A few years back, there was a little dust-up in the news about North Carolina’s public school textbook operations. After a couple of autumns in which some students didn’t have their books at the start of school, two local businessmen put together a proposal to privatize the state education department’s book-distribution process.
Ricky Wright, a politically connected Wake Forest businessman, and Vernon Malone, then a Wake County commissioner and a former school board member, partnered with leaders of a South Carolina company that handles that state’s school books. In June 1996, Wright, Malone and three leaders of the R.L. Bryan Co. suggested to their high-placed friends that their new partnership could manage the business more efficiently and promptly than the state-run warehouse in Raleigh–a win-win-win that would ensure textbooks on time for children, savings for taxpayers, and profits for the private company estimated at $4 million to $6 million a year.
They solicited help from then-Gov. Jim Hunt and the South Carolina state treasurer, who both encouraged Harlan Boyles, then the North Carolina state treasurer, to evaluate the options.
“The outsourcing of textbook distribution in North Carolina to a business with the resources, expertise and a performance record would require no capital outlay from the state and would offer immediate improvement in this service,” argued the businessmen, in urging the state treasurer’s office to turn the $50-million-a-year textbook business over to them.
The behind-the-scenes lobbying drew some public criticism of Malone, the retired head of the Governor Morehead School for the Blind and a commissioner since 1984, and Wright, who has close ties to state Senate President Pro Tem Marc Basnight (D-Dare). The pair was criticized for using their political connections to promote a personal business deal, but their approach was also effective. Their initial 1996 proposal prompted a state auditor’s study in May 1997. That report spotlighted various problems at the warehouse and suggested in-house management solutions, but not privatization. Later that year, the Office of State Budget and Management weighed in against privatization, with an analysis showing that outsourcing the work would cost the state school system–and thus, the taxpayers–a lot more money. The cost per book of the state-run system averaged about $35; a private distributor would average about $40, the study found.
In another view of the issue, a follow-up survey of local school system leaders showed overwhelming support for a state-run system, with 108 of the 113 districts that responded opposing privatization.
And yet, nearly seven years and several studies later, the idea still lingers in the legislature. A proposal to privatize the textbook warehouse is undergoing yet another study this month, this time by an outside consultant at a cost of $80,400 in scarce public dollars.
How such an oft-rejected plan persists offers an inside look at state politics that bewilders some and dismays others.
“It’s been studied and studied, and I’m not sure what other things they may find, but somebody wanted it done,” says Larry McLamb, the director of financial services for the Department of Public Instruction. “Nobody here asked for it.”
Staffers at DPI awarded the contract March 7 at the direction of the joint legislative education oversight committee, which was carrying out orders from the General Assembly.
“There must be, somebody’s got a real concern about this, or–and I hate to say this–someone’s trying to push some business really hard,” says state Sen. Jeanne Lucas (D-Durham), who co-chairs both key education committees in the Senate and serves on the joint committee that’s overseeing the current study.
Malone, who won a state senatorial seat in November, says he’s no longer interested in the textbook business. “It’s been two or three years since there’s been any dialogue on our part,” says Malone (D-Raleigh). “This is not being done at my request.”
But the lawmaker who most recently shepherded the issue through the state House, former state Sen. Howard Lee (D-Orange), says a conversation with Malone a couple of years ago was exactly the impetus that launched the current study.
After speaking with Malone in late 2000, Lee introduced a bill in April 2001 to privatize the textbook system. The bill died in committee. Lee says he chose to pursue a feasibility study rather than a privatization mandate after hearing concerns from state education officials, including State Board of Education Chairman Phil Kirk. Lee put the study in the 2001 budget bill as a “special provision,” a vehicle often used for pet projects or measures that for whatever reason would not pass muster in both houses as stand-alone bills.
Lee, who lost his re-election bid in November and now serves as an education adviser to the governor, is a dedicated proponent of privatization. He says the textbook issue is an outsourcing opportunity that needs exploring by an independent consultant, since previous studies were all done by in-house state agencies. If the consultant recommends privatization, it would have to be awarded through a competitive bid process, Lee says, “Though the question was raised by some: ‘Shouldn’t we just go ahead and work with this group?’”
One of the supporters of the idea, Lee says, was R.V. Owens, an Outer Banks businessman and nephew of Basnight. The Owens connection seems to shore up suspicions of some education department staffers and legislators who have long theorized that the Senate president pro tem is the real mover and shaker behind the push to hand over the nation’s only publicly run textbook business to Wright, a Basnight donor and fundraiser who has also contributed to the campaigns of Malone, Hunt, Boyles and Gov. Mike Easley.
“I assure you that is definitely not the case,” says Basnight’s chief of staff, Rolf Blizzard. “Sen. Basnight is just keenly interested in trying to find ways to make our government function more effectively.”
Basnight, Lee and other key Senate leaders supported the study in 2001, but the measure stalled out in a dismal budget year. But it had enough support to carry over to 2002, where it sparked some debate in the joint legislative education oversight committee last fall.
Co-chairman Gene Rogers, a Williamston Democrat, was a little mystified to see it on his group’s plate again, in light of the earlier evaluations.
“I really don’t know what the source is,” says Rogers, who did not seek re-election in November. “We’d found out that it was just as easy and just as economical to do it in-house, but someone out there keeps pushing for privatization–there must be someone interested in taking it on.”
Malone, who joined the Senate in January, is quick to distance himself from the textbook study. He says he is “right now” filing paperwork to dissolve his partnership with Wright. The company known as the N.C. Instructional Materials Distribution Center Inc. is still an active corporation in state records, with Malone, Wright and three executives from R.L. Bryan listed as the principals. Company documents also show that Malone’s son Rod, an attorney with the powerhouse Raleigh law firm Tharrington Smith, helped organize the partnership and lobby state officials. Vernon Malone, who also worked for one of Wright’s companies after his retirement from the Morehead School, did not list the textbook partnership on the financial disclosure statement each legislator files.
“That was an oversight,” Malone says.
Wright, his partner, who is known as a back-room player with friends in high places in the state House, doesn’t list the textbook company on his 2003 financial disclosure report, either. As a gubernatorial appointee to a seat on the state ABC Commission, Wright must report all his business interests to the N.C. Board of Ethics. Wright does disclose an annual salary of $179,500 for his job as president of the Electric Motor Shop of Wake Forest, a family-owned repair and maintenance facility whose customers include the state of North Carolina. Wright’s report also documents ties to other high-profile businessmen, such as a real estate partnership with Barry Lee Green, who owns Thee Doll House strip club and other bars in Raleigh.
Wright’s many connections have twice drawn inquiries from the Ethics Committee. In 1998, he was reprimanded by the ethics board for not recusing himself from an ABC Commission vote on a regulatory matter involving Green’s strip club. And just last month, on March 13, the ethics board cautioned Wright that his role as an ABC Commissioner may pose a conflict of interest if he pursues an investment in an ethanol manufacturing plant, since, as an alcohol-based fuel, ethanol technically falls in the jurisdiction of the ABC Commission. Wright declared in writing on March 7 that he is not involved in the ethanol project, contrary to reports by the John Locke Foundation, a conservative think-tank in Raleigh that has accused Wright and other high-profile Democrats of back-room deals to siphon personal gain from the state’s Golden LEAF economic development coffers. (For the most interesting state government story the mainstream media is ignoring, visit
www.carolinajournal.com.)
Wright says he’s “not pursuing” North Carolina’s textbook business any longer either, and acted surprised to learn that a private consultant would be taking another look at the issue.
“After that last report came back, that pretty much shot it. I don’t know that there’s been any activity at all,” Wright said March 31. But that same day, his South Carolina partner, R.L. Bryan CEO Charles Dickerson, said Wright had alerted him “a couple of weeks ago” that the study was going forward.
Since the 1997 auditor’s report detailed delivery problems, state officials say, the textbook warehouse has addressed the criticisms.
“There were people jumping on the privatization bandwagon because there were a couple of bad years,” says Ben Matthews, the schools support chief. “But now we’re efficient and effective, and we’ve gone to a ‘just-in-time’ system.”
But Basnight’s office still hears complaints about textbook distribution, says Blizzard — one reason the man some call “more powerful than the governor” lent his support to another look at privatization. And Lee, a leading candidate for the soon-to-be-vacated seat of the chair of the state Board of Education, still thinks it’s a good idea.
“This is an opportunity to look at the facts,” Lee says. “Why not put the request for proposals out there and let people use their creativity, and see if there’s a better way? I don’t know why people would be threatened by a study.”
The consulting contract, which was awarded to Innovate E-Commerce of Carrboro, runs through the end of May, so a report is tentatively expected in June.
If the power brokers in Raleigh do decide to outsource North Carolina’s textbook operation, Malone and Wright’s South Carolina partners, at least, admit they would be interested in acquiring the business.
“We’ve had a good record here, and if we can help North Carolina in any way, I’m sure we’d be interested,” Dickerson says.
Still, so much time has passed since Dickerson and his colleagues formed their partnership with Wright and Malone, he thought the opportunity had evaporated. So he was pretty pleased to hear from Ricky Wright that the possibility was back on the table.
“He called to give us a status update, and I said to him, ‘Ricky, y’all still chasing that fox, huh?’” Dickerson says with a laugh from his Columbia, S.C., headquarters. “There’s nothing underhanded going on, I can assure you of that.” 
