An investigation into the state's former Deputy Education Commissioner, Chas Anderson, has found she broke some conflict-of-interest rules in procuring herself a contract, but clears her of more egregious allegations that she tried to defraud the state.
Chas Anderson ranked second only to Commissioner Alice Seagren at the Minnesota Department of Education before her resignation in June.
The state's Management and Budget Office investigated Anderson this summer to see if she had improperly procured herself a contract as she left her state position. Anderson had signed a $5,000 contract with the department to help write an application for a federal grant under a program called TIF, Teacher Incentive Fund. The contract was never executed.
The office had planned to release its findings next week, but Anderson surprisingly preempted that move by releasing her copy of the report to media Friday afternoon through her spokesperson.
The report states that Anderson broke some conflict of interest laws during the process of arranging her own contract - that she "placed herself on both sides of a State business transaction," according to the report. But the probe also concludes investigators found no evidence "of any effort by Anderson to defraud the State or to obtain any kind of windfall."
The report concludes it was reasonable for the department to want to hire Anderson, given her knowledge of the topic of the grant, along with the fact that no other person was able to write the grant after Anderson's contract was canceled. As a result, the state of Minnesota did not submit an application.
The problem, according to the report, is in how the idea was executed to have Anderson become a paid independent contractor.
For example, Anderson wrote her own contract on state time, a move the report concludes "could be construed as a violation of State law."
The report also takes issue with Anderson post-dating her own signature. The signed contract lists the date June 7, but investigators' interviews revealed the paper was signed June 4 - Anderson's final day working at the Department of Education.
Furthermore, investigators questioned why the only other signature on the contract belonged to Pat King, given that Anderson was King's boss at the time.
King, the state's Director of School Improvement, told investigators she was 'not comfortable' with the circumstances and, in hindsight, would have refused to sign the agreement, even though she would have been refusing direction from her own boss.
Anderson's boss, Commissioner Alice Seagren, had told investigators she was surprised to see King's signature on the contract. Anderson told investigators she thought it would be okay for King to sign it because it was her last day; Seagren had apparently left for the day; and Anderson was trying to get everything in order before leaving.
Tammy McGlone, the administrative services director at the Department of Education, told investigators that she had told Commissioner Seagren the arrangement with Anderson "seemed weird." McGlone says Seagren's reponse was that it "bothered her too."
In retrospect, Anderson told investigators, she should have had Seagren sign the contract.
While it was known that Minnesota Management and Budget (MMB) was conducting the investigation into whether there was a conflict, Friday's release of the report revealed for the first time that it was also MMB itself that initiated the complaint.
MMB had flagged Anderson when the Department of Education tried to procure a vendor number for her. The vendor number would have been used to document Anderson's work as an independent contractor. However, because it was so close to her departure date from the Education Department, Anderson she was still showing up in state records as being a state employee. It's illegal for state employees to also be independent contractors doing business with the agency where they're employed.
MMB Commission Tom Hanson said in a statement Friday that while the decision to contract with Anderson made sense, "the process for establishing the contract was unacceptable."
"Our financial control systems worked to detect and stop the process before it was finalized."
The report also reveals that Education Commission Alice Seagren didn't cancel Anderson's contract until the morning after Hanson had informed her that his office would be investigating the matter.
Seagren also issued a brief statement Friday, saying the report "raised important concerns about some internal controls at the Department of Education. We have already taken aggressive steps to improve our internal processes."
MMB's investigation also looked at two other issues: Whether Anderson was improperly paid for a high number of holidays as a state employee, and whether Anderson was improperly employed by another employer while still working for the state.
In both cases, the report found there was no evidence of impropriety.
Anderson was paid for working on 15 different holidays through 2008 and 2009, but the report concludes there's no reason to believe she didn't actually work on those holidays. Seagren had credited Anderson as a hard worker who took on an extraordinary workload.
Anderson also had begun working for a Texas-based group called the National Math and Science Initiative before ending her employment with the state, but the report said there was no evidence she did any NMSI work on state time.
Anderson has long been a well-known political confidante to Gov. Tim Pawlenty. She worked on his campaign staff during his first run for governor in 2002, which earned her the political appointment at the Education Department.
Anderson released a statement Friday, in which she noted the most positive findings, namely that there was no evidence that she tried to defraud the state.
The review, Anderson said, "found that (the Minnesota Department of Education's) consideration of contracting with me constituted a 'sound business case' and was for 'legitimate business reasons' and only identified problems in the process used to write the contract."
"I am proud to have had the opportunity to serve Governor Pawlenty and Commissioner Seagren at the Minnesota Department of Education for most of the last eight years. Together, we made a positive impact in our state by helping improve the academic achievement of all students in Minnesota."
The report also suggests that Anderson's power within the Education Department rivaled that of the commissioner.
Anderson was already at the Department of Education when Alice Seagren became commissioner in 2004. Seagren noted in an interview with investigators that she was initially concerned that everyone was "basically reporting to (Anderson)." Seagren added that Anderson resisted the idea that the department's assistant commissioners report to Seagren, the highest-ranking official in the department, instead of Anderson, Seagren's deputy.
Seagren also revealed that she had found out after Anderson's departure that Anderson had instructed employees not to talk to Seagren.
"It's been my perception that Chas Anderson was the direct pipeline to the governor," noted State Representative Mindy Greiling (DFL-Roseville), chair of the House K-12 Education Finance committee. "If it was important, she was there. If it wasn't important, she wasn't there.
"We always called Chas 'the Commissioner,' added Greiling. "That must have been hard for Alice Seagren, but it was also hard for us if Chas wasn't there to get an answer that was up to date and accurate from the real commissioner."
Al Louismet, a state worker for more than three decades and the department's manager of accounting operations, told investigators that he was told not to go to Seagren.
"In my career with the state I always had access to (the commissioner's) office, and I think I should," he told investigators. "But the politics here I didn't understand it, so I said okay.
"But it seemed a little odd to me."