return calls for comment.

“It’s hard for me to respond because I don’t know anything about it,” Young said after the Review-Journal told her of the payment. “The only information we’re (the School Board) getting right now is it’s ‘in the process.’ ”

Copies of the check obtained by the Review-Journal bear the signatures of Cranor, acting as board president, and district Chief Financial Officer Jim McIntosh. It’s unclear if Superintendent Pat Skorkowsky knew about it — Searer said district regulations only require approval of McIntosh and head legal counsel Carlos McDade, both of whom report directly to Skorkowsky.

Cranor, who is seeking re-election in District G in November, refused to say anything about the payout.

“I have respectfully requested the Review-Journal diligently discover and correct any less than stellar work in its coverage,” she said repeatedly in response to all questions.

‘IT’S NOT RIGHT’

Business Benefits, the district’s former negotiator for health insurance contracts, filed the lawsuit in May 2014. It claims its contract was cut short and Cranor stepped outside her duties as a trustee by demanding that the district kill the agreement “as soon as possible,” as shown in an October 2013 email from Cranor to Skorkowsky.

The lawsuit alleges that under pressure from Cranor, Skorkowsky canceled the Business Benefits’ contract without the required 180 days’ notice.

“… Cranor knew (or should have known) that the contract could not be terminated for convenience,” but advocated without authority from the board to “terminate the contract without cause,” according to the lawsuit.

Because of her involvement, Cranor was the only district trustee named as an individual in the lawsuit — and thus personally liable for damages if Business Benefits wins its case. The $100,100 settlement removes her personal liability, while the district itself remains on the hook.

Attorney Erika Pike Turner, who represents Business Benefits, said she knows of no legal reason to split the payments, and said she was perplexed by the $100 check from Kolesar and Leatham.

“I have no idea why they did that,” she said Tuesday.

The specific amount of Cranor’s settlement exceeds the maximum award of $100,000 allowed in court for intentional tort damages. The district offered such a large settlement so “we’d have to take it,” Turner said in August. Had Business Benefits refused it and had the court awarded the maximum amount in the case, Business Benefits would have to pay Cranor’s legal fees because it declined the larger offer.

Stephen Augspurger, executive director of the union representing district administrators, said “it’s almost too stunning to think this could’ve happened.

“Cranor is the president of the board,” Augspurger said. “She has called for greater transparency. And here she does everything completely the opposite of that.”

Augspurger has also been subpoenaed in the lawsuit by Business Benefits, which has worked for his union.

“The fact that she (Erin Cranor) signs a check on her behalf — something’s not right. It’s not right,” said Augspurger, referring to a potential conflict of interest because Cranor’s name was on the check that removes a threat to her personal assets.

But Searer said the district didn’t notify Cranor before putting her electronic signature on the check, which she called common practice in a district that issues many checks. She said there was no discussion of a potential conflict of interest.

“We recognize we could have highlighted it to the board and the public, since this was a settlement that involved a trustee,” she said.

Searer didn’t say why no disclosure was made. The Review-Journal brought the payment to light.

LAWSUIT ‘PENDING’

The Review-Journal reported on Aug. 19 that Business Benefits had accepted $100,100 to drop Cranor as an individual defendant, subject to board approval. On Tuesday, after four weekly board meetings had come and gone, the newspaper asked when the settlement would come up for a public vote.

Searer’s response: “The Business Benefits lawsuit is still pending. I will let you know when we have additional information on this.”

When asked Wednesday why she didn’t disclose the payment had already been sent without board approval, Searer said: “That’s not what you asked.”

Augspurger called the exchange another in a string of deceptive actions by school officials. Last week, he noted, Skorkowsky apologized in writing for his administration’s work to change sex education curriculum in secret, vowing to start over with a more public process.

“How many times can you do these kinds of things before no one will trust you?” said Augspurger, contending the settlement should be subject to a public vote and rescinded if trustees reject it.

Young said she just wants to know.

“What I would like to see is the information,” she said. “From there, we can make that determination.”

Contact Trevon Milliard at tmilliard@reviewjournal.com or 702-383-0279. Find him on Twitter: @TrevonMilliard.