Mercedes Schneider: Texas: SPEDx Whistleblower Laurie Kash Was Right, and She’s Been Paying for It Ever Since.
Richard Nyankori logged a few years with Teach for America and working for Michelle Rhee; on the strength of that–and some personal connections–he launched Spedx, a special ed consulting firm that somehow managed to land hefty contracts with the states of Texas and Louisiana. In Texas, a whistleblower notified the state about shenanigans behind the awarding of the no-bid contract for Spedx–and was immediately fired. That touched off a legal journey that is just coming to an end. Mercedes Schneider, a teacher, writers and researcher, has the whole tale here. Reposted with permission.
In August 2017, Laurie Kash was hired by the Texas Education Agency (TEA) as its director of special education.
Her immediate supervisor was Justin Porter, who was then the executive director of special populations. (One year later, in August 2018, Porter assumed Kash’s job, which sat vacant for nine months following Kash’s firing in November 2017).
On the day after Kash filed a complaint with the US Health and Human Services Office of Inspector General (OIG) against TEA, Kash was fired (date of complaint: November 21, 2017; Kash’s firing: November 22, 2017).
Kash’s complaint (see above) concerned a no-bid contract for special education services by a then-newly-created vendor, SPEDx, whose founder, Richard Nyankori, had a personal connection to Porter’s immediate supervisor, Penny Schwinn, TEA’s chief deputy commissioner of academics.
So, right off the bat, this situation became dicey for Kash, for she was concerned about impropriety related to her supervisor’s supervisor. Kash alerted Porter of her concerns, and she spoke about those concerns with a Texas parent group, Texans for Special Education reform (TxSER). Porter did not like this, and Schwinn found out and approached Porter about Kash’s verbalizing her concerns.
On November 03, 2017, Porter formally reprimanded Kash for not reporting her concerns “through appropriate channels,” and Schwinn verbally reprimanded Kash directly for having “loose lips” and for hearing that Kash was saying “a litany of unprofessional things” involving Schwinn.
In his letter of reprimand, Porter stated, “these directives are not intended to prohibit the reporting of conduct which you believe to be illegal or unethical,” adding, “such conduct may be reported through your chain of command or to appropriate authorities.”
Well, since the chain of command was now a hostile environment, “appropriate authorities” was what was left.
One could argue that Kash should have kept her concerns to herself and gone straight to OIG. (Note that Kash also discussed the situation with TEA’s internal auditor, and told him that she “reported her concerns about the sole source contract to the SAO [State Auditor Office], the AG [Attorney General] Office, and OIG.”) However, I do not see how Kash could have effectively poker-faced this situation in some display of public support for TEA’s contract with SPEDx. Even posing a face of neutrality and dodging public discussion of the TEA-SPEDx relationship could have been perceived as condoning the situation or of not doing her job.
Once she did formally file a whistleblower complaint with OIG, she was fired the next day.
Kash filed a complaint with the US Department of Education (USDOE), which was appropriate since TEA was paying SPEDx with federal dollars. Two years to the day after she was fired, on November 22, 2019, USDOE found that Kash’s OIG filing was a contributing factor to her firing, noting, “Although they (Porter, Schwinn, and Commissioner of Education Mike Morath) were aware of Kash’s earlier communications with TEA’s internal auditor, Mr. Aleshire’s (Kash’s lawyer’s) letter was the first concrete notification Morath, Schwinn, and Porter received of Kash’s OIG filing.”
That concrete evidence led USDOE to conclude TEA fired Kash, at least in part, based on protected disclosure in the form of a whistleblower complaint to OIG and that TEA owed Kash compensation as follows:
Texas Education Agency is ORDERED to pay Laurel Kash compensatory damages, employment benefits, and all cost and expenses, including attorneys’ fees, in the total amount of $202,711.20.
Of course, TEA had a right to appeal, which it did. In July 2020, in the US Fifth Circuit Court of Appeals, the USDOE filed a brief on why the TEA’s appeal should be denied (see above). One of the points raised in the appeal was that of sovereign immunity and the waiving thereof, which the document linked above defines as follows:
State sovereign immunity “bars suits that individuals file against states in federal court” as well as certain administrative proceedings. But “a state may waive its immunity, and Congress can induce a state to do so by making waiver a condition of accepting federal funds.”
A focus of the proposed USDOE denial is “41 U.S. Code § 4712 – Enhancement of contractor protection from reprisal for disclosure of certain information” (Section 4712), summarized in general as such:
An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (2) information that the employee reasonably believes is evidence of gross mismanagement of a Federal contract or grant, a gross waste of Federal funds, an abuse of authority relating to a Federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant.
Section 4712 makes all federal grantees subject to the statutory whistleblower protections and clearly mandates that all grantees are subject to the remedies specified in the statute. The provision makes plain that, if found to have engaged in a prohibited reprisal, a grantee would be responsible for monetary damages, including “compensatory damages (including back pay), employment benefits, and other terms and conditions of employment.” 41 U.S.C. § 4712(c)(1)(B); see also id. § 4712(c)(1)(C) (authorizing award of costs, expenses and attorneys’ fees). This language puts a grantee, such as TEA, on notice that if it accepts a federal grant and retaliates in violation of the provision, it is subject to the remedies outlined in Section 4712(c), including damages. Moreover, agency guidance confirms that state grantees will be subject to Section 4712. Department of Education guidance requires that all “non- [f]ederal” grantees, a term defined to include state governments, must “[c]omply with [f]ederal statutes [and] regulations….”
In its August 2020 response (see above), TEA asserts that there is no global waiver of sovereign immunity for federal funds and that “This interpretation contradicts decades of Supreme Court guidance that courts will only find waiver where stated ‘by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.’”
What we are left with is not the pressing issue of whether TEA misspent federal money but whether TEA can get away with not compensating a whistleblower for firing her related to her blowing the whistle.
Not one month after TEA fired Kash, it canceled its $4.4M contract with SPEDx, as the December 16, 2017, Statesman reports. And in July 2020, USDOE told TEA it needed to send back the $2.5M it had already paid SPEDx. From the July 20, 2020, Houston Chronicle:
The U.S. Department of Education has asked Texas to repay more than $2.5 million after state auditors found the agency violated purchasing rules when it awarded a multi-million-dollar no-bid contract to a group tasked with collecting data about special education students.
In emails sent to Texas Education Commissioner Mike Morath and Texas Education Agency Director of Special Education Justin Porter, an audit facilitator with the federal department’s Office of Special Education Programs said the costs associated TEA’s 2017 $4.4 millioncontract with the Atlanta-based company SPEDx were “not reasonable,” and that the agency did not use “reasonable methods to protect personally identifiable information” of disabled students.
Although TEA paid SPEDx more than $2.5 million in federal funds allocated through the Individuals with Disabilities Education Act, state auditors found only about $150,000 worth of work was completed.
“Most of the IDEA funds paid to SPEDx under the contract provided no benefit to the IDEA program, and, therefore, were not allocatable to the IDEA program under the cost principles of the Uniform Guidance,” Audit Facilitator Susan Kauffman wrote in a May 13 email.
As for how Schwinn connected to Nyankori, in a piece about SPEDx’s dealing in Texas, Shelby Webb reported the following in the September 05, 2018, Houston Chronicle:
Personal emails from that month showed the TEA’s Chief Deputy Academic Commissioner Penny Schwinn was introduced to SPEDx CEO Richard Nyankori by a professional development coach, with whom the deputy commissioner had a previous professional relationship. The three discussed special education projects that at least six of the agency’s 20 education service centers were interested in pursuing before switching their conversations to work emails.
As for SPEDx’s vast experience (tongue-in-cheek), its only other contract aside from its no-bid in Texas was with Louisiana. and that under mysterious payment circumstances. The common connection among then-Louisiana state superintendent John White, Penny Schwinn, and Richard Nyankori is through Teach for America, an organization known for arranging temporary stints as classroom teachers with the goal of having their alums assume positions of educational, political and otherwise entrepreneurial leadership in order to drive education reform in a direction favorable to TFA. Thus, I am not surprised at all that Nyankori, who has no experience as a certified special education teacher, was able to create SPEDX (Avenir Edication) in September 2016, and within a year, was handed SPED data for two states in order to *advise* about how to operate sped programs; was mysteriously compensated for so-called services in one state, and was granted a multi-million-dollar contract in another.
(To see documents related to Nyankori’s Avenir Education AKA Lizard Park Technologies, use the Georgia LLC search tool and search “Richard Nyankori.” You will find that Nyankori’s Avenir/Lizard Park existed for only two years, from 09/16 to 09/18. Thus, SPEDx is no more.)
Once SPEDx lost Texas and Louisiana, it was no more.
Kash was right to blow the whistle.
Even so, TEA was able to win its appeal. On March 23, 2021, the Fifth Circuit sided with TEA’s argument that TEA had not waived its sovereign immunity (see above). Sure, TEA canceled its SPEDx contract a month after firing Kash. Yes, USDOE required TEA to repay the $2.5M it paid SPEDx. And yes, SPEDx is now out of business. However, none of this mattered in the appeal.
According to the Fifth Circuit, TEA could fire an employee without consequence for filing a complaint that TEA misspent federal funds and that employee was spot on.
Upon receiving news of TEA’s win (and her loss), Kash released the following statement:
By now you may have heard that the Fifth Circuit did not uphold the Office of Inspector General’s findings or the US Department of Education’s decision that Texas did not have the right to fire me as a whistleblower when I was the State Special Education Director. The decision cites sovereign immunity, which is an outdated concept that was designed to protect states from being sued frivolously. The problem is that federal whistleblowing laws are not frivolous, and states should not be able to get $1.2 billion of federal money to serve students in special education without the safeguards required by the federal government.
Although this decision is not particularly surprising for Fifth Circuit, this is very disappointing for workplace ethics and whistleblower rights in Texas and around the country. When employees cannot follow the established protocols to report illegal behavior to protect taxpayers and those they serve, everyone is less safe, not just the employees who lose their careers. Over time, this creates tolerance for unethical and illegal behavior which statistics show is rampant in Texas government.
The answer is simple and should not have required hundreds of thousands of dollars of court and attorneys’ fees: The allocation of funding for the education of the most vulnerable children in the state should not be left to its most corrupt people. Whistleblowers who are doing their best to protect those children and that funding should not be fired and debased for those efforts; rather, they should be celebrated for their tenacity and bravery.
My attorney, Ben Vernia, and I are very disappointed though not completely surprised by this decision. We are examining our options to see what our future holds.
Since TEA is a state entity, no single individual is bearing the hefty weight of paying for legal filings, attorneys, and other related expenses. But as an individual up against the machine, so to speak, Kash is indeed bearing that weight, and with it, the many ripples it produces in one’s personal and professional life.
The cost of revealing rot can be brutal, and I am sorry that Laurie Kash continues to be under such strain.