Cortez Hill Academy

SPECIAL REPORT: THE SCHOOL GURU WHO PROMISED RESCUE AND BROUGHT RUIN, September 24, 2008, The Voice of San Diego

…But Cortez Hill [Academy, San Diego] enrollment didn't keep pace with soaring downtown rents in the summer of 2006, making money so scarce at the tiny charter school that it relied on parents to help maintain the dim, aging building on A Street. Balancing the books frustrated the principal, a former counselor who could soothe troubled teens but was less familiar with finances.

Michael R. Hazelton sold himself as an expert who could help. He was soothing. Gray-haired. Nice. A Harvard University seminar topped his resume, loaded with impressive work at a national company and a school that had once aided Cortez Hill. The school hired him as its executive director to reverse its fortunes.

Instead its deficit ballooned from $16,559 to $188,187 in the single year that it employed Hazelton. When an audit revealed that he gave himself an $18,350 raise without the blessing of the Cortez Hill board, boosting the six-figure salary that had already dwarfed what his predecessor had earned, Hazelton was already gone.

Two of its 13 teachers lost their jobs as Cortez Hill struggled to pay its bills. And something else was missing, something de Guevara couldn't quite describe. Rumors about Hazelton spread and graffiti proliferated in the bathrooms. De Guevara started skipping class to hang out with friends in the library.

"Everyone found out what Mike did," de Guevara said, adding that "the school changed so much. I hated it."

Cortez Hill isn't the only charter school where Mike Hazelton promised rescue and brought ruin. In four years, he has led three Southern California schools and each has been crippled or closed by the time he walked away, suffering deficits or battling accusations that Hazelton improperly enriched himself or corporations he founded.

He was first accused of double-dipping in San Bernardino County, where deficits destroyed a bilingual school that paid him nearly $128,000 in salary and an estimated $290,000 to the corporation he founded for accounting and administrative support. The school's abrupt closure left teenagers without class credits and some struggling to graduate.

Two and a half years later, an audit concluded that his Cortez Hill raise was unapproved and the school hemorrhaged money under his watch, decimating its budget and its morale. And his most recent school, Theory Into Practice Academy [Encinitas, CA], was shut down in August after a Encinitas Union School District investigation concluded that the school's board and administration, which included Hazelton and his wife Deborah Hazelton, violated conflict of interest laws and mismanaged its finances…

…Jacqueline Hicks leafed through the mail left behind at Cortez Hill Academy after Mike Hazelton quit as executive director two weeks before school started in August 2007 to take a job at his wife's school in Encinitas. Each envelope held another nasty surprise. The rent hadn't been paid for two months, Hicks told her board in a letter, and checks were bouncing because Hazelton had neglected to make a wire transfer on time.

And then the school bookkeeper told Hicks that Hazelton had hiked his $100,000 salary to $118,350 — a raise that Hicks and the board said they'd never approved. Auditors from El Cajon-based Wilkinson Hadley & Co. later discovered that the school's deficits had jumped from $16,559 to $188,187 during the single year that Hazelton was director, and Hazelton was signing checks alone despite a school policy that required him to get a second signature.

"He ripped us off," Hicks said. She added, "And I had no idea until he was gone."

Hicks changed the locks on Hazelton's office and alerted the board. She demanded that he return the funds. He hired an attorney. Hicks told the police about the raise and the audit, but nothing came of it. Suing him seemed too expensive to contemplate…

Hicks said school leaders banked on the recommendation of Stephen Halfaker, the former Chief Executive Officer of Guajome Park Academy, when they hired Hazelton. But had the leaders at Cortez Hill scrutinized his resume more carefully, Hazelton might not have seemed as impressive. Three of his claims aren't supported by employers listed on his resume, and his other references include past acquaintances who were surprised to learn that they were references at all…

Hazelton claimed to have developed four new charters between 2004 and 2006 for Adams and Associates, Inc., a Nevada-based company that operates career training programs. Yet its president Roy Adams, one of Hazelton's references, said Hazelton didn't develop new charters while working for the company. He only consulted them on curriculum for their alternative high school programs.

Hazelton also touted himself as co-founder and board president of the award-winning School for Integrated Academics and Technologies headquartered in Vista between 2001 and 2002. But its spokeswoman said Hazelton wasn't its founder and never served on the board, though he did help spread a dropout recovery program that eventually evolved into the Vista school.

And had Hicks, the Cortez Hill principal, known to call Dennis Byas, who oversaw the Colton Joint School School District outside San Bernardino, she would have gotten a counterpoint to that resume: The financial meltdown of Las Banderas Academy [Colton, CA], which Hazelton and his corporation oversaw one year before he joined Cortez Hill…

Las Banderas Academy had long worried Superintendent Byas. Its test scores were mediocre and its board members kept changing. Byas wasn't convinced that it enrolled as many students as it claimed. And the school was run by an alphabet soup of organizations that still confounded Byas years after the school was shuttered.

Chief among those organizations was New Education for Communities, Inc., a corporation that Hazelton founded. It was entitled to 15 percent of Las Banderas' revenues for accounting and administrative support while Hazelton also served as the school's full-time chief education officer. Suspicions abounded that Hazelton was double-dipping by earning a Las Banderas salary and gaining money from the group as well.

Those suspicions were never proven or disproven because the corporation left few records and was later suspended by the state. Deficits forced the school to close. But the corporate confusion and allegations foreshadowed the conflicts that later unraveled Theory Into Practice Academy in Encinitas…

But the involvement of Hazelton's corporation started to trouble Lechuga and her staff as money flowed to the outside group. Hazelton called New Education for Communities a nonprofit subsidiary of Guajome Park Academy, but its exact relationship with the school is cloudy. Tax returns filed by Guajome while Las Banderas was operating do not list either the corporation or Las Banderas as related groups…

What was clear was that school funds were going to the corporation that Hazelton headed. New Education for Communities was entitled to 15 percent of Las Banderas revenues in its first year, according to school documents. Based on the school's reported revenues of $1.97 million in 2004, the corporation's 15 percent share would've amounted to $290,000 that year.

Teachers felt it was a sizable fee for a school with fewer than 300 students that already employed an administrator like Hazelton. Founding documents for Las Banderas said Hazelton's role was "analogous to the role of Principal." Lechuga and office manager Laurie Gonzalez said Hazelton spent more than half of his time elsewhere, fostering another charter school near Los Angeles and unsuccessfully pushing a third in Murrieta. Lechuga was paid $73,844 to juggle two school sites; Hazelton drew a $127,957 salary from Las Banderas that rivaled the highest-paid managers in the nearly 25,000-student Colton district…

Hazelton denied receiving money from the corporation, but the documents that would prove that were never filed with the state or Internal Revenue Service. The corporation never registered with the attorney general as nonprofits are required to do. Nor did it file its state or federal tax returns, which disclose top officials' salaries. Hazelton's corporation owes more than $4,000 to the state and it was suspended in 2007 for failing to file its returns…

It was like when "you marry someone and you think they're Mr. Wonderful," Lechuga said. "Then you realize that this person is an abusive person."

As a junior at the school, Jonathan Alva said he saw the change "out of nowhere." Enrollment was plummeting and rumors spread that the school would close. Alva said the new principal tried to sugarcoat it, telling teens it would all be okay. But before class, Alva's science teacher announced he was enduring a pay cut for his students' sake.

"That told me, 'It's really over,'" Alva said.

Hazelton was gone by April when the Las Banderas board decided unanimously to dissolve the school, which could only pay its teachers through the month. He was replaced by Guajome founder Sandra Angle, and New Education for Communities promised to foot its remaining payroll and bills. Board members formally agreed they should "close the school with dignity, respect and order" when the school year ended…

Principal Deborah Hazelton, an Oceanside elementary teacher, created Theory Into Practice Academy, a charter school that taught all children with the same rigor and complexity as gifted children. Her husband volunteered as president of its board, but as he finished his first and only year at Cortez Hill Academy, his wife grew insistent on hiring him. Her June letter to the board argued that she needed "full-time administrative support."

Board members were reluctant to hire Mike Hazelton. They worried about nepotism, doubted whether Hazelton was competent, and questioned whether they could afford another leader. The school district had already scolded them for incurring debts and overstating their income; they wanted to pinch pennies to buy their own building instead of sharing space with Ocean Knoll Elementary. It was "the absolute wrong time to entertain paying Mike Hazelton $125K per year," board member Louisa Johnson wrote…

But the Hazeltons had a trump card. Mike Hazelton informed the board that they had accidentally been using the wrong bylaws, and the right bylaws gave daunting powers to an outside corporation, Theory Into Practice Education, Inc., that the Hazeltons created and ran.

Board members were stunned. The corporation had the final say on hiring or firing a principal or merging with other organizations; it had the power to choose the board president. Johnson called it "a 'neutron bomb' that can at any time obliterate the board" if it didn't capitulate to the Hazeltons.

Fighting the bylaws seemed useless after board members learned that the rules had already been filed with the Encinitas Union School District. But one year later a private investigator hired on behalf of the school district added up the details and concluded that the board probably never approved the bylaws that named the Hazeltons' corporation, and that Mike Hazelton had given false bylaws to the school district, the Internal Revenue Service, and the state…

Shortly after the bylaws materialized, Hazelton was hired as chief operating officer for $95,000 for the rest of the academic year. Two months later the school reported a $28,000 first-year deficit, instead of the $6,000 to $12,000 surplus Mike Hazelton had predicted. Its outstanding loans still worried the Encinitas superintendent. Yet the school also bolstered Deborah Hazelton's pay from $87,000 to $110,000.

There is no evidence that the TIP board approved either of the Hazeltons' contracts, according to the Encinitas Union School District. Meeting minutes do not reflect the hires, but board members said they remember discussing the raise and the contract.

And in January the Hazeltons asked the board to start paying their corporation 1.5 percent of its annual revenues and a onetime $35,000 fee for curriculum and administrative support. It echoed the controversial agreement that Las Banderas had made with New Education for Communities…

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