he ultraconservative faction on the Texas state school board owes its breathtaking clout largely to one man: Rick Agosto, a San Antonio Democrat who regularly votes with the group, giving it the paper-thin majority it needs to push its agenda forward. Why does he do it? Some fellow board members chalk it up to vote swapping.
Their allegations hinge on a recent deal involving the $22 billion Permanent School Fund, which is overseen by the board and provides nontax funding for the state’s public schools. At Agosto’s urging, the faction voted last summer to fire the fund’s chief outside investment adviser and bring in a firm called New England Pension Consultants. This baffled some of their colleagues. After all, the Texas department of education had found that NEPC was the less-qualified firm, and its original bid was roughly $1 million a year—more than twice what the competition was asking. “The whole thing stunk,” recalls Republican board member Pat Hardy.
In the run-up to the vote, six senior government staffers who manage the fund’s day-to-day operations refused to sign routine disclosure statements vouching for the ethical integrity of the deal. It has since come to light that Agosto, who does marketing for institutional investment firms, was courting NEPC as a client, which has raised suspicions among the board’s dissenters—not to mention Lone Star pundits—about his motives for steering business to the firm. (Agosto declined to be interviewed, but he issued a statement saying, “I have never knowingly received an improper benefit in connection with my role on the Board.”)
The ordeal echoes another scandal, which began in 1995 when the board, led by members of the ultraconservative bloc, ignored advice from the fund’s staff and parceled part of its assets out to dozens of money managers (one of them Agosto’s former employer). Investigations by the Texas State Auditor’s Office later found that this opened the system to conflicts of interest and self-dealing, and that companies with links to some bloc members were handed lucrative contracts. Allegations of pay-for-play and influence peddling abounded, though a grand jury probe failed to turn up proof of criminal wrongdoing. The arrangement was costly for Texas schoolchildren: once the $130 million in money managers’ fees were deducted, the value of the fund plunged by $57 million between 1995 and 2004. At the same time, the stock market as a whole roughly doubled in value.
The board finally began shedding money managers in 2003, after a group of reformers were voted on. Among them was Cynthia A. Thornton, a seventy-year-old former schoolteacher and stalwart Republican who raises donkeys on a farm near Round Top, Texas. Like the bloc’s members, she opposes sex education, believes schools should display the Ten Commandments, and pooh-poohs evolution—as she told me, “There is no way humans crawled out of some pond.” But during her tenure on the board, from 2000 to 2006, she sparred with them so viciously that armed police started attending board meetings and escorting her to and from her car. While Thornton believes some faction members have a genuine interest in education, for others she argues “that’s just the smoke that covers the shady business.”