The embattled CEO of Connecticut’s soon-to-be-dissolved education partnership, Mary Anne Schmitt-Carey, is owed more than $120,000 in severance if terminated — provided she doesn’t publicly criticize the public-private initiative, according to contract information obtained by the CT Mirror.
But hedge fund billionaire Ray Dalio’s philanthropic arm — not the state — would cover any separation costs owed by the Partnership for Connecticut. That’s because Dalio Philanthropies has agreed to pay all partnership personnel costs, according to Gov. Ned Lamont’s office.
State officials also pledged last week that all financial transactions by the partnership would ultimately be released, closing the book on an experiment that has been marked by controversy over transparency since its inception nearly one year ago. Although the Dalios received praise for contributing $100 million over five years — an amount the state pledged to match — to invest in some of Connecticut’ lowest-performing schools, the Dalios’ offer came with an unprecedented qualifier: the process would be exempt from state disclosure and ethics rules.
Lamont and Democratic leaders in the General Assembly granted the Dalios’ request when they passed legislation establishing the partnership, but that decision led to persistent criticisms that decisions were being made without full transparency — including those related to the hiring process for its CEO and her ultimate removal.
Following a Freedom of Information request from the CT Mirror, the Lamont administration last week released the contract sent to Schmitt-Carey, who was hired March 23.
“Although you are an at-will employee, should the Partnership decide to exercise its right to terminate your employment, the Partnership will provide you with a severance payment equal to six (6) months’ salary,” reads the agreement, which set Schmitt-Carey’s annual compensation at $247,500.
But while the partnership’s original blueprint called for Connecticut and Dalio Philanthropies to fund the partnership equally, “it has been the organization’s practice to have all operating expenses be paid for by the Dalios,” said Max Reiss, spokesman for Lamont.
The issue of severance pay and Schmitt-Carey’s future are uncertain for two reasons.
Partnership Chairman Erik Clemons placed her on paid administrative leave on May 7, three days, she asserts, after Clemons and Dalio Philanthropies’ representatives urged her to resign.
Less than two weeks later, on May 19, Lamont announced Ray and Barbara Dalio, who first proposed the joint venture, had grown frustrated about news leaks and decided to dissolve the partnership. The Dalios have pledged to continue funding their end of the project, even though the partnership is over.
CEO compensation had been a source of disagreement
Schmitt-Carey’s compensation was a sticking point between the Dalios and the state even before she was hired.
The partnership had budgeted $247,500 for the post. Legislative leaders who serve on the partnership’s Board of Directors said they balked when asked to consider annual compensation in excess of $300,000 — more than what most superintendents earn — and noted that taxpayer funds would match the couple’s investment dollar-for-dollar.
The partnership ultimately settled on $247,500 and hired Schmitt-Carey, longtime CEO of Say Yes to Education, another nonprofit focused on improving inner city education, lauding her experience in the field.
The honeymoon didn’t last long. Just six weeks into the job, Schmitt-Carey charged that Clemons, Barbara Dalio, and partnership staffer Andrew Ferguson “ambushed” her with “false and defamatory allegations” during a May 4 phone call and urged her to resign.
Schmitt-Carey described the meeting in a later email to all partnership board members.
Elected state officials on the partnership’s board said they would not learn of these actions until May 8.
The CT Mirror posed questions to Dalio Philanthropies and the partnership through Global Strategy Group, a public relations firm retained by the Dalios. They declined to comment.
Schmitt-Carey also refused to be interviewed.
‘Non-disparagement’ agreements raise concerns — in public sector
While Schmitt-Carey’s contract has a severance provision, it also stipulates she “will not at any time make, publish, or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Partnership, or any of its employees, officers, and associated third parties.”
Such “non-disparagement” agreements, though common in the private sector, have increasingly come under fire in state government.
The Senate passed a bill in 2015 barring public agencies from reaching deals with managers after the state university system paid departing President Gregory Gray $70,000 through a “non-disparagement” deal. [The bill died in the House.] Gray had faced sharp criticism from faculty and legislators.
The state auditors also urged lawmakers to ban the practice altogether after Connecticut Lottery Corp CEO Anne Noble stepped down in 2016 following an investigation into gaming fraud.
Despite resigning, Noble was given the post of “senior advisor” and paid $25,000 per month through a non-disparagement deal — an arrangement auditors said allowed her to reach a 10-year employment threshold and qualify for public retirement benefits.
But Connecticut’s partnership with the Dalios — who have won praise from education leaders for previous initiatives to assist at-risk students in several communities — was different from state initiatives from the start.
A tumultuous year
When the Dalios, via the Lamont administration, insisted that the partnership be exempt from state disclosure and ethics rules, legislators granted the demand over strong objections from House Republicans.
The Dalios and Lamont defended the exemption by saying the problems facing Connecticut’s school systems couldn’t be solved without difficult, sensitive conversations that would never occur if they were subjected to public scrutiny. Board decisions and finances, they said, still would be explained afterward and made public through website reports and community briefings.
Critics, like Gwen Samuel of Meriden, president of the Connecticut Parents Union, said the approach was counter-intuitive, limiting access to families most concerned about improving public schools.
“If we’re talking about parents taking responsibility for their children, if we’re talking about parents being engaged, then this approach was contradictory to all of the efforts of our public school system,” she said. “You don’t meet privately and tell us what you did afterward. You have to include us. There is no way around that.”
But the Dalios also sought to vet and approve legislative leaders’ appointments to the partnership board. Democrats and Republicans balked at this, and a compromise was reached for top lawmakers to serve themselves on the panel.
Then, when Attorney General William Tong concluded elected state officials on the board would have to disclose partnership documents in accordance with FOI rules, Dalio representatives proposed empowering a subcommittee of the board —one that included no elected officials — to make most major decisions.
When the partnership ultimately broke down, the Dalios blamed House Republicans — particularly Minority Leader Themis Klarides, R-Derby — and the news media.
“It has become clear that it’s not working because of political fighting,” Barbara Dalio wrote in a statement on May 19. “I am not a politician and I never signed up to become one. I only want to help people. Through this experience I’ve learned about our broken political system and I don’t see a path through it to help people.” She added that even without the partnership the Dalios still would invest $100 million in public schools in poor communities.
In a May 23 post on Twitter, Ray Dalio never named Klarides but effectively identified her, charging her with playing partisan politics and leaking “distorted stories to some media folks who wanted to write sensationalistic stories.”
But Klarides wasn’t the only critic, even among legislators.
Senate Minority Leader Len Fasano, R-North Haven, said the proposal to empower an executive subcommittee to run the partnership would have reduced the role of legislators to “window dressing.”
And after the partnership collapsed, two Democratic leaders — Senate President Pro Tem Martin M. Looney and House Majority Leader Matt Ritter — both said the basic approach, in hindsight, was flawed.
Lamont, at the end, was frustrated that Schmitt-Carey’s personnel issue had made news reports, and expressed surprise the offer to provide limited access to the process, through reports, briefings and press conferences, hadn’t assuaged critics.
“We worked through this, I thought,” he said. “We were going to earn the trust of the people of Connecticut.”
The governor and the four legislative leaders on the board have declined to discuss specifics of the CEO matter, noting that personnel issues among public school employees normally are exempt from disclosure under FOI law.
But Lamont and all four legislative leaders on the board — Looney, Fasano, Klarides and House Speaker Joe Aresimowicz — all asserted last week that the partnership’s fiscal records still would remain public.
“Absolutely,” Aresimowicz said. “We voted on it as a board. That would be consistent with the original language in the [partnership] bylaws.”
“Obviously, whatever money is left, we should have a detailed accounting,” Fasano added.
Reiss said between $14 million and $15 million of Connecticut’s $20 million contribution to the partnership for the current fiscal year, which ends June 30, remains unspent and would be returned to the state.
The partnership board would need to adopt a resolution to dissolve, he added. No vote has been announced to date. Legislative leaders said they’re still researching whether the full General Assembly also must vote to disband the partnership.