Relationship with attorney, TRS appeal hot topic of recent meetings

Members of the Ennis School Board were at odds with the school district’s attorney during a meeting last week to discuss an ongoing appeal of findings against the district from the Montana Teachers’ Retirement System.

The meeting was scheduled because school board members wanted an update on the ongoing appeal with TRS. However, the meeting grew tense as board members Lisa Frye and Craig George challenged district’s attorney Elizabeth Kaleva on her role in creating the problem that led to the TRS investigation and decision.

The school district is appealing the finding from TRS that the district owes TRS for benefits for former superintendent Doug Walsh, who retired in June. Last August, TRS issued their findings of an investigation and determined that even though the district and Walsh claimed he first retired in 2001, that wasn’t so. And since he hadn’t retired, the school district owed TRS its share of Walsh’s retirement, which totaled about $189,000. TRS also claimed Walsh owed TRS about $572,000, which also included the refund of retirement benefits paid to him from 2001. The interest on the unpaid and improperly paid benefits continues to accumulate at 7.5 percent.

The claim dates back to 2001, when Walsh had supposedly retired and then was rehired back a month later as a part time superintendent and part time consultant. In 2008, Walsh’s consultant contract was dropped and he was hired as a part time bus supervisor.

In their initial findings, TRS claimed that Walsh’s employment with the district meant he really never retired and shouldn’t have been claiming retirement benefits.

The school district and Walsh filed separate appeals with TRS and those appeals have been progressing slowly.

Under the TRS operating procedures, their decisions must first be appealed to the TRS board of directors. The second appeal goes to district court.

Kaleva told the board at the meeting last Wednesday that she was waiting for a determination in the case as to her claim that Montana statute of limitations only allows TRS to go back two years for claims.

“If the scope is two years it’s a far lesser amount of money,” she said.

A hearing officer, who has been appointed to hear the case, will decide this point of the appeal. However, if the TRS board doesn’t like the hearing officer’s decision, they can choose to ignore it, Kaleva said.

Since the TRS board, which issued the findings in the first place, is also hearing the appeal, it can ultimately make the final decisions on any points in the case, she said.

Ennis School Board member Craig George asked Kaleva about her history of communications with the school board. He voiced his surprise that the board members hear very little from her while the appeal is proceeding.

Kaleva told George that previous boards hadn’t asked for regular updates and she would update the board as often as it preferred.

George also asked Kaleva about Walsh’s bus supervisor contract that was written and signed back in 2008. He asked if she had consulted Walsh on that contract and if Walsh had asked her to, would she have told the school board.

Kaleva denied consulting Walsh on his contracts with the district.

“We’re straying far away from the TRS stuff,” she said. “If you have issues with my representation (of the district) that’s something different … I did not counsel him (Walsh) personally on his contract.”

George asked Kaleva what contracts she was involved in and school board chair Lisa Frye asked if she was involved in the bus supervisor contract.

Kaleva again cautioned the two board members against arguing the merits of the case in such a matter.

“If you want to take a whack at me you’re damaging your own case, but go ahead,” Kaleva said.

The thing to understand about the claims by TRS is they are concerned with the intent of the contracts between Walsh and the school district, not the contracts themselves, she said.

Essentially, TRS claims that Walsh was a fulltime employee and as such wasn’t subject to claiming retirement benefits and both he and the district should have been contributing to his retirement, Kaleva explained. By appealing the TRS decision, the district is denying this claim.

School board member Jim McNally felt the discussion was beyond how the meeting was noticed on the agenda.

Frye disagreed, saying the new board members had never had the opportunity to discuss the case with Kaleva.

George asked Kaleva for her counsel on what path the district should take. Specifically, he wondered if it was time to try and settle the case with TRS.

“Not until you know the scoping,” she said.

Ethically, does the school district owe TRS money? George asked, saying that it seems like the claims against the district by TRS are accurate.

Kaleva again stopped him, saying debating the merits of the case like this would cause catastrophic damage to the district’s defense.

“As the board of trustees, we need to have the best interests of the district in mind,” said McNally. “I think that has gone awry here.”

Frye asked Kaleva what she thought about the board getting a second opinion from another attorney.

“If you’re not happy with me, then I suggest you go and do it,” Kaleva said.

There was also some discussion about a deposition that was conducted by TRS of a witness in the case, former school district clerk Sandra Lane. Kaleva said that she and Walsh’s lawyer are trying to arrange for their own deposition of Lane.

The conversation about Kaleva’s representation continued on to the school board’s regular monthly meeting Monday.

George said he was disturbed by Kaleva’s representation and attitude toward a couple of the board members. Also, he wanted more communication with her as the appeal continues.

“There seems to be a lack of communication between us and our attorney,” George said Monday. “We as a board need to sit down and discuss that and provide some parameters … It’s not a good working relationship.”

George was concerned about the money the school district is paying to pursue the appeal and if there’s some accountability for it. He was particularly concerned with how the deposition of Lane was going to proceed, be paid for and who was organizing it. He was under the impression initially that Walsh’s attorney was organizing. Now it appears Kaleva is.

“I’m in a position that I would rather settle with TRS,” he said.

It might be wise to wait until the hearing officer rules on the scope of the claims and appeal, said Ennis superintendent John Overstreet.

“I would encourage the board to be patient a little longer,” Overstreet said.

But still, the communication problem must be addressed, George said.

“We need a better working relationship with our attorney so we, the current board, can make some decisions,” he said.

The discussion also ventured into whether or not to keep Kaleva as the attorney.

Overstreet encouraged the board to keep her on at least until the scope of the appeal was determined. He felt like bringing a new attorney up to speed would be expensive.

Ennis resident David Kelley, who faced Kaleva in his lawsuit against former school board members and Walsh, told the board that their attorney had in fact worked with Walsh on the contracts he worked under and that ultimately the truth shouldn’t be something to fear.

“If the truth is going to sabotage your case, you’re in big trouble,” Kelley said. “You should settle.”

George tried to focus the discussion back on communication with Kaleva, rather than her representation of the district.

McNally made a motion to require Kaleva to provide monthly updates to the board, and allow her to depose Lane. He later amended the motion to add that board members would do no further harm to their case with TRS. The motion passed on a 3-2 vote, with George and Frye voting against it.

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