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Under Castor, board rose, fell quickly

The former USF president left to improve public school teaching. But her group's growth may have come too fast.

University of South Florida president Betty Castor had no plans to leave the school before a nonprofit education group wooed her away in 1999 with an attractive offer.

The National Board for Professional Teaching Standards helps train public school teachers, one of Castor's passions, and it wanted to expand.

Castor delivered.

In three years, she doubled annual revenues to $54.9-million and turned the organization into one of the largest nonprofits of its kind. She moved the national office from Michigan to Washington, D.C., and opened satellite offices around the country. She more than doubled the number of employees.

But she also spent millions of dollars more than the organization had and posted losses of at least $4.8-million twice in the three years she was there, according IRS records.

As her contract wound down in 2002, Castor offered buyouts to almost 100 staffers. A third of them took the offer.

The group, which also saw a sharp drop in private donations and lost money on investments under Castor, has dipped into its "rainy day" fund to stay afloat.

"I don't know if it was the most strategic expansion," said Jennifer Riccards, who worked in the government relations and fundraising offices and took a buyout in 2002. "I think it could have probably been handled better."

Running the nonprofit was Castor's last full-time job before becoming the front-running Democrat in the U.S. Senate race. Her opposition in the Aug. 31 Democratic primary for the seat of retiring Sen. Bob Graham includes U.S. Rep. Peter Deutsch of Hollywood and Miami-Dade County Mayor Alex Penelas.

Unlike her time as USF president or years as Florida education commissioner, Castor's leadership of the obscure but influential organization has drawn little attention.

Castor said she is proud of her accomplishments at the National Board but can't explain why the group reported losses to the IRS. It could be a misleading accounting quirk, she said.

"We were always in good financial shape," she added.

Some former employees blame the problems on a bad economy, a dropoff in contributions after 9/11 and waning support from the Bush administration.

But even Castor's supporters say they wonder if the organization grew too fast.

"That argument could be made but we were trying to achieve the strategic plan," said Gary Galluzzo, the executive vice president under Castor who left last year. "It seemed like the right thing to do."

The National Board, which certifies teachers through a rigorous battery of assessments, was founded in 1987 by former North Carolina Gov. Jim Hunt, a Democrat. It receives federal grants and charges a $2,300 fee to certify each teacher, which is usually paid by local school districts or the states.

The group searched nationally for a new president in 1999. Castor's name surfaced because of her experience as a teacher, state education commissioner, university president and state legislator.

Castor said she wasn't interested initially but Hunt eventually convinced her. Improving teaching is one of her passions, she said.

Castor was paid $229,837 a year, the same as her USF salary the first year. She was paid $322,000 in her third year, documents show.

"I was hired specifically to take the organization from infancy and build it out," Castor said. "I was hired to create a national network of master teachers."

The group's 63-member board of directors told Castor it wanted to expand to every state.

"We just needed to ramp up," said Barbara Kelley, a former Maine teacher and board chairwoman when Castor was hired. "She was perfectly positioned. She understood every level."

"We took off," said Galluzzo, the former executive vice president. "The board wanted to truly become the national board."

Revenues doubled to $54.9-million from 1999-2002, as the group relied more on federal grants than private donations.

From 1999 to 2000, contributions declined from $4.1-million to virtually nothing. Meanwhile, expenses increased 144 percent, from $24.4-million to $59.6-million.

In 2000, the group reported $6.4-million in losses, partly due to poor investments, documents show. In 2002, it reported $4.8-million in losses.

"I don't know about that," Castor said of the losses. "It may have appeared that way."

At the end of 2002, it had $185,013 in the bank.

"This is obviously not something an organization could do every year," said Chuck McLeas, vice president for research at Guidestar, which provides a database for nonprofit information.

A spokesman for the National Board said Wednesday he could not answer specific questions about the organization's finances. Officials attribute part of the losses to millions of dollars in technological upgrades and research.

During Castor's tenure, the National Board increased certification from 5,000 teachers to 24,000, expanding to dozens of disciplines.

"Betty is a mover and shaker," said Nancy Flanagan, a Michigan teacher who worked at the National Board for two years. "She wasn't thinking "Gee, I'm not going to rock the boat.' "

After several months at the helm, Castor began moving the headquarters from suburban Detroit to the Washington suburb of Arlington, Va. She said it was difficult to recruit staff in Michigan. Flanagan had a different take: "She moved to Michigan and it didn't agree with her."

Castor increased staff from 44 employees to 101 and opened satellite offices in Denver, Raleigh, N.C., and Livonia, Mich.

But then the money dried up.

"Our projections had been continued growth," Kelley said. "We just ran into the economic downturn like everyone did."

Galluzzo said he and Castor settled on a buyout. "Short of firing everyone, we did what we could."

Today, the National Board has 52 employees. It is still certifying teachers but at a slower rate than before. Since Congress approved the No Child Left Behind Act in 2001, state governments and local school districts are spending less on this type of certification.

Castor, who returned to Florida in 2002, downplayed the changes.

"We did try to tighten," Castor said. "As with any organization, you do make changes."

- Times researcher Caryn Baird contributed to this report.

More than doubled annual revenues to $54.9-million.

Increased the number of teachers certified from 5,000 to 24,000.

Opened three satellite offices.

Moved the headquarters from suburban Detroit to Arlington, Va.

Posted losses of at least $4.8-million in two of the three years.

Began downsizing to reduce staff from 101 to 52.

- Source: IRS records