Carwashes, sorting clothes at the PTA Thrift Shop, linking your VIC card at Harris Teeter – these are the school fundraising methods of the plebeian. Rashkis Elementary School teachers have a much more innovative way of raising money: selling alcoholic drinks at a party where students who are minors work as servers.

Penny Rich told Chapelboro.com that the retirement party she catered for former Rashkis principal Deshera Mack was actually a charity fundraiser to benefit students who could not afford to go on field trips. Rashkis teachers organized the event, Rich said, and reimbursed her for the food and liquor, and the teachers sold drink tickets to raise money for the field trip scholarship fund. The school received a $25 donation from Rich on Aug. 26.

Rich said she did not make a profit from the event. But the party served as advertisement for her catering business, and any expenses she was not reimbursed for would be a tax write-off for her, as would the money donated to the school, though the negligible amount raised won’t make much difference.

Rich also said students were servers at the party. While it’s illegal to have children under 18 serving drinks if you pay them, the law does not address the legality if they work for free. So no ALE agents will be busting down Rich’s door.

However, school board member Mike Kelley was not amused by the unorthodox fundraiser. “I raised my brow after reading that alcohol was served at a function that included students. Yikes,” Kelley said after reading the Chapelboro report. “I do not support serving alcohol at functions were children are in attendance, and discourage adult-only school-related events that serve alcohol.”

And that’s why I wrote the email to Town Council members that prompted the ordinance to be pulled from the consent agenda for discussion. I questioned why the 523 building should be exempt from the alcohol ban immediately when the only publicly discussed use for the building at that time was as an art gallery for UNC students.

Underage and excessive drinking is a particular problem in university towns. More than a dozen students didn’t even make it through their first weekend at UNC without being arrested for alcohol-related offenses. And there is a direct connection between students’ drinking behavior and the message they get from observing their parents’ attitudes toward drinking. Some Chapel Hill parents would never spank a child because of what it might teach the child about hitting. Yet what does it teach children when these same parents serve alcohol to their teenagers, arguing that the teens will drink anyway; they might as well drink at home.

Apparently, Penny Rich and the Rashkis teachers would drink to that.
– Nancy Oates

When I worked as a cashier in a grocery store, I was not allowed to check out my mother. Store policy. Thirty years later when my son worked as a cashier at a different grocery chain in a different state, the policy at his store was that cashiers couldn’t check out any of their relatives. The grocery stores wanted to clear themselves of even the appearance of impropriety. Which is why, when I went shopping one Sunday night and saw that my son was the lone cashier, I had to take my cart full of groceries through the U-Scan. And the person supervising the U-Scan didn’t say, “Oh, just this once, in this special circumstance, you can go through your son’s line.” She understood the policy built trust between the business and its customers.

The appearance of impropriety is why Penny Rich’s silence about her catering gig when she argued so passionately for an ordinance change lifting the alcohol ban was out of line. Had she prefaced her petition by saying, “I’m a caterer, so this may seem self-serving, but I think there’s a need for another place in town to hold catered events with alcohol. In fact, I’m catering a dinner in a few weeks, and if the ban is lifted, I’ll have the event at the 523 building.”

Instead, she tried to sneak it through the consent agenda. Just like Bill Strom and colleagues tried to do with an ordinance that would have had taxpayers paying for council members’ health insurance benefits for life, had Matt Czajkowski not questioned it and convinced others on the council to rethink their original votes.

Part of the impetus behind council adopting a code of ethics was to restore voter confidence in the council after Strom, who had purchased an apartment in New York, waited until after the candidates’ filing date to announce that he had left town and wouldn’t return to council in the fall. That way he could work behind the scenes to have a like-minded person appointed to the seat; voters didn’t have any say in the choice.

Rich was elected with taxpayers’ funds through the Voter Owned Election program. That makes transparency in her actions all the more important, so taxpayers don’t conclude that she used their money to get elected to a position she could use to her own financial gain.

We need to have confidence that our elected leaders are making decisions based on what’s in the best interest of the community, not what benefits the council member most.
– Nancy Oates

Ethics? Ethics, and transparency, for that matter, are for the little people, Penny Rich seems to believe.

At the May 23 Town Council meeting, in which she petitioned council to lift the alcohol ban from 523 E. Franklin St., Rich argued that the former museum belonged to “all the people.” And by that she evidently meant “caterers,” and by “caterers” she must have meant her own business. During the lengthy discussion that night on whether to change the ordinance before council had thought about how the vacant building would be used, Rich never mentioned that she had snagged a catering gig to be held three weeks later that included a cash bar for more than 100 people and needed a venue.

Rich argued that being able to serve alcohol would make the site more attractive to private parties. Allowing alcohol would enable the town to charge upwards of $100 an hour, she said, rather than the $20 per room other indoor sites on the Parks & Rec’s list charge.

So what did Rich pay for the space in which she was paid several thousand dollars to cater? My request for that information is being treated as a public records request and has been forwarded to the town’s Public Arts staff, who oversee events at 523 E. Franklin.

And did Rich hire the police officer she said was required at catered events where alcohol is served? Rich has been uncharacteristically silent on questions about the June 12 retirement party she catered. She did not respond to my email to her.

At the May 23 meeting, Rich said, “There’s no reason for the building to be sitting there without making money.” But the site was plenty attractive without alcohol. The building hosted some group’s event nearly every day before and after the ordinance change to allow alcohol, yet none seem likely to serve liquor: a butter sculpture workshop, the Autism Outreach Playgroup, the Chapel Hill-Carrboro Mothers Club, the Spiral Scouts. Rich’s catered party looked to be the only event where alcohol was served in the two months following the ordinance change.

Granted, the Code of Ethics the Town Council adopted in November last year doesn’t specifically rule out a council member petitioning for an ordinance change that would allow her to reap financial gain, but Rich’s behavior smells like deviled eggs left out too long on the buffet. Her integrity has shriveled like a Vienna sausage forgotten on the steam table.

Laurin Easthom said she wished she had known of Rich’s personal interest in the petition before joining the 7-1 vote to pass the ordinance. (Matt Czajkowski was the lone nay vote; Sally Greene was absent.) “Had I known she was personally going to take advantage of the relaxing of rules on alcohol in that building by hosting her own event with alcohol,” Easthom wrote in response to an email I sent to council members who voted to approve, “I would have brought it up in the meeting because what one council member does really affects us all, because the council voted for it.”
– Nancy Oates

John Rhodes, a writer from Efland, contributes this report. Portions were previously published in a Chapel Hill News Guest Column on June 15, 2011.

In 2007, the board that oversees UNC Health Care decided to purportedly “cut” $555,467 in executive bonuses. The board also purportedly reduced $834,753 in bonuses for 22 other managers.

Yet the only thing cut by the UNC board was the word “bonus.” Amounts reported cut or reduced, roughly $1 million, kept flowing to the same recipients.

Rather than going to the execs as “bonuses,” the amounts went to the same individuals as pay raises — a re-categorization of how the monies were defined and never reported in the press.

Why didn’t UNC communicate, at the time of the announcement in May 2007, what UNC vice president for communications Joni Worthington later stated by email (September 2008)? “The salary approved by the Board of Governors represents a 7.2 percent increase in Dr. Roper’s total compensation in the preceding year. That compensation base included the $110,100 bonus paid in 2006-07 (for performance in the prior year), as well as a mid-year salary adjustment.”

Worthington’s e-mail means that rather than only receiving a 7.2 percent increase between the two years in question, Roper’s raise ($489,030 to $690,000) was actually 41 percent.

But it wasn’t just the head of UNC Hospitals whose bonus was handled this way. The same 500-word news story emphasizing approximately $1 million in bonus “cuts” included 16 words of double-talk: “Base pay will be adjusted to make sure the total compensation is comparable to previous years.”

Transparency?

As there is a significant difference between bonus and base pay, this is accounting and rhetorical deception at its best. Bonuses are not guaranteed. Base pay is. And while bonuses are not factored into base salary to calculate future pay raises, once $1 million of bonus monies are redefined and rewarded as (unreported) pay raises, all future raises are then based on higher totals.

Equally disturbing were the comments of Roper and Bowles to the press in announcing the “cuts”:

” ‘I commend the board for making this fundamental change,’ said UNC system President Erskine Bowles, who had pushed hard for the board to address the issue after complaints.”

“In a prepared statement, Roper said he embraced the change. ‘These changes reflect our commitment to maintaining the public confidence in UNC Health Care’s service to its mission and the people of our state,’ said Roper.”

And from the same source:

“Roper and other system officials will continue to make recommendations for executive pay increases in consultation with the board’s compensation committee, according to a statement announcing the changes.”

Was there planning (conspiracy) on the part of Roper, Bowles and UNC Board of Governors to mislead (deceive) the public in what they intended when they announced the bonus cuts?

The expense is passed on to the patient and Blue Cross to absorb, and I suspect that Blue Cross raised their rates … and passed it all on to the State Health Plan and the insured.

Beyond masking an ethics problem behind standards that failed to provide adequate disclosure to the public, what happened to “there’s a formal process that the University has wisely set up to oversee these kinds of activities,” to quote Roper.

A slight lapse of judgment? How did all this happen, and on whose part?
— John Rhodes

John Rhodes, a writer who lives in Efland, contributes this report:

While citizens of North Carolina and the rest of the nation go down an economic drain initially created by improper oversight in the real estate/finance market, there’s hope … at least for a few.

Former White House Chief of Staff Erskine Bowles is one such lucky chap. What did a giant within the struggling auto industry or a Wall Street finance house have to gain in having a businessman with Washington connections sit on their boards?

The same question should be asked as it relates to Dr. William Roper, CEO of UNC Hospitals.

What would Medco Health Solutions, the nation’s largest pharmacy benefits company of its kind, or DaVita Inc., one of the nation’s largest providers of kidney dialysis, have to gain from having one of the country’s most influential physician executives, who is fully armed with insight to regulatory issues as they relate to health care management, sit on their corporate boards?

Given that a stock’s value rises with profit, news of DaVita being sued for intentionally wasting medicines in order to reap hundreds of millions of dollars in unnecessary Medicare reimbursement while Roper served on its board is beyond disturbing (see “Lawsuit Says Drugs Were Wasted to Buoy Profit,” New York Times, 07/25/11). The suit alleges that DaVita packaged medicine in larger-than-necessary vials, knowing that Medicare would pay for unused portions.

Between 2004 and 2008, Roper, while serving on DaVita’s board, cashed in $2.7 million in DaVita stock, $1.3 million from 2005 alone. As these stock earnings were reported in a June 26, 2009, memorandum from John Lewis, CFO of UNC Health Care, to Richard Bostic, principal fiscal analyst of the North Carolina Assembly – copy of which was sent to Holden Thorp – this should be a major concern for UNC.

After the football thing, just how many scandals – this one national in scope – can one chancellor handle?

Beyond his income from the state – now in the range of at least $800,000 a year – is Roper using his board positions and insight to hospital management to increase the profit of others and himself at public expense?

If so, it would be an understatement to say there’s a bit of a conflict of interest here. As CEO of UNC Hospitals, Dr. Roper’s number one priority should be the physical and financial well-being of every patient, not that of profit from and for those in the corporate world.

And what if, beyond Medicare and the senior citizens who may have been administered these medications, DaVita products were provided to those receiving Medicaid benefits? The matter would be all that much more serious because of the increase in scale.

Although there seemed to have been no direct conflict of interest for Bowles and his board positions, when “the time was right,” he stepped down from a couple of board obligations and as president of UNC.

Should we consider ourselves lucky?

Bowles still has his connections in Washington, where, after having been one of the individuals who approved Roper for his position with Medco Health Solutions, he can continue influencing policy as it relates to the national budget … conflict of interest … health care reform …

How wide open to exploitation should any marketplace be to public officials, on any level, who, beyond the government positions they hold, use their knowledge to profit in the private sector at the expense of the very same public they claim to serve?