Communications Breakdown

After neglecting to get available federal aid, technology-deficient TUSD enters into a questionable business deal

Like navigating through fog along the Santa Cruz River on a misty morning, delving into Tucson Unified School District's telephone and technology systems is extremely murky. The same can be said for the reasons that TUSD has neglected to obtain thousands--if not millions--of dollars from the federal government's E-Rate funding program during the last three years.

Millions of dollars in equipment purchases and Internet improvements are on the line--improvements that everyone agrees TUSD, way behind in terms of technology, desperately needs. Meanwhile, public squabbling has broken out between TUSD officials, with finger pointing and allegations of corruption and incompetence.

Last fall, Trillion Partners of Austin, Texas--proclaiming itself as "the largest national service provider of wireless and fiber wide area networks for K-12 school districts in the country"--started talking with TUSD officials.

According to e-mail messages between Gary Gaessler, regional sales manager of Trillion, and Guyton Campbell, head of the TUSD Technology and Telecommunication Services Department, several district employees had dinner with Trillion executives while at a school technology conference in late October. They ate at Tamayo, a Mexican restaurant in Denver serving contemporary cuisine, where most of the entrées are priced at more than $20. TUSD representatives in attendance included Campbell and his assistant, Rudy Flores.

Campbell characterizes the dinner as being mostly about sales; Campbell acknowledges he and Flores also had breakfast with Trillion executives. Campbell emphasizes functions like this are part of his job, and that some time ago, he had a get-together with Qwest officials to discuss their fiber network ideas for TUSD.

Shortly after the Colorado meetings, Trillion began laying out its concept for a wide area network (WAN) for TUSD. By Thanksgiving, a preliminary design for how the district's many facilities could be networked had been completed.

A few weeks earlier, district officials had decided to obtain an analysis of TUSD's current systems. As a result, bids were solicited for an objective presentation to the school board on technology.

To complete this analysis, Trillion's Gaessler suggested a Montgomery, Ala., firm, eRate Consulting Services (ERC). After a confusing procurement process that included two other companies, ERC was selected. Flores wrote in a memo: "In the interest of a true unbiased analysis, it is in TUSD's best interest to go with a neutral, non-affiliated provider, which in this case is ERC." The company was to be paid $29,200 and had 30 days in which to complete its assignment.

Shortly after being employed, ERC representative Dan Kettwich contacted TUSD officials about another task his firm could do for the district. "Please remember," he wrote, "that we perform E-Rate consulting services." Last fall was an opportune time for such an offer.

E-Rate is a federal program set up to provide reimbursement to K-12 school districts for data and telephone costs. Even though many program participants consider getting relatively small E-Rate grants to reimburse school districts for telephone bills almost automatic, the staff of TUSD has not been able to accomplish the job since 2002.

Hoping to change this fate, late in 2005, TUSD employed ERC for an extra $9,900 to help it solicit bids from technology and communication vendors, along with preparing an E-Rate application. Intending to apply for both reimbursement of telephone costs and money for expensive infrastructure improvements this year, district officials had to rush to meet a Feb. 16 deadline.

To comply with E-Rate requirements, vendor bids for tens of millions of dollars of proposed technology projects were quickly solicited, obtained and reviewed by a TUSD committee. To facilitate this group's job of wading through the waist-high stack of proposals submitted by 16 companies, Kettwich and TUSD procurement staff members analyzed the bids and prepared a matrix of their findings.

From the applicants for the critical WAN component of the bids, Trillion Partners was ranked highest, with the Qwest proposal coming in second.

The three-member TUSD review committee, which included Flores, agreed with the recommendation. In response to later criticism of his role in the review process, Jon Slaughter, president of ERC, insists he wasn't even in the room at the time the committee made the Trillion recommendation.

When the proposed vendor contracts went to the school board on Feb. 14 for approval, there was $3 million included for Trillion Partners to provide WAN services. A similar amount over each of the next four years was also a possibility; meanwhile, no WAN money was recommended to be spent with Qwest.

Of course, if the E-Rate funds were not obtained, the vendor contracts were to be canceled due to a lack of money.

At the meeting, Slaughter plainly told the elected officials: "I don't represent any vendor." In response to a crystal-clear question from board member Judy Burns about any connections he might have on his company's Web site to any of the E-Rate bidders, Slaughter replied: "Not to my knowledge."

Burns had asked the question for a reason: A Trillion Partners banner ad was on the ERC Web site. The ad proclaimed: "Providing high-speed Internet access for K-12 schools, Trillion is uniquely qualified in designing, installing, operating and maintaining wireless wide area network systems ... ."

After this information was discussed by the school board in executive session, member Joel Ireland said, "It would be troublesome if the consultant had connections to one bidder."

As a result of Slaughter's apparent conflict of interest, the board voted 3-2 to not approve either the vendor proposals or the two pending multi-million dollar E-Rate applications.

Slaughter pleads he is a victim of an oversight and was not paid for the banner ad. "I have 974 pages on the Web site," he explains. "One person with my company thought we needed to certify good service providers because of problems with the E-Rate program."

Indicating that ads for these "E-Partners" were placed on his Web site early last year, Slaughter insists he quickly changed his mind about the promotion. But, he says, that one Trillion banner that Burns found was missed when the others were deleted.

The morning after the TUSD board vote to not apply for E-Rate funding, the Arizona Daily Star ran a front page story with the screaming headline: "TUSD could lose $35M from U.S." As a result, Burns remembers, "We got pressure from important people in the community."

At the same time, TUSD Superintendent Roger Pfeuffer looked into financial links between Slaughter's company and Trillion, and couldn't find any.

Reporting his conclusions to the board at a special meeting held on Feb. 16, the superintendent said: "I think (the banner) was a bad business judgment, but it didn't affect (ERC's) judgment." As a result of Pfeuffer's stance, that night, Burns was the lone board member to vote against accepting the vendor bids and submitting the E-Rate applications.

District records show Burns called a Qwest consultant the morning of this meeting, but she deflects any criticism of this contact with a bidding vendor. "I talk with them regularly," she says. "They know our system."

However, since the Feb. 16 vote, more about Slaughter and his possible ties to Trillion Partners has bubbled to the surface. According to a Montgomery Advertiser article from 2001, several years ago, a Harry Slaughter--apparently, Jon's brother--along with two other men, established an Alabama company called Trillion Digital Communications. An industry newsletter reported this firm in 2002 started a sister company, Trillion Partners, in Austin.

It was this same Trillion Partners that on Feb. 16 received the $3 million TUSD bid, and in November had suggested Slaughter's company for the telecommunications and technology analysis. Also, on Feb. 16, according to a company press release, Trillion Partners purchased the assets of Trillion Digital Communications.

Pfeuffer only recently learned of these developments; Slaughter flatly denies allegations of financial connections between himself and Trillion Partners.

"That's completely inaccurate," he says. "My estranged brother, Harry Slaughter III, founded Trillion (Digital Communications) in Birmingham, but was bought out a couple of years ago. There is no way I got remuneration."

In Slaughter's defense, representatives of three small school districts across the country presently employing ERC say they have never heard of Trillion.

However, this isn't the first time Slaughter has had difficulty with allegations of family business connections. According to the Miami Herald, questions were raised four years ago about the work he was doing for Broward County Public Schools on a technology plan, involving possible links with a vending company owned by his father and a brother.

When the TUSD school board approved the E-Rate applications on Feb. 16, they concurrently asked the Arizona Attorney General's Office to look into the process involved in securing the vendor bids. If any discrepancies were found with procurement codes or other laws, the applications were to be modified or withdrawn.

"The irony (of this situation)," notes Flores, "is we did everything we could in terms of getting a consultant and trying to run a process that was as clear and clean as possible, only to end up at this point."

While TUSD officials strongly disagree over many technology issues, there is consensus on one thing: The district's telecommunication and Internet systems need improvement.

"When I returned to work for the district 2 1/2 years ago," Campbell observes, "I was absolutely floored by the network. It was the same technology I had seen 15 years earlier. That network served TUSD well, but times are changing."

Back in February, Slaughter told the TUSD Governing Board: "Your telephone system is inadequate due to lack of capacity, and in excess of 50 percent of the equipment is outdated."

While she disputes some of Slaughter's specifics, school board member Burns agrees the district's communication system needs upgrading. For the last year, she has been loudly clamoring for development of a plan that would include anticipated costs, along with price comparisons between improving the current system or totally replacing it.

Last October, Burns sent Pfeuffer an e-mail, stating: "If you do not bring us ALL of the options available, with all costs (up front and maintaining), this will be the biggest boondoggle TUSD has ever brought to the city of Tucson."

Slaughter concurs a wide-ranging technology plan is needed, and estimates it could cost a half-million dollars or more. But he strongly believes it should be done by a neutral, out-of-state consultant.

"TUSD's current (communication system)," Slaughter declares, "is a direct result of inappropriate participation of board members in technology decisions. ... The district's technology department is being manipulated by the board under the direction of vendors. It's a painful thing to watch."

Assuming Slaughter's comments are aimed directly at her, Burns--often outside of the TUSD mainstream--fires back: "That's ridiculous. When can I get two others on the board to do anything (I want)?"

Instead of addressing Burns' call for a comprehensive communication and technology plan--and believing TUSD could not afford to do it anyway--Pfeuffer instead pursued a different path. Based on directions he believes the school board gave him in September, he decided to commission a study of the district's current systems.

That was the job ERC was hired to complete in November, but Slaughter quickly concluded the work wouldn't be possible within the 30 days allowed. "The data we asked TUSD for, they couldn't get us," Slaughter recalls.

An e-mail from Slaughter's associate, Kettwich, is more blunt. After submitting several requests to the district for information, and repeatedly not getting responses from one crucial employee, Kettwich wrote in early February: "It is very difficult to get a timely response from (this employee). ... On numerous times, information has been requested or a question asked, and we have failed to receive a response."

Thus, instead of providing a comprehensive report which was intended to assist the district in addressing its present and future communication and technology needs, Slaughter gave the school board only a brief, hazy presentation on Feb. 14.

The major conclusion of his analysis were three recommendations: A citizens' committee should be appointed to look at the district's technology and communication needs; ERC's contract should be extended and enhanced; an E-Rate application should be submitted to help pay for the district's needs.

That is where the Feb. 16 applications could play an important role. The cost of upgrading TUSD's systems might range into the tens of millions of dollars, but the district has less than $8 million available in bond funds to spend.

The dollars offered yearly by the E-Rate program were one option for making up the difference. It provides matching grants in the areas of telecommunication services and Internet access along with installation and basic maintenance of technology connections.

Confronted with well-publicized financial scandals, political critics have called for E-Rate's elimination. But for now, every year, it keeps handing out lots of dough.

Unfortunately, TUSD hasn't been awarded any E-Rate cash since 2002. Thus, even though the district has enormous communication needs, whether it can obtain any program money remains a huge question mark.

Explaining its failure to obtain any E-Rate money since 2002, district officials offer various excuses, the most common of which is to blame the state's procurement practices. Chris Castillo, of the Arizona Department of Education, disagrees.

"Obviously, they may not have all their facts," she says of TUSD.

Burns accuses Pfeuffer and--especially--Campbell, for the district's poor performance.

"We were always capable of handling (the paperwork) before Campbell, but he's taken people who knew how to do it and marginalized them," Burns says.

Campbell replies: "The previous (TTS) director used to do E-Rate applications, but asked for small requests. Then an interim director did an application (in 2003), and it wasn't funded."

Displaying her frustration with Campbell's work, Burns tried to have his contract with the district not renewed for next school year. But several speakers publicly came to support Campbell at a board meeting, with one of them saying it was a case of corrupt staff members and technology vendors trying to bring down a good, honest, ethical man who had a vision to change TUSD to a wireless network.

After hearing these testimonials, four board members voted to retain Campbell for at least another year, with only Burns dissenting.

While TUSD's failure to obtain E-Rate money disturbs Burns, it doesn't appear to faze Superintendent Pfeuffer. Despite writing in a March 2005 e-mail that "E-Rate grants are an important source of future revenues for TUSD," in a recent interview, he shrugged off the district's dismal past performance.

"Basically," the superintendent argues, "(the E-Rate) funds would supplant our excess utilities (fund) money. That would have provided a very, very minimal reduction to our taxpayers, but offered no additional supplies, materials, equipment or anything else to the classroom."

That attitude dumbfounds Burns. "It's free federal money," she declares. "To me, it's all (taxpayer's money). We're all paying it."

Alex Rodriguez, a TUSD board member, declined to comment on Pfeuffer's statement. "But if TUSD money hasn't been leveraged in the past, shame on us. We need to leverage every penny," he says.

The other three members of the TUSD board--Adelita Grijalva, Bruce Burke and Joel Ireland--did not return phone calls seeking an opinion on the E-Rate program.

Administered by the Universal Service Administrative Company for the federal government, E-Rate distributes taxes collected on telephone bills. Used in large part to pay telecommunication and Internet access charges, the funds are awarded to school districts partially based on the number of enrolled children who live in poverty.

Even though the program provides useful funding to school districts, it has administrative hassles. As Jim Thomas of the Poplar Bluff, Mo., school system halfheartedly chuckles: "For every $1 you get, there is a page of paperwork."

Despite the difficulties, last year, 22 Tucson schools and school districts, but not TUSD, were awarded funds. These grants ranged from a few hundred dollars up to $164,000 going to the Amphitheater School District.

"It's a time-consuming and tedious process," admits David Fernandez, who oversees that district's E-Rate program, "but it pays for excess utility bills."

Nationally, the average E-Rate award in 2005 was $55,000, and the most money received by an Arizona school district was $2.3 million. This year, TUSD officials decided to shoot for the moon by applying for $35 million in grants. This amount would be matched by $13.5 million of district bond and other money, bringing the total to $48.5 million.

"Why wouldn't you apply for everything you qualify for?" wonders Pfeuffer. "Why wouldn't you go for the brass ring?"

From his perspective, Slaughter doesn't believe TUSD's objective is to receive all that money. "Their goal was to get about $10 million."

Whether TUSD will receive any E-Rate money remains to be seen. So far, nationally, $325 million has been awarded out of the $2.25 billion available, and the district has not been included. While Amphitheater has gotten notice of a $138,000 grant, TUSD may have to wait until the end of the year--or longer--to find out if it receives any money at all.

There is also a question about one of the applications that was submitted on TUSD's behalf. With the clock ticking down on Feb. 16, Slaughter recalls: "The Internet access at the hotel I was at froze, so I got the application (for $15.8 million in federal funding) through one minute past the deadline."

Slaughter says he's confident the application will still be accepted, and he has filed an appeal to ensure that happens. If it is considered, this application will join almost 40,000 others which requested $3.5 billion in total funding.

Even as TUSD anxiously awaits its 2006 E-Rate fate, it has the cloud of the attorney general's investigation hanging over it. At the same time, district officials are taking steps to improve their chances of obtaining funding in the future.

Believing it needs to hire a consultant to operate its E-Rate process, administrators have solicited bids for three years of assistance, including from Slaughter's company. Even though locally, both the smaller Amphitheater and Sunnyside school districts have successfully obtained funds for many years using only in-house staff, the TUSD school board is tentatively scheduled to consider hiring outside help next week.

Campbell initially floated the idea of employing a "technology grants development manager" more than a year ago, blaming the district's failure to obtain E-Rate funds in 2005 on a lack of staff. But now, he and Pfeuffer concur a consultant is the way to go.

"In a district this large," Campbell says, "we really need to have someone working on this E-Rate funding issue, or at least the applications ... with lots of experience. (The program) has become very difficult."

While Rodriguez refuses to speculate about how he will vote on hiring an E-Rate consultant, Burns is blunt: "We don't need it," she insists. "We did fine before Guyton Campbell came on board."

A technology plan is also expected to be presented at the board meeting next week. But instead of being the kind of nuts-and-bolts, detailed cost comparison Burns has long been seeking, it will apparently be mostly a statement of district goals and objectives for telecommunication and Internet services.

Required to be adopted as part of the E-Rate process, according to Campbell and Flores, the plan will be a general document, but will contain some information on infrastructure.

"The majority (of the plan)," Flores says, "talks about: If you have the canvas, what are you going to paint on it? If you have the technology, what are you going to do with it?"

This plan obviously won't do everything Burns thinks TUSD needs. Both Pfeuffer and Campbell talk freely about a future hybrid wireless/fiber network for the district, as if the decision has already been made. But Burns wants to see the technology canvas before any more paint is applied. Burns also opposes a wireless network, believing it will be too expensive and technically uncertain for a district as large as TUSD.

As an alternative, Burns thinks TUSD should spend a year devising a technology plan which the public and governing board can be confident in. "It should show how to get from here to there in the most cost-effective way," she says.

"I want to make sure TUSD has a (technology and communication) plan, and what the funding is for it. E-Rate funding could go away. If we have a plan that can't be done, we still need to have phone service and a safe Internet system."

Adopting that plan is "absolutely" a school board decision, Burns insists. "The voters didn't elect the superintendent or the administrators," she observes, "but me."