Lawmakers waived appointments to secure Dalio funds for CT schools

When Connecticut’s partnership with Dalio Philanthropies to transform under-performing schools gets underway later this summer, legislative leaders will find themselves in an unusual role.

One of the conditions hedge fund giant Ray Dalio’s foundation set in exchange for its unprecedented $100 million contribution was that top lawmakers would not make political appointments to the 13-member board overseeing the public-private endeavor.

Instead, legislative leaders must serve on the panel themselves.

Additional controversial provisions — exempting the process from state disclosure and ethics rules — raise a number of questions.

How much information do these lawmakers owe to Connecticut’s taxpayers, who will put up $100 million over the next five years and have an ongoing stake in the public school system?

And what responsibilities do they have to the nonprofit corporation they created — one that not only will oversee how the money is spent, but also try to attract another $100 million in private contributions for Connecticut’s schools.

“Who is my master? The way this is done is problematic,” said House Minority Leader Themis Klarides, R-Derby. “Everything is supposed to be done in the light of day. I don’t know what happens if a publicly elected official has a fiduciary responsibility to this nonprofit corporation. What rules do I follow?”

“To some extent we’re going to have to find our way as we go,” said Senate President Pro Tem Martin M. Looney, D-New Haven. “I would hope we would have as much transparency as possible. … It’s always an issue and a concern when you’re trying to build public confidence.”

Some legislators say public confidence in this experiment took a hit in late June when Gov. Ned Lamont and his fellow Democrats in the legislature’s majority unveiled an outline of how the partnership would function in the new state budget.

There would initially be a 12-member oversight board, with four appointments belonging to the foundation led by Dalio’s wife, Barbara.

Lamont will have three appointments and hold one seat himself.

Presumably most of these appointments will go to experts in education.

“Who is my master? The way this is done is problematic. I don’t know what happens if a publicly elected official has a fiduciary responsibility to this nonprofit corporation. What rules do I follow? Everything is supposed to be done in the light of day.”

House Minority Leader Themis Klarides, R-Derby

Legislative leaders will get no appointments. Instead the top two Democrats — Looney and House Speaker Joe Aresimowicz — and the top two Republicans — Klarides and Senate Minority Leader Len Fasano — will serve on the panel themselves.

According to sources familiar with the budget talks, an earlier proposal that was discarded would have allowed each of the legislative leaders one appointment, but the Dalio Foundation would have had the power to block any of those legislative decisions.

Sources said this proposal, brought forward by Lamont officials — presumably to accommodate the Dalio Foundation — would never be acceptable to legislative leaders from either party.

“The Partnership for Connecticut represents an unprecedented opportunity to help youth who are disengaged or disconnected from high school, the community, or the workforce,” the Dalio Foundation wrote in a statement last week. “Young people deserve the attention and support of Connecticut’s top elected leaders and it is important for the Partnership to remain bipartisan and inclusive. That is why we asked for the Governor and the four legislative leaders to serve themselves on the governing board.”

The foundation added that these five elected leaders “bring incredible expertise and commitment, and we’re honored to work alongside them in making a positive difference.”

Lamont, who joined the Dalios when they announced the historic contribution at East Hartford High School on April 5, has often insisted state government must collaborate more frequently with private business and philanthropy.

“This is the largest public donation in Connecticut’s history and the first time Dalio Philanthropies partnered with the state or worked with matching funds,” Lamont spokeswoman Maribel La Luz said recently. “Having legislative leadership directly on the governing board of the non-profit exemplifies the state’s seriousness and commitment to doing things right and efficiently.”

La Luz noted that while the partnership is envisioned to run for several years, the current governing board only serves through early January 2021. The board will have the option of redefining itself at that point.

But while legislators tackle dozens of topics through their bills, most don’t have the time to become experts in many subjects. That’s why legislative leaders usually are given appointments. They still have the option of appointing themselves to any panel, but usually select someone with specialized knowledge.

“There are hundreds of different boards and commissions in the state and they go from soup to nuts in terms of subject matters,” Klarides said. “Even though we are all leaders, we don’t have expertise in all subjects.”

Fasano said he initially also opposed depriving lawmakers of an appointment option.

“My first thought was I don’t know a lot about the topic,” he said. “I felt I’m not sure I would be the right person at the table.”

But the Senate Republican leader added there is an advantage to the approach that was taken.

“Many times when people have an issue, they’d rather meet with the leaders than other folks because you can get an answer directly,” Fasano said.

Ray Dalio leads the Westport-based Bridgewater Associates, the world’s largest hedge fund, and Forbes lists his net worth at $18.4 billion.

The Dalios already have invested, through their foundation, in under-performing districts in Connecticut and in other states, though not on the scale planned for this latest endeavor.

“He doesn’t believe in idle time,” Fasano said. “He believes people who are decision-makers need to get together.”

Aresimowicz agreed and said that while withholding appointments from legislative leaders is unusual, he didn’t take it as a slight.

“I took it as the level of commitment the Dalio family wants to see from the legislature,” he said.

And both Aresimowicz and Looney said they won’t hesitate to seek out help from educational experts as the partnership plays out over the coming years  — even if these experts aren’t necessarily members of the corporation’s governing board.

“There’s nothing that prohibits us from frequent and direct consultation with any education experts,” Looney said. “I think we can have the best of both worlds with this board, energy and substance.”

Lamont spokeswoman Maribel La Luz said the board is expected to begin meeting later this summer. 

The Dalio foundation already has announced two appointments: Bridgeport  teacher Sheena Graham, who is Connecticut’s 2019 teacher of the year, and Erik Clemons, CEO and president of the Connecticut Center for Arts and Technology.

Once the 12-member panel is fully formed, one of its first orders of business will be selecting a 13th member, who also will serve as president of the nonprofit corporation.

Still, some legislators are wary of this process, as well as how state funds will be expended.

Why exempt the panel from disclosure and ethics rules at all? some legislators asked.

Deputy House Minority Leader Vincent J. Candelora, R-North Branford, irked Lamont when, during a June 3rd House floor debate, the lawmaker said these exemptions make Connecticut residents little more than “peasants” waiting for the wealthy to “sprinkle” dollars on their school districts.

Neither legislative leaders nor Lamont have said whether the board’s first meeting, or any others, would be open to the public, let alone corporation research and planning documents the board generates.

La Luz said “information about the partnership and its activities will be made available to the public just as the foundation has done with their work in the past.”

The foundation wrote in response to a question from The CT Mirror that “like all boards, governing board members have a fiduciary duty to keep confidential information private, but they are otherwise expected and encouraged to publicly represent the partnership and its mission.”

But a foundation statement also appeared to close the first meeting of the new board to the public.

“The first full governing board meeting will only involve members of the board and invited staff, consistent with how any private non-profit organization conducts its board meetings,” the foundation wrote.  “The board will collaboratively develop its culture and determine the rules for future meetings. More broadly, the board and staff will actively engage with community members and provide information to the general public through the website, public reports, and in-person collaborations.”

For those who remain concerned about transparency, Lamont administration officials point to smaller initiatives the Dalio Foundation already has funded in recent years in East Hartford, Meriden, New Haven and Hartford.

The foundation has supported a variety of programs — all designed to better position high school students to graduate and succeed in college — in the East Hartford system for more than three years, said Superintendent of Schools Nathan Quesnel.

This has led to development of a data-based analysis system to track student success and identify those who might need early intervention to ensure success in high school. It also includes an extensive summer learning institute to develop student leadership skills.

In both cases, Quesnel said, the foundation has worked closely with parents, teachers and town officials while maintaining transparency.

“Barbara Dalio is not someone who is comfortable with the pomp and circumstance and accolades that come with philanthropy,” he said. “But their idea has been to bring as many people to the table as possible, so everybody has a voice.”