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New firm’s owner still worked for McKee ally while finalizing $5M state contract

Target 12

PROVIDENCE, R.I. (WPRI) — The head of a newly founded consulting firm was still working for one of Gov. Dan McKee’s close confidantes at the same time that her company was finalizing a controversial state contract worth up to $5.2 million, the Target 12 Investigators have learned.

Separately, Target 12 has also learned that a key initiative the consulting firm is spearheading — the creation of alternative municipal education offices across Rhode Island — is slated to receive funding from Amazon.com under the terms of the company’s new agreement for a project in Johnston.

The consulting firm, ILO Group, has been making headlines ever since Target 12 first reported that the state awarded a lucrative contract to ILO soon after it was incorporated, despite a messy bidding process which state officials deemed unsuccessful.

The contract “had all the hallmarks of some of the deals that we’ve had in the past that come from the ‘I know a guy’ culture in Rhode Island,” said state Rep. Jason Knight, a Barrington Democrat and member of the House Oversight Committee, which is considering hearings on the contract.

ILO’s majority owner and managing partner is Julia Rafal-Baer, who was previously chief operating officer at the national education nonprofit Chiefs for Change. Chiefs for Change’s CEO is Mike Magee, a longtime adviser to McKee on education issues who worked for the governor when McKee was Cumberland mayor. Magee also served on McKee’s transition team last winter.

ILO filed incorporation papers with the Rhode Island secretary of state’s office on March 4, two days after McKee was sworn into office. But Target 12 discovered Rafal-Baer did not leave her old job when she co-founded the new firm and began bidding on the seven-figure state contract.

R.I. Board of Elections filings show Rafal-Baer continued to list Chiefs for Change as her employer, rather than ILO, when she made campaign donations during the spring. A spokesperson for ILO, Frank McMahon, confirmed Rafal-Baer kept her job at Chiefs for Change until June 28 — after ILO had won the state contract and just a few days before it took effect.

The most recent available IRS filings for Chiefs for Change show the nonprofit paid Magee $308,211 and Rafal-Baer $247,881 in 2019, making them the organization’s two highest-paid employees.

No decision yet on oversight hearings

As the bidding process began in March, Rafal-Baer had access at the highest levels.

The day after ILO’s incorporation papers were filed — March 5 — she and Magee were slated to participate in a half-hour Zoom meeting with the governor and the state purchasing agent, Nancy McIntyre, according to McKee’s schedule for that day. Also invited to the meeting were McKee’s then-chief of staff, Tony Silva, and the director of the R.I. Department of Administration, Jim Thorsen.

“The meeting was to discuss the state’s options for engaging additional support to assist with school safety related to COVID, including testing and other strategies for safe in-person learning,” said McKee spokesperson Andrea Palagi. She added that Rafal-Baer “was sent an invite for this meeting but did not attend.” The meeting was first reported by The Providence Journal.

Later in March the governor’s office solicited bids for a new education consultant to help with reopening schools and long-term policy planning.

ILO put in an initial bid of $8.8 million to do the work, while a rival firm with a two-decade track record in Rhode Island — WestEd — said it would cost only $936,000.

With the numbers so far apart, state officials reworked their request and asked for revised bids. On May 7, ILO lowered its bid to $6.5 million — but that was still far higher than WestEd’s revised bid of $3.5 million.

By late May, a four-member state review panel that included North Providence Mayor Charlie Lombardi abandoned the competitive procurement process and proposed splitting the work between the two firms. ILO got a contract for up to $5.2 million to help K-12 schools, while WestEd got $926,000 to help colleges.

The governor has emphasized that ILO is billing the state hourly for its services — at a rate of $223 an hour — and he expects the final price tag for the contract to come in “far below” the $5.2 million maximum.

Spokespersons for both organizations as well as the governor’s office have distanced Chiefs for Change and Magee from the bidding process that led to ILO’s selection. In a letter to legislators last week, McKee said Magee “has no past or current financial interest or management role in ILO,” and ILO’s spokesperson said Magee “did not participate in the preparation or submission of this proposal.”

In his letter to lawmakers, McKee said ILO “currently works with large-scale and small-scale school districts throughout the country.” When Target 12 asked for a list of the other states where ILO is working, however, a spokesperson for the company said: “It is ILO’s policy not to share the names of its clients.”

The company’s bare-bones website says only: “Invested in leaders. Invested in change. Coming Soon.”

Knight, the House Oversight member, is one of multiple lawmakers who have expressed concern about the revelations regarding the new consulting firm. “Frankly, it sent up warning bells for me,” he said. (Knight endorsed General Treasurer Seth Magaziner for governor late last week.)

House Speaker Joe Shekarchi and Senate President Dominick Ruggerio have both said their staffs are examining information provided by the governor’s office about the ILO contract, and they are putting off any decision about whether to hold an oversight hearing on the issue until that review is complete.

The governor expressed frustration after a news conference last week as reporters questioned him about ILO.

“As far as the agreement goes in terms of the contract, it was a competitive bid process right from the word ‘go,'” McKee said. “I don’t get a say. I don’t sit in the room and do the scoring. I don’t get in the room and have it brought to me. When it’s brought to me, that’s when I do my work.”

Pressed on whether ILO had an inside track to obtain the contract, McKee replied, “Oh my God. What don’t people get? Really?”

Amazon providing $1.25M for new local offices

While ILO’s contract is described on purchasing documents as focused on reopening schools during the pandemic, McKee has emphasized that the consulting firm’s responsibilities extend beyond that. ILO is also supposed to help establish alternative municipal education offices around the state, modeled on the one McKee and Magee created in Cumberland when the former was serving as mayor.

Target 12 has confirmed that the initiative is getting a financial boost from an unexpected source: Amazon.com.

As part of the e-commerce giant’s deal with the Johnston Town Council to build a new warehouse there, Amazon has agreed to spend roughly $20 million on public projects. A breakdown shows $1.25 million of the money is earmarked for “Rhode Island Municipal Education and Training Initiatives.” The governor’s office confirmed that is a reference to the same local education offices initiative that ILO is spearheading.

“As mayor of Cumberland, the governor opened up the Office of Children, Youth and Learning,” McKee spokesperson Matt Sheaff said. “The governor wants to replicate this model in Providence and other communities across the state (in cities and towns interested in such programming). These funds would assist with that.”

Tim Duffy, executive director of the R.I. Association of School Committees, has criticized the concept for circumventing local school departments.

“When we’re talking about $1.2 million in the Amazon program, is that just to set up these agencies and then to hand it over to the taxpayers of the various 39 cities and towns to fund?” Duffy asked. “When there are existing programs that are receiving state, federal or private grants that offer a lot of the same services?”

Amazon’s agreement with Johnston says the company will pay out the $1.25 million in five annual installments of $250,000 starting in 2024. A spokesperson for the R.I. Commerce Corp., which helped negotiate the deal, said the “precise approach” for how to utilize and distribute the Amazon money “will be determined in the coming months.”

The Amazon money is separate from the two pots of federal COVID-19 funds that are paying for ILO’s $5.2 million state contract.

Half of that funding is slated to come from the $1.25 billion CARES Act Coronavirus Relief Fund, which was mostly used up during the Raimondo administration. The other half is coming from the state’s third allocation of Elementary and Secondary School Emergency Relief Fund money, which was approved by Congress earlier this year as part of the American Rescue Plan Act.

McKee told lawmakers the goals of the contract are to help the state “keep schools safe, support our students in overcoming the learning interruptions of the last 19 months, and ensure we have the resources to address any challenges that Delta or other COVID-19 variants could present in our schools.”

Duffy said he was disappointed that any of the School Emergency Relief Fund money is going to ILO for the new municipal offices.

“Those funds were appropriated by Congress specifically to deal with issues concerning COVID and reopening — learning loss, requiring ventilation of school buildings, distancing,” he said.

Robert Walsh, executive director of the National Education Association Rhode Island teachers union, said he was surprised to learn that ILO was working on school reopening. And he was circumspect about the outlook for the municipal education offices.

“The safe reopening of schools is of paramount importance, and we were not aware of this group [ILO] in conjunction with the reopening, so we’re eager to know more,” Walsh told Target 12. “On the municipal education idea, I think there has to be community sign-off before any of those offices get implemented anywhere else in the state.”

Zoom meetings, advice on bus driver shortage

The initial outcry over the ILO contract was caused in part by a lack of specifics regarding its work and what it had accomplished in the weeks leading up to the reopening of schools.

Initially McKee pointed to the consulting firm’s involvement in Westerly, but the Westerly School Committee’s chair quickly said there had only been initial conversations with ILO and they were not working with them “at all” so far. In addition, Duffy said he surveyed district leaders about ILO and of those that responded, only one district — Little Compton — said they had worked with the firm.

Since then, more details have emerged about what ILO and its staff have been doing since July.

Last week, R.I. Department of Education spokesperson Emily Crowell provided a list of six communities where she said ILO had assisted with the reopening of schools: Little Compton, Newport, North Smithfield, Pawtucket, Central Falls and Providence. Target 12 reached out to each community for more details.

Little Compton Superintendent Laurie Dias-Mitchell said she received an email from RIDE on Aug. 7 identifying her community as a “cold spot” for vaccinations and offering a consultation with ILO. “The ILO Group has deep expertise in supporting school systems in navigating Covid-19 and is available to pressure test your existing plans and help triage any gaps,” the email said.

“My motto as a school administrator is: ‘If it’s free, it’s for me!'” Dias-Mitchell told Target 12 in an email. “Anytime I am offered expert assistance for free or hear about grants, I’m on it!” She said she and her principal had “a wonderful Zoom meeting” with four ILO consultants on Aug. 12 that lasted 50 minutes to go over the district’s reopening plan.

“They read our draft well in advance of the meeting and had excellent feedback and even reformatted and reorganized the draft — from one document to several tabbed documents for us to share with stakeholders,” sh wrote. “They also organized our comprehensive plan a week later upon my request (from Word to Excel). Their work was excellent!”

Newport Superintendent Colleen Burns Jermain said she received a similar outreach email from RIDE, leading to a roughly 45-minute Zoom meeting where district officials walked ILO consultants through their plans for the fall.

“They were impressed by our outreach with our families, communication, food service, technology implementation, clinics set up, and work with our community partners,” Jermain wrote in an email. “The only comment from them was to check in on bus driver shortage because they were seeing this popping up all over the country — and to be possibly prepared for that.”

Audrey Lucas, a spokesperson for the state-controlled Providence school district, told Target 12: “ILO has been providing support to the district as we open schools for nearly 23,000 students in a safe, supportive way. They have been helpful in areas such as testing, vaccination, and other mitigation strategies, and have played an important role supporting operations.”

A spokesperson for the city of Pawtucket said school officials there also had a conversation with ILO regarding reopening. Superintendents in Central Falls and North Smithfield have not yet responded to questions about their interactions with the firm.

In addition to those communities, Crowell said ILO’s work included statewide efforts “supporting a targeted response” to the pandemic; coordinating efforts between state departments; and “helping to build on the existing infrastructure” relating to “vaccinations, testing, transportation, closing the digital divide, and ensuring government readiness.”

Municipal officials still debating proposed offices

In its communication with lawmakers last week, the governor’s office provided a list of five communities that officials said have had initial meetings with ILO consultants about setting up alternative municipal education offices: Middletown, Pawtucket, Central Falls and North Providence, as well as Cumberland, where McKee pioneered the idea in the 2000s.

Middletown Town Administrator Shawn Brown said he met with ILO in late August. “I was told that ILO was authorized by the governor’s office to begin designing municipal learning programs,” he said in an email.

“The purpose of the meeting was to discuss Middletown’s needs and hear about Middletown’s efforts to identify learning opportunities for its residents,” Brown said. “The Middletown Town Council is looking into all its options for improving education opportunities for its residents and is collecting feedback from stakeholders throughout the community, including the school department.”

Emily Rizzo, a spokesperson for Pawtucket Mayor Don Grebien, said the city had “a preliminary conversation” with ILO on Aug. 30. “They reached out to us to consider the municipal learning programs and we have had some informal, introductory conversations to inquire about what their goals were,” she said.

“The consultant has given us some of the introductory materials we requested to review and therefore schedule an initial meeting across our local stakeholders to learn more about what programming currently exists in Pawtucket,” Rizzo said. The mayor’s aides plan to meet with other city and school officials once they review the information to decide whether to move forward, she said.

In Cumberland, there is no consensus about whether the original Office of Children, Youth and Learning serving as a model for ILO’s efforts has been a success.

The office’s existence has created political friction, with town officials debating its merits both publicly and behind the scenes for years. Cumberland Superintendent Philip Thornton told The Providence Journal earlier this month that “programs like this don’t correlate to school achievement,” and that Cumberland “could use the money in the public schools.”

Cumberland Mayor Jeff Mutter told Target 12 municipal learning programs will only be successful if they complement local districts. The mayor said if he could create one from scratch, he would design it like a social services agency that helped school departments with the social and emotional well-being of children rather than curriculum.

“I’m a big wellness guy,” Mutter said. “If students are sleeping better, eating better – they’re learning better.”

But he argued not every community will need or want a whole new department, especially if it would only duplicate what already exists.

“It’s not a one-size-fits-all; different communities have different needs,” Mutter said. “I also don’t think you should create another curriculum. We already have an education entity that we put a lot of financial support into, and that’s what they should do. And we should be doing what we can to help them get it done.”

Ted Nesi (tnesi@wpri.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter, Facebook, LinkedIn and Instagram

Tim White (twhite@wpri.com) is the Target 12 managing editor and chief investigative reporter at 12 News, and the host of Newsmakers. Connect with him on Twitter and Facebook.

Eli Sherman (esherman@wpri.com) is an investigative reporter for WPRI 12. Connect with him on Twitter and on Facebook.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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