The Morning Report
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Part one of a two-part series.
Wednesday, Sept. 24, 2008 | Juan Pablo Ladron de Guevara had floundered in a big, conventional school, but not at Cortez Hill Academy. He relished the small classes and loved chatting with his English teacher, his “all-time most favorite teacher in the whole world.”
“I actually felt like coming to school,” de Guevara said.
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| Mike Hazelton led three different charter schools in four years, each of which suffered deeper deficits or suspicions of mismanagement under his leadership. Photo from TIP Academy yearbook |
But Cortez Hill enrollment didn’t keep pace with soaring downtown rents in the summer of 2006, making money so scarce at the tiny charter school that it relied on parents to help maintain the dim, aging building on A Street. Balancing the books frustrated the principal, a former counselor who could soothe troubled teens but was less familiar with finances.
Michael R. Hazelton sold himself as an expert who could help. He was soothing. Gray-haired. Nice. A Harvard University seminar topped his resume, loaded with impressive work at a national company and a school that had once aided Cortez Hill. The school hired him as its executive director to reverse its fortunes.
Instead its deficit ballooned from $16,559 to $188,187 in the single year that it employed Hazelton. When an audit revealed that he gave himself an $18,350 raise without the blessing of the Cortez Hill board, boosting the six-figure salary that had already dwarfed what his predecessor had earned, Hazelton was already gone.
Two of its 13 teachers lost their jobs as Cortez Hill struggled to pay its bills. And something else was missing, something de Guevara couldn’t quite describe. Rumors about Hazelton spread and graffiti proliferated in the bathrooms. De Guevara started skipping class to hang out with friends in the library.
“Everyone found out what Mike did,” de Guevara said, adding that “the school changed so much. I hated it.”
Cortez Hill isn’t the only charter school where Mike Hazelton promised rescue and brought ruin. In four years, he has led three Southern California schools and each has been crippled or closed by the time he walked away, suffering deficits or battling accusations that Hazelton improperly enriched himself or corporations he founded.
He was first accused of double-dipping in San Bernardino County, where deficits destroyed a bilingual school that paid him nearly $128,000 in salary and an estimated $290,000 to the corporation he founded for accounting and administrative support. The school’s abrupt closure left teenagers without class credits and some struggling to graduate.
Two and a half years later, an audit concluded that his Cortez Hill raise was unapproved and the school hemorrhaged money under his watch, decimating its budget and its morale. And his most recent school, Theory Into Practice Academy, was shut down in August after a Encinitas Union School District investigation concluded that the school’s board and administration, which included Hazelton and his wife Deborah Hazelton, violated conflict of interest laws and mismanaged its finances.
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| Deborah Hazelton, wife of Mike Hazelton, cofounded TIP Academy and served as its principal. Photo from TIP Academy yearbook |
Hazelton is still in business, now planning a new private school with his wife in San Marcos. He has not repaid the thousands of dollars that the Encinitas school district and Cortez Hill say he was improperly paid. Hazelton has explanations for the mishaps: The San Bernardino school had trouble partnering with a community group. Cortez Hill was billed twice by the school district. And rivalry spurred the Encinitas school district to attack his school.
He has defenders in San Bernardino and Encinitas. Some contend that the closure of TIP Academy was a politically motivated attack on a successful charter that had drawn students away from the Encinitas schools; others voiced similar complaints about the school district that oversaw the San Bernardino school and place its problems with the local group that partnered with Hazelton.
Even his harshest critics call him nice, and struggle to reconcile his kindness with his record. When classrooms needed books he jumped to supply them. He knew each of their children by name. It seemed impossible that friendly Mike Hazelton, the man who ran school traffic duty in a goofy straw hat, meant to profit off their school. Katherine Flesh, who sent her children to the Encinitas school, was left wondering whether Hazelton was conniving or merely incompetent.
“Is he Mr. Magoo who has left a trail of destruction? Or is it a cover he’s perfected?” she asked. Either way, Flesh said, “he found a gravy train.”
His saga underscores the vulnerabilities of charter schools, a relatively new phenomenon in California education. Publicly funded but independently run, charters are meant to be incubators for creativity and innovation, unfettered by the rules that weigh traditional schools. They give all students a free alternative to the public schools.
But independence also has a price. Charters often shoulder the business tasks that school districts ordinarily handle for schools, such as running a payroll or financing a building. And those tasks can prove daunting to educators who are more familiar with classrooms than budgets.
Hazelton offered to handle those jobs, convincing his employers with his resume and the sterling reputation of the first charter where he worked. Exaggerated titles and job descriptions went undetected. Few employers contacted all the schools he left, or the references who said they hardly knew Hazelton or hadn’t spoken to him in years. School leaders who hired Hazelton trusted him.
“I was hoping he was the professional who could turn it around for us,” said Will Stillwell, board secretary at Cortez Hill Academy. “I wanted to let him lead.”
Hazelton studied at the University of California, Irvine and San Diego State, and started teaching in 1975 in Oceanside public schools, where he ascended to coordinator of student services, according to his resume. He also owned private preschools in Encinitas with his wife, a recognized teacher of gifted students.
Hazelton joined the charter world in 1998, taking a job at Guajome Park Academy in Vista, and eventually became assistant superintendent of the school. In 2001 he began starting charter schools for Guajome, spreading a dropout recovery program from Vista to the East Coast. His boss praised his success getting new schools approved, and Hazelton was amazed by the freedom and possibilities that charter schools offered, such as replicating a successful program nationwide.
“I’m so used to schools being in boundaries, and I didn’t realize you could go all over,” Hazelton said in an interview. “It was a paradigm shift for me.”
‘He Ripped Us Off:’ Cortez Hill Academy
Jacqueline Hicks leafed through the mail left behind at Cortez Hill Academy after Mike Hazelton quit as executive director two weeks before school started in August 2007 to take a job at his wife’s school in Encinitas. Each envelope held another nasty surprise. The rent hadn’t been paid for two months, Hicks told her board in a letter, and checks were bouncing because Hazelton had neglected to make a wire transfer on time.
And then the school bookkeeper told Hicks that Hazelton had hiked his $100,000 salary to $118,350 — a raise that Hicks and the board said they’d never approved. Auditors from El Cajon-based Wilkinson Hadley & Co. later discovered that the school’s deficits had jumped from $16,559 to $188,187 during the single year that Hazelton was director, and Hazelton was signing checks alone despite a school policy that required him to get a second signature.
“He ripped us off,” Hicks said. She added, “And I had no idea until he was gone.”
Hicks changed the locks on Hazelton’s office and alerted the board. She demanded that he return the funds. He hired an attorney. Hicks told the police about the raise and the audit, but nothing came of it. Suing him seemed too expensive to contemplate.
“I did what I could do with it,” she said, “and then I moved on.”
Hazelton chalked up the deficit to a change in the way San Diego Unified billed charter schools, but the school district said its change didn’t increase costs. He insisted that his salary was approved by the board as part of a smaller school-wide raise.
Cortez Hill “has its challenges because the people there really didn’t have a business sense,” Hazelton later said. “… I just inherited a tough timing situation.”
Hicks said school leaders banked on the recommendation of Stephen Halfaker, the former Chief Executive Officer of Guajome Park Academy, when they hired Hazelton. But had the leaders at Cortez Hill scrutinized his resume more carefully, Hazelton might not have seemed as impressive. Three of his claims aren’t supported by employers listed on his resume, and his other references include past acquaintances who were surprised to learn that they were references at all.
Hazelton claimed to have developed four new charters between 2004 and 2006 for Adams and Associates, Inc., a Nevada-based company that operates career training programs. Yet its president Roy Adams, one of Hazelton’s references, said Hazelton didn’t develop new charters while working for the company. He only consulted them on curriculum for their alternative high school programs.
Hazelton also touted himself as co-founder and board president of the award-winning School for Integrated Academics and Technologies headquartered in Vista between 2001 and 2002. But its spokeswoman said Hazelton wasn’t its founder and never served on the board, though he did help spread a dropout recovery program that eventually evolved into the Vista school.
And had Hicks, the Cortez Hill principal, known to call Dennis Byas, who oversaw the Colton Joint School School District outside San Bernardino, she would have gotten a counterpoint to that resume: The financial meltdown of Las Banderas Academy, which Hazelton and his corporation oversaw one year before he joined Cortez Hill.
“Maybe we should have looked farther,” Hicks said. “But I didn’t know how to find out.”
‘It Just Didn’t Seem Right:’ Las Banderas Academy
Las Banderas Academy had long worried Superintendent Byas. Its test scores were mediocre and its board members kept changing. Byas wasn’t convinced that it enrolled as many students as it claimed. And the school was run by an alphabet soup of organizations that still confounded Byas years after the school was shuttered.
Chief among those organizations was New Education for Communities, Inc., a corporation that Hazelton founded. It was entitled to 15 percent of Las Banderas’ revenues for accounting and administrative support while Hazelton also served as the school’s full-time chief education officer. Suspicions abounded that Hazelton was double-dipping by earning a Las Banderas salary and gaining money from the group as well.
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| Theory Into Practice Academy shared a building with this Encinitas school. Photo: Sam Hodgson |
Those suspicions were never proven or disproven because the corporation left few records and was later suspended by the state. Deficits forced the school to close. But the corporate confusion and allegations foreshadowed the conflicts that later unraveled Theory Into Practice Academy in Encinitas.
Las Banderas began as the brainchild of Emma Lechuga, who had long been intrigued by the idea of a charter school to serve bilingual students. Her Colton nonprofit Somos Hermanas Unidas had taught English to immigrants and helped teen dropouts earn their degrees for decades, but opening a school took money that Lechuga didn’t have, and Byas was skeptical of her first ideas.
She had shelved her plans until she met Mike Hazelton, who was working for the highly regarded Guajome Park Academy and spreading a computerized dropout recovery program much like hers. Together they imagined a new school: A bilingual version of the elite International Baccalaureate program that was flourishing at Guajome, but tailored for disadvantaged youth in Colton.
Billing Guajome as the “parent corporation” for Las Banderas helped convince the Colton school board to approve the school. It was a respected school that legitimized their plans and furnished Las Banderas with seed money. Without Guajome and Hazelton, “the school would not have been a viable charter,” said former Colton school board member Tobin Brinker.
“Emma is a real nice person,” Brinker said, “but Mike and the people from Guajome Park had the experience.”
But the involvement of Hazelton’s corporation started to trouble Lechuga and her staff as money flowed to the outside group. Hazelton called New Education for Communities a nonprofit subsidiary of Guajome Park Academy, but its exact relationship with the school is cloudy. Tax returns filed by Guajome while Las Banderas was operating do not list either the corporation or Las Banderas as related groups.
“We spent hours trying to see how New Education fit with everything else,” said English teacher and Las Banderas board member JoAnne Hux. “Was he double-dipping? It just didn’t seem right.”
What was clear was that school funds were going to the corporation that Hazelton headed. New Education for Communities was entitled to 15 percent of Las Banderas revenues in its first year, according to school documents. Based on the school’s reported revenues of $1.97 million in 2004, the corporation’s 15 percent share would’ve amounted to $290,000 that year.
Teachers felt it was a sizable fee for a school with fewer than 300 students that already employed an administrator like Hazelton. Founding documents for Las Banderas said Hazelton’s role was “analogous to the role of Principal.” Lechuga and office manager Laurie Gonzalez said Hazelton spent more than half of his time elsewhere, fostering another charter school near Los Angeles and unsuccessfully pushing a third in Murrieta. Lechuga was paid $73,844 to juggle two school sites; Hazelton drew a $127,957 salary from Las Banderas that rivaled the highest-paid managers in the nearly 25,000-student Colton district.
Colton school board member Marge Mendoza-Ware was among several school district and Las Banderas officials who suspected that Hazelton was double-dipping by earning a Las Banderas salary and profiting from his corporation as well.
David Jenkins, a former New Education for Communities board member, said he believed Hazelton was being paid by the organization.
Hazelton denied receiving money from the corporation, but the documents that would prove that were never filed with the state or Internal Revenue Service. The corporation never registered with the attorney general as nonprofits are required to do. Nor did it file its state or federal tax returns, which disclose top officials’ salaries. Hazelton’s corporation owes more than $4,000 to the state and it was suspended in 2007 for failing to file its returns.
The rancor puzzled Hazelton’s allies. Rita Hemsley, an education researcher who served on the Las Banderas board, praised Hazelton as an honest and professional innovator. Brinker, the Colton school board member, faulted poor communication between Somos Hermanas Unidas and the corporation for the clashes. And Brinker attributed its financial crisis to school employees miscalculating its attendance, not the involvement of Hazelton and his corporation.
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| The closure of Theory Into Practice Academy left children such as Sorel and Rowan Straughan bereft. Their mother was furious at the Hazeltons. Photo: Sam Hodgson |
In December 2004 an audit revealed that the school ended its first year nearly $60,000 in the red. It had no emergency reserves and no finalized plan to solve the problem. And Las Banderas owed nearly $200,000 to Guajome Park Academy from two separate loans. The audit didn’t blame any individual for the shortfall, but it noted that Las Banderas was getting more state funding than it should for the number of minutes it was open annually, and had to lengthen the school year or day to compensate.
Galvanized by the audit, Byas said he demanded financial records from Hazelton. Byas said Hazelton blamed computer failures for delaying the papers. Hazelton later chalked up Las Banderas’ shortfall to a federal grant that had been delayed a month — a factor never mentioned in the audit — and claimed not to remember its findings, including auditors’ worry that its deficit “raises substantial doubt about [Las Banderas’] ability to continue as a going concern.”
Things began to fall apart for the fledgling school. Hux said she and other teachers voted against keeping Hazelton in charge. Lechuga quit and Somos Hermanas Unidas splintered from Hazelton and his corporation. She said it meant the end of the nonprofit when Las Banderas stopped renting its building, cutting off money that had sustained them while other funds for job training had dropped.
It was like when “you marry someone and you think they’re Mr. Wonderful,” Lechuga said. “Then you realize that this person is an abusive person.”
As a junior at the school, Jonathan Alva said he saw the change “out of nowhere.” Enrollment was plummeting and rumors spread that the school would close. Alva said the new principal tried to sugarcoat it, telling teens it would all be okay. But before class, Alva’s science teacher announced he was enduring a pay cut for his students’ sake.
“That told me, ‘It’s really over,’” Alva said.
Hazelton was gone by April when the Las Banderas board decided unanimously to dissolve the school, which could only pay its teachers through the month. He was replaced by Guajome founder Sandra Angle, and New Education for Communities promised to foot its remaining payroll and bills. Board members formally agreed they should “close the school with dignity, respect and order” when the school year ended.
Yet later in the spring Alva and his classmates arrived at Las Banderas on an ordinary school day to find the doors unexpectedly locked. Many teens went to see Byas, peppering him with questions about their records and class credits, but Alva just went home.
“They closed and threw everything on our lap,” Colton school board member Mark Hoover said. “And the students were the ones who suffered.”
Alva couldn’t get credit for several classes taught by Las Banderas teachers without the right credentials, and had to juggle extra classes after school to graduate. He was still finishing his schoolwork in the summer, too dejected to watch his classmates striding to “Pomp and Circumstance.” It was nothing like what the ambitious kid from a “not exactly rich” family had expected from Las Banderas: to graduate with college credit, jumpstarting the college education his parents never had.
“It all seemed too good to be true,” Alva said. “And it was, after all.”
‘Giving the Bully the Lunch Money:’ Theory Into Practice Academy
Robyn Schiefer adored the school that Mike and Deborah Hazelton founded in 2006 where six of her children were challenged, inspired and called “scholars.” She and her husband were astounded when the 8-year-old who once faked stomachaches to avoid class climbed into the family van early for school. They were stunned when his older brother overcame a hearing disability to blossom into an unlikely class clown.
Two years later she stayed awake at night poring over a thick Encinitas school district report that damned the Hazeltons’ actions, lamenting that their cherished school had been led astray.
Principal Deborah Hazelton, an Oceanside elementary teacher, created Theory Into Practice Academy, a charter school that taught all children with the same rigor and complexity as gifted children. Her husband volunteered as president of its board, but as he finished his first and only year at Cortez Hill Academy, his wife grew insistent on hiring him. Her June letter to the board argued that she needed “full-time administrative support.”
Board members were reluctant to hire Mike Hazelton. They worried about nepotism, doubted whether Hazelton was competent, and questioned whether they could afford another leader. The school district had already scolded them for incurring debts and overstating their income; they wanted to pinch pennies to buy their own building instead of sharing space with Ocean Knoll Elementary. It was “the absolute wrong time to entertain paying Mike Hazelton $125K per year,” board member Louisa Johnson wrote.
“I am gravely concerned that … the tail is wagging the dog,” she wrote in an e-mail to her colleagues. Board members said Deborah Hazelton’s hints had evolved into threats that she and the teachers would abandon their school if Mike Hazelton wasn’t hired. Her e-mail added, “Giving the bully the lunch money — This is not a lesson I want my children to learn!!”
But the Hazeltons had a trump card. Mike Hazelton informed the board that they had accidentally been using the wrong bylaws, and the right bylaws gave daunting powers to an outside corporation, Theory Into Practice Education, Inc., that the Hazeltons created and ran.
Board members were stunned. The corporation had the final say on hiring or firing a principal or merging with other organizations; it had the power to choose the board president. Johnson called it “a ‘neutron bomb’ that can at any time obliterate the board” if it didn’t capitulate to the Hazeltons.
Fighting the bylaws seemed useless after board members learned that the rules had already been filed with the Encinitas Union School District. But one year later a private investigator hired on behalf of the school district added up the details and concluded that the board probably never approved the bylaws that named the Hazeltons’ corporation, and that Mike Hazelton had given false bylaws to the school district, the Internal Revenue Service, and the state.
Almost the entire board resigned over the next few months, starting with Zalman Vitenson. “I simply no longer wish to deal with this,” he wrote to other board members, “and they have the upper hand right now.”
Shortly after the bylaws materialized, Hazelton was hired as chief operating officer for $95,000 for the rest of the academic year. Two months later the school reported a $28,000 first-year deficit, instead of the $6,000 to $12,000 surplus Mike Hazelton had predicted. Its outstanding loans still worried the Encinitas superintendent. Yet the school also bolstered Deborah Hazelton’s pay from $87,000 to $110,000.
There is no evidence that the TIP board approved either of the Hazeltons’ contracts, according to the Encinitas Union School District. Meeting minutes do not reflect the hires, but board members said they remember discussing the raise and the contract.
And in January the Hazeltons asked the board to start paying their corporation 1.5 percent of its annual revenues and a onetime $35,000 fee for curriculum and administrative support. It echoed the controversial agreement that Las Banderas had made with New Education for Communities.
Again Mike Hazelton said his corporation’s directors — which included the Hazeltons — would earn nothing because it was a nonprofit. But the corporation failed to get tax exemptions from the IRS or the Franchise Tax Board that would have required it to file public tax returns listing its highest-paid employees and officers.
The corporation was overseen by a group that included the Hazeltons and teacher Lisa Bishop, who were already earning salaries from the school, and University of Southern California educator Sandra Kaplan, who sat on both boards. They said any conflicts posed by paying the corporation they controlled could be eliminated by signing a “conflict of interest waiver.”
The idea flummoxed board member Mark Demos. He calculated that the school would pay the corporation $300,000 in a decade, and questioned how that benefited the school.
As Demos and others voiced their concerns, many families defended the Hazeltons as a devoted principal and “superhuman” administrator. A civil war erupted in the stucco school. It grew so ugly, parent Katherine Flesh said, that another mother shouted “bitch” down a Target aisle at her as she shopped. She pulled her children from the school just six weeks before summer vacation, fearing for their safety.
The Hazeltons ultimately dropped plans to contract with their corporation; Mike Hazelton told The San Diego Union-Tribune that an auditor advised them against it. Their plans in Palos Verdes and Los Angeles crumbled. But the Encinitas school district began investigating the school. The district demanded that the school immediately fire the Hazeltons, remake its board, collect any improper payments and gather a slew of records.
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| After TIP Academy was closed, the Hazeltons originally planned to open a new private school in this San Marcos building. Photo: Sam Hodgson |
Hazelton had earlier dismissed “this sort of public flogging” as an attempt to discredit their school and said the corporation had never gotten school money. But the school district turned up a $2,156 check that belied his claim.
Encinitas Union School District concluded that the Theory Into Practice Academy board and the Hazeltons mismanaged public funds and violated the state conflict of interest law by improperly approving contracts that could profit board members, including contracts for Mike Hazelton, Deborah Hazelton and teacher Lisa Bishop. The school district’s investigation said Deborah Hazelton used her influence to goad the board to hire Mike Hazelton for a “lucrative employment position.”
“[T]here is no evidence to suggest that anyone else was considered or interviewed for the position, or that any effort was made to establish a reasonable salary for the position based on market factors or other criteria, or to otherwise validate the transaction under any validating method available under the law,” the school district concluded.
Encinitas Union School District alleged that those acts violated the Political Reform Act and a government code that bans public officials and employees from participating in contracts that could benefit them financially. Charters have long argued that the second rule, which predates charter schools, does not apply to them. The question has never been settled in court.
The school complied with most — but not all — of the district’s demands. It fired Mike Hazelton and the Hazeltons’ corporation gave up its powers over the school, but Deborah Hazelton stayed until July, and the school said recouping money was beyond its power. It was shut down despite pleas from parents such as Jake Bartow, who said closing the successful school was a second wrong that couldn’t make things right.
“If it wasn’t for the Hazeltons, there wouldn’t be a TIP,” parent Richard Boger said. “And if it wasn’t for the mistakes they made, we would still have a TIP.”
As Robyn Schiefer pored nightly over the school district’s report, her confidence in the Hazeltons dissolved. She was furious that their board hadn’t stopped the Hazeltons earlier; furious that the school district wouldn’t give them another chance; furious that the school had paid for the Hazeltons’ mistakes.
“If they did all this wrongdoing, they should be behind bars,” she said.
As the scandal subsided in Encinitas, the Hazeltons began planning another school. On a sunny August morning they festooned a San Marcos building with aqua and blue balloons and welcomed visitors to their future private school, The Academy North County, where every kid would “think like a scholar.” Tuition topped out at $7,500, a fee Mike Hazelton said he was sorry to charge.
“This goes against what we want to do,” Hazelton said in August. “We want to change public education.”
They had hoped to open in September, but within a month their plans changed again. Talk of opening a school disappeared from their website, which instead advertised tutoring at The Academy Learning Center in Solana Beach for $75 per hour.
Thursday: The freedom that allows some charter schools to thrive has spawned an unintended risk: vulnerability to fiscal mismanagement. Charter schools usually shoulder the business tasks that school districts handle for traditional schools, and some educators and boards are overwhelmed by the task.
Please contact Emily Alpert directly at emily.alpert@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.