CONSULTANT GOLD MINE LAUSD PAYING TO $300 PER HOUR.

Byline: Helen Gao Staff Writer

Real estate consultants have profited handsomely from the Los Angeles Unified School District's multibillion-dollar crash school-building program with little oversight or accountability, according to an inspector general's report obtained by the Daily News.

The 12-page report - which was obtained from a source after numerous LAUSD officials refused to release it - found that the district contracted with senior facilities executives at ``absurd'' rates without competitive bidding or any benchmarks to evaluate their performance.

The four executives examined in the study by Inspector General Don Mullinax's staff were paid between $200 and $300 an hour for long-term, full-time assignments - a rate that one real estate expert said is two to three times above industry standards.

According to the report, one consultant, who initially lacked a real estate broker license, billed the district nearly $1 million for work he did over a two-year period - a compensation level that is double the salary of LAUSD Superintendent Roy Romer, who makes $250,000 a year.

The report highlighted several instances where consultants billed the district thousands of dollars for attending meetings.

One invoice charged $3,600 for 12 hours spent at a ``Chamber'' meeting - averaging $300 an hour. Another billed the district $1,440 for 4.8 hours spent at a board meeting. A third invoice charged $1,102 for 4.5 hours spent at another board meeting.

``The school district should not be paying this rate and it should not be bleeding at this level,'' said Larry Kosmont, a nationally recognized Los Angeles real estate and economic development expert.

``If you have a full-time assignment as a consultant, it would be very reasonable that the school district should be able to negotiate a fee of $100 an hour or at the most $150 an hour.''

He added, ``My sense is if they ran an advertisement saying they will pay $100 an hour guaranteed 40 hours per week for six months to a year, they would receive hundreds of applications.''

In the private sector, he said, consultants would be required to submit monthly, if not weekly, invoices along with regular progress reports, to justify their billing.

But the inspector general's report found one consultant submitted more than $478,000 in invoices on a single day covering a two-year period.

In at least two cases, highly paid consultants lacked real estate broker licenses to conduct transactions, with one obtaining his midway through his contract with the district. The other consultant explained that whenever he needs to negotiate a property purchase, he takes a licensed district employee with him.

Jim McConnell, LAUSD's chief of facilities, said the consultants helped the district acquire 440 acres of land for 80 school projects in a very short time, apply for $839 million in state funding, and move projects forward at a pace once thought to be impossible.

``We have 90 percent-plus of the land at our disposal now to build these schools. That's phenomenal,'' he said. ``When I got here two years ago, I don't think there was any hope that we would be able to do that.''

He added, ``This is truly not business as usual. It's required an exceptional effort. I think we have gotten that exceptional effort (from the consultants).''

New procedures

McConnell said that since the Inspector General's Office launched its investigation a year and a half ago, new procedures have been put in place to ensure adequate oversight.

The district has since gone out for bids on its facilities consultant contracts setting the hourly rate at $175 to $225. There are now also greater budget controls in place with a project's expenditures broken into real estate, design and construction.

``Things have changed quite a bit,'' McConnell said. ``The greatest evidence is that we have these positions bidded through an RFP (request for proposal).''

McConnell noted that one of the consultants in the study, Rick Rodriguez, who was paid nearly a million dollars over two years, no longer works for the district and was hired before he became chief of facilities. He praised Rodriguez for giving the district ``very good deals.''

In a phone interview, Rodriguez said he saved the LAUSD millions by ``finding ways to buy properties so they would not be as expensive.''

He acknowledged he initially did not have a real estate broker's license, but said he obtained one before handling acquisitions and that pre-acquisition work did not require a license.

``I did a lot of good things,'' said Rodriguez, who has not seen the report. ``The way this has been painted has been distressing. The document is wrong. It's false.''

Rodriguez, in fact, has a recommendation from McConnell, who credited him with helping the district acquire 23 sites and called him ``a passionate and effective advocate for the district.''

School board member David Tokofsky said the inspector general's report highlights the need for a tighter, more accountable organizational structure.

``The checks and balance structures are there. It's a question of whether there is enough teeth,'' he said.

Oversight committee

The district has a citizens oversight committee that reviews expenditure of the $2.4 billion Proposition BB bond passed by voters in 1997 and the $3.35 billion Measure K bond passed in 2002.

However, the committee largely focuses on broad policy issues and the progress of projects. Its limited resources and staff means it rarely if ever delves into issues such as consultant pay and oversight.

``There is a very large number of things going on here. It's a matter of seeing what the priorities are,'' said Tom Rubin, who was hired as a consultant to help the oversight committee improve accountability.

Rubin said he has not seen a copy of the report.

Another oversight committee member contacted said he also hasn't been sent a copy of the study.

Lacking basic checks

Although highly paid consultants were initially conceived as experts who would be used on a part-time basis to handle ``difficult and complex transactions,'' the report found that is no longer the case.

Ron Bagel, one of the consultants covered by the study, serves as the district's acting director of real estate - a district job classification with a salary range of $121,849 to $150,501. As a consultant, Bagel was paid $142,407 for five months of work in 2000 and $288,393 for eight months of work in 2001.

Roderick Hamilton, the third consultant who was examined in the study, was paid $478,450 for 22 months of work.

The fourth consultant, Ed Van Ginkel, was paid $210,750 for eight months of work in 2000 and $315,300 for another eight months in 2001.

The report painted a picture of a facilities division lacking basic checks and balances to ensure consultants are doing their job for the hours they are billing the district.

When questioned by investigators about the lack of oversight, supervisors pointed fingers at each other or former employees who have left the district, according to the report.

``We have determined that ... oversight standards employed by Facilities failed to assure an objective correlation between the hours invoiced (and) performance, and were not sufficient to effectively monitor and hold the consultants accountable for their work product,'' the report said.

Labor unions, which have long protested the district's heavy reliance on pricey consultants, expressed outrage.

``These guys are feeding at the trough of taxpayer dollars,'' said Connie Moreno, labor relations representative for the California School Employees Association, whose members include district employees in the facilities division.

The CSEA filed a formal complaint with the LAUSD Personnel Commission last March to protest the use of 279 contractors for work that it believes should be performed by its bargaining unit.

In the midst of a $5.05 billion new school construction program, LAUSD last year employed 660 consultants at a cost of $71 million for everything from field supervision and project management to acquisition of real estate.

``I get pretty outraged when I see people doing jobs that could and should be done by regular employees at a much cheaper rate,'' said Moreno. ``It's a theft of public funds.''