LT: Aug. 8th, more on Klaus Decision

Updated: 8/8/2008 11:47:02 PM
Eau Claire schools Superintendent Ron Heilmann, left, and attorney Kirk Strang announced at a Friday news conference the details of the suspension of Bill Klaus, the Northstar Middle School principal and former superintendent, until next June 15. The school district has concluded a phase of a monthslong probe into allegations that Klaus tried to gain early access to his $267,209 retirement stipend.

School board suspends former superintendent Klaus

By Julian Emerson
Leader-Telegram staff
The Eau Claire school board's decision Friday to suspend Bill Klaus without pay wasn't an official firing, but it could have the same effect while making a successful lawsuit against that action more difficult.

As part of the decision, Klaus, the Northstar Middle School principal and former superintendent, could resume working as a district employee after June 15, 2009, in a yet-to-be-determined administrative job.

However, his return is in question given that Klaus will turn 55 in July, at which time he would be eligible for retirement, as well as the controversy surrounding him in the wake of his attempt to access his retirement stipend early.

If Klaus does return, he will not be principal at Northstar, where he began work last summer after nine years as superintendent, current Superintendent Ron Heilmann said.

The board's decision to suspend Klaus closes one phase of the much-scrutinized investigation into whether he improperly attempted to access his $267,209 retirement stipend earlier than allowed, even as the next step appears imminent in the form of a lawsuit. Klaus' attorney, Thomas Guelzow, said Friday afternoon he "most certainly" plans to file a lawsuit against the district on Klaus' behalf.

As part of the board's decision, Klaus will not begin receiving retirement stipend payments until next July.

Klaus will miss out on nearly $100,000 during his suspension, including his lost salary and other benefits such as vacation and sick leave. The district will continue to provide health insurance to Klaus during that time.

The board also decided to alter the length of Klaus' contract. That contract provided Klaus with employment through June 30, 2012, but board members shortened the contract expiration date to 2010 because of concerns it wasn't in compliance with state law.

State statute dictates that school district administrators receive two-year contracts that can subsequently be extended for one year. Klaus' contract, approved Feb. 5, 2007, did just that, but it was negotiated on top of an existing two-year contract, giving him, in essence, a five-year deal.

"The board had questions about (Klaus) having multiple contracts simultaneously," said Madison attorney Kirk Strang, who has represented the school district during its investigation into Klaus' contract matter.

Legal ramifications
Besides saving a payout of Klaus' salary, the board's decision to suspend him also is more difficult to challenge legally, according to terms of Klaus' contract and legal experts familiar with Wisconsin school law.

To suspend Klaus, the board must prove only that its decision to do so was not arbitrary but based on some behavior on his part.

Firing him is much more difficult because it requires the board prove "just cause" for termination and involves a much lengthier process, including a formal hearing with cross-examination of witnesses.

Guelzow acknowledged the board's suspension action negates his ability to file a wrongful termination lawsuit. But there are other legal avenues available to challenge the board's decision, he said, based on the removal of Klaus' salary and what Guelzow termed the board's "arbitrary decision" to shorten Klaus' contract.

"Clearly, we are going to court over this," Guelzow said. "The board will no longer be able to hide behind closed doors."

Guelzow criticized the board for failing to interview former board members Carol Olson, JoAnne Evans and Michael O'Brien during its investigation. Those board members have said they believed the board intended Klaus to start receiving his stipend at age 53.

Controversy about Klaus' contract surfaced in April after revelations that he directed Olson - the former board president and no longer a board member at the time - to sign and backdate a document allowing Klaus to begin receiving his stipend last August.

Several board members said the board never discussed granting Klaus his retirement stipend at age 53, and board meeting minutes don't show the board approved that action.

Klaus didn't receive that money after the board in October determined he couldn't access it until age 55. He said he requested the money early to ensure it went to his family in case he died before retirement.

Buyout rejected
The board announced Monday it had reached a decision regarding Klaus' future with the district. But that determination was subject to negotiation, and Guelzow and Strang discussed terms of a possible resolution to the conflict during the week.

On Thursday, Guelzow said Klaus offered to resign in exchange for payment of his salary through next June 30.

"He wants to move past this and realizes the school district needs to pass a referendum at some point," Guelzow said of Klaus.

However, the buyout wasn't palatable to the board, which denied the proposal.

"We felt, given our review of all of the facts of this case, that the decision we reached was a fair one," board member Mike Bollinger said.

The board's decision prompted mixed reactions. Some school district residents criticized the board for not firing Klaus, and others expressed anger that Klaus will receive his stipend.

"I can't believe they would let him come back as an employee," Evelyn Tweet of Eau Claire said.

But Larry Paulson, also of Eau Claire, said the suspension makes much more sense than the buyout of Klaus' contract that had been discussed as a possible resolution. The cost of a full buyout of Klaus' contract plus his stipend would have topped $800,000.

"This way we're really not paying (Klaus) anything," Paulson said. "I think that's appropriate."

Board members have endured criticism during their investigation, in part for their failure to resolve the issue sooner. But board member Brent Wogahn defended the board's actions, saying the issue merited a thorough, rigorous investigation given its complex nature and the high degree of public scrutiny it attracted.

Now board members and district officials are looking to move beyond the dark cloud that has enveloped the district since Klaus' stipend concerns surfaced. That will prove difficult, especially with a looming lawsuit.

"We know it will be tough to move ahead, but we've got to do it one issue at a time," board member Ken Faanes said.

Emerson can be reached at 830-5911, 800-236-7077 or julian.emerson@ecpc.com.