“Whities,” “Brownies,” and an $8 Million Deficit: Investigation Reveals Troubling Leadership at Newberg Schools

A damning 56-page investigation report was obtained by Newberg Neighbors and reveals that former Newberg School District Superintendent Dr. Steve Phillips failed to monitor the budget, resulting in an $8 million deficit. He also used racist language and misrepresented the district’s compliance with state standards. The report, prepared by independent investigator Dave Novotney, Ph.D., substantiates four of seven allegations against Phillips during his tenure leading a district beset by years of controversy. 

Dr. Novotney was also briefly the interim superintendent prior to Dr. Phillips, when then-board chair Dave Brown and three other board members fired Dr. Joe Morelock with no plan for a replacement. At the time, Novotney provided his services for free as the superintendent of the Willamette Educational School District, of which Newberg is a part. Upon his retirement, he became an independent investigator.

The investigation, which included interviews with 27 district employees and administrators, paints a picture of a superintendent who held informal “pop-in” meetings instead of implementing proper financial oversight, referred to students and staff using racist terms in private conversations, and told staff to report compliance with state standards even when programs fell short – because “nobody actually reports out of compliance.” 

We are expecting further information from our records request. This report, which is redacted to protect the identities of those who were interviewed over the course of the investigation, is the first.

Link to the complete report: Report_-_S_Phillips_Newberg-Dundee_SD_Investigation__Final__Redacted__1_.pdf

Newberg Neighbors has taken the liberty of creating a Cliff’s Notes version for public consumption. 

Allegation 1: Did Dr. Phillips fail to provide adequate oversight of the budget? 

The allegation was substantiated, with 4 specific duties contained within school board policies CB and CBA were cited that demonstrated Dr. Phillips’ culpability for the devastating budget fiasco. Furthermore, as Dr. Novotney is a former superintendent himself, he had specific knowledge of the responsibilities of a superintendent and the budgeting process and found Phillips to be lacking in his fiduciary responsibilities. 

Specifically, the district lacked basic systems with which to monitor the budget, did not implement a practice known as “budget blocking” in the district’s finance software that would have prevented the overspending responsible for the budget deficit, and did not grant administrators access to monitor or view their departments’ budgets. Despite Dr. Phillips’ claims that he isn’t responsible for the mess made of the district’s budget, Board Policy very clearly states that, while the superintendent can delegate tasks to others, they are not relieved from the responsibility of actions taken under delegation. 

Allegation 2: Did Dr. Phillips use racist and discriminatory language during private meetings? 

The allegation was substantiated, with two standards in the employee handbook and two standards in NDPS board policy CBA cited to have been violated. Dr. Phillips referred to Caucasian kids as “whities,” Hispanic students as “brownies” and LGBTQ students as “gays and weirdos” in multiple instances with two separate people, one of whom Dr. Phillips assumed would be friendly to his views. In Dr. Phillips’ interview, he expressed frustration at a perceived lack of loyalty among administration ranks, seemingly expecting to be protected at all costs by the principals who worked beneath him. Dr. Phillips also claimed ODE wanted students to be referred to as white kids and brown kids. This item is potentially reportable to TSPC. 

Allegation 3: Did Dr. Phillips mislead ODE, the NDPS Board of Directors, and the community at large about the district’s full compliance with Division 22 standards in fall of 2023? 

The allegation was substantiated. NDPS board policies CM and CBA were cited to have been violated, as well as two standards in the employee handbook. This item is potentially reportable to TSPC.

Allegation 4: Did Dr. Phillips fail to adhere to board policy regarding Reductions in Force (RIFs) in June of 2024? 

This allegation was unsubstantiated, with specific board policy cited that demonstrated why this was an unfounded claim. Specifically, the June RIFs were for classified and non-represented staff, two populations who don’t require Board of Directors action before the RIF process can begin. 

Allegation 5: Did Dr. Phillips fail to properly implement administrator evaluations consistent with TSPC standards and Board Policy CCG? 

This allegation was substantiated and was fairly cut-and-dried. However, Dr. Phillips claimed administrators in Newberg had never been evaluated by TSPC standards, which was easily found to be untrue as TSPC standards were used in the 2021-22 school year by Karen Pugsley, who was Admin on Special Assignment at the time. The evaluation created by Dr. Phillips was merely a self-reflection. 

Allegation 6: Did Dr. Phillips attempt to negatively impact the employment of Gregg Koskela? 

This allegation was unsubstantiated, as the other superintendent in this equation seemed to understand the communication from Dr. Phillips to be a concern about whether Mr. Koskela was writing and posting on his blog during company time. It should be noted, however, that Dr. Novotney believes Dr. Phillips did make a significant error in judgment in contacting Mr. Koskela’s new boss. 

Allegation 7 was specific to Dr. Phillips’ time in Jewell and the civil rights lawsuit filed last spring. 

As the litigation is ongoing, a proper investigation was unable to be completed. However, Dr. Novotney noted in his report that Dr. Phillips promptly reported an inappropriate letter discovered in the classroom of the sex offender to the proper authorities. 

We recommend reading the full report in its entirety. In early 2022, we had a superintendent candidate with the knowledge, experience, and reputation to lead a district of this size; yet the conservative school board majority chose a superintendent on administrative leave and under investigation at his then-current job, who was also forced out of his previous job due to the expression of racist views via the reposting of anti-undocumented immigrant sentiment on the social media platform X, formerly known as Twitter. Thus, none of what’s contained within the pages of the report should be a surprise to anyone who has been paying attention to school district business over the last four years.

It is clear Dr. Phillips was not hired because he was the best man for the job; rather, he was hired despite being unqualified for the job. His sole qualification was his political views, which closely matched those of the conservative board majority. Don’t take our word for it: one of the people interviewed stated Dr. Phillips referred to people unaligned with his political views as “commies.” This cronyism directly led to chaos, destruction, and heartbreak for our district and community which will take years to fully recover from. 

It is our hope the community will remember this saga when it’s time for school board elections in May. Our next school board will be responsible for hiring a permanent superintendent for our district. It is imperative we continue the healing process by electing people with integrity who are committed to the non-partisan nature of the school board, so that a superintendent of good character who will lead this district with competence, professionalism, virtue, and accountability may be hired.