Grant money spent on legal advice -- Horizon principal denies any wrongdoing

PALMER -- The loss of charter for Horizon Charter School may only be the beginning of serious problems for school administration. Officials from Horizon have claimed they had permission from a state education department manager to use federal grant funds to pay for legal services, but that may not be true.

Alaska Department of Education and Early Development Charter School program manager Louie Yannotti said Horizon's claims of a discussion about the grant funds are false.

"I have never discussed this issue," Yannotti said. "I would be fired if I had approved that, there are very stringent rules."

Both Horizon Academic Policy Committee chair woman Joy Vaughn and Horizon principal Yulanda Paez spoke of approval from Yannotti at Monday's Matanuska-Susitna Borough School Board meeting. Both were referring to a purchase order that was brought forth by the school district. The order showed that Paez requested a $2,000 payment from the school's Federal Planning and Implementation Grant to the law firm of Lane, Powell, Spears & Lubersky LLC. The order had the payment labeled as "services for school training."

"We started using the lawyer in October after the district started talking about termination," Vaughn said. "We did inquire with Louie Yannotti, who is the state person in charge of that grant account, and he said it was fine, that professional services were in there and could be used for a lawyer."

But district spokesperson Kim Floyd said the district had not yet considered termination of the Horizon Charter contract in October. Paez used one of the legal firm's lawyers, Peter Partnow, during her personal contract negotiation in October, but the district has not accused her of using grant funds for her own legal advice. Partnow is an Alaska-based partner in the firm, and according to the company's Web site, specializes in litigation and dispute resolution in employment and labor disputes.

"We could not reach an agreement on terms of the contract for employment," Floyd said. Floyd said the district did not bring its lawyer to the October meeting.

Floyd said the delay in hiring Paez as a district employee was also the reason that Paez could not hire a secretary, because a nondistrict employee cannot hire district employees. The lack of a secretary was part of Horizon's defense during the board's discussion regarding termination of the school's charter contract.

After what started out as a rather rocky first year, Horizon's charter contract was terminated at Monday's school board meeting, and the following morning Yannotti said he was shocked that Horizon had claimed he had approved the use of grants funds for legal services.

"[Paez] can deny it 'til the cows come home, but the truth is the first time I heard about this was this morning," Yannotti said.

In her public testimony at Monday's board meeting, Paez spoke about getting approval for the transaction, which she said paid for "training and guidance" for the school's staff. At no point did Paez mention using the same firm as part of her own employment contract negotiation.

"We sought information from the Department of Education," Paez said. "We would not move on this without getting approval. Yes, the implementation grant does allow for services -- professional and technical services from legal council."

Yannotti explained that in order for him to have approved the transaction, Paez would have had to turn in a project budget/budget narrative change which he would have had to sign. Neither that, nor a conversation with anyone at Horizon about the transaction, ever occurred, Yannotti said.

On Wednesday, Vaughn said she did not personally speak with Yannotti about using the lawyers, but that she recalls Paez telling the APC earlier in the school year about getting approval.

"I remember specifically being told [by Paez] that [Yannotti] said the grant could be used but that he didn't encourage it," Vaughn said. "I was under the impression that Yulanda talked to Louie about it herself."

Vaughn said it also appeared that Paez had talked to Yannotti after she discussed Yannotti's denial of the conversation with Paez on Wednesday.

"She acted shocked that Louie had said she hadn't discussed it, but she did not actually say that she did call [him]," Vaughn said.

Paez said Wednesday that she couldn't recall if she talked with Yannotti specifically.

"I don't recall the personal conversations with Louie, what I do recall is conversations with people in the department of education making sure this was OK," Paez said.

Paez also said she is legally pursuing the district due to "unfair practices and an attempt to defame" her. She denied that the firm she is in contact with is out of Seattle, Wash., -- where Lane, Powell, Spears & Lubersky's address is listed on the purchase order -- but did not deny or confirm that the lawyer she is using is the same one used for advice on the termination or the October employment negotiation.

"That has not been decided yet," Paez said.

Contact Jen Ransom at jen.ransom@frontiersman.com.