June 2009
Ensuring lawful spending
By Jim Walsh

We expect by now that most of you have figured out how to spend your “stimulus” funds.   As you start issuing checks, keep in mind that the American Recovery and Reinvestment Act (ARRA) calls for an unprecedented level of accountability and transparency. In pursuit of that objective, the ARRA has its own “whistle-blower” provisions, designed to insure that funds are spent lawfully.  

Whistle-blower laws are not a new concept. We are familiar with the basic features. There must be a disclosure by an employee of wrongdoing, followed by a reprisal by the employer. As a general rule, the employee has to prove that the reprisal was caused by the disclosure. But the ARRA whistle-blower law has some unique features, each of which will make it easier for the employee to prove a case. 

First, the report of wrongdoing can be made to a wide variety of people, including the employee’s direct supervisor or anyone who has the authority to investigate, discover or terminate misconduct. Thus, if a teacher informs the principal that he thinks the ARRA funds are being spent illegally, he has made a disclosure. It is not necessary for the teacher to go to the sheriff. 

Second, the disclosure does not necessarily have to involve illegal activity. Reports of gross mismanagement, gross waste, an abuse of authority, or a substantial and specific danger to public health
or safety also satisfy the disclosure requirements.

Third, the burden of proof in these cases favors the employee. If the employee demonstrates that the disclosure was a contributing factor in the reprisal, then he or she has successfully “established the occurrence of the reprisal.” The employee is not required to prove that the reprisal was caused by the disclosure. It’s not necessary to prove that the disclosure was the sole factor, or even a substantial or motivating factor. The employee only needs to show that the disclosure contributed to the employer’s decision to issue a reprisal. 

Furthermore, the complainant can prove the case by circumstantial evidence. This could include, for example, evidence that the reprisal followed the disclosure closely in time.

Once it is established that the reprisal occurred, the burden of proof shifts to the employer to prove by clear and convincing evidence that it would have taken the same action (the reprisal) regardless of the disclosure. 

What to do about all this?

First, comply with the law. If your district has received ARRA funds, you will need to post a notice of the rights employees have to blow the whistle. 

Second, spend your money wisely and well. The best way to avoid “gross mismanagement” is to manage your funds well.

Third, document the real performance of your employees. What happens all too often in whistle-blower cases is that the employer has had some legitimate concerns over the employee’s performance over a long period of time. But, in hopes that the problem will just go away, the employer fails to document deficiencies. Then the employee blows the whistle on something, and boom — the employee’s evaluation takes a sharp turn south. One week later, a nonrenewal is proposed and the employer says, “Well, he’s been one of our weakest teachers for years.” Maybe so. But it won’t look that way to a “reasonable person.”  

Remember that in any personnel-related litigation, the real motivation of the employer is almost always a crucial factor. Make your decisions for the right reasons, and keep a written record of it. You never know when you may need that information.