Buying democracy

Web Posted: 03/05/2006 05:01 PM CST
Peggy Fikac and Gary Scharrer
Express-News Austin Bureau

AUSTIN — Physician-turned-businessman James Leininger long has battled to forge the Legislature into a conservative GOP image by putting millions of dollars behind favored candidates and causes.

But now, it's war. And the doctor not only is in, he's leading the charge.

The San Antonio megamillionaire is pouring record cash into toppling five House lawmakers who help make up the Republican majority he fought to build.

Their firing offense? Despite the "R" behind their names, they helped deliver the latest in a string of defeats for his dream of taxpayer-funded vouchers for private school tuition.

It's one of the few political fights he hasn't won, and as this election approaches, his increased urgency is apparent.

With a privately funded San Antonio voucher program poised to expire, and policy and political trends potentially making chances even bleaker for the controversial idea after next year's regular legislative session, some say this election is a make-or-break time.

So comes the war's escalation.

Leininger, 61, says that for him, it's all about improving the chances of saving inner-city children from low-performing public schools. His critics say vouchers would damage public education for all children.

What's more, critics say his infusion of more than $3.2 million so far in this year's primaries — with the majority going to the five targeted legislative seats — signals a disturbing effort by one man to buy democracy.

"It's unprecedented and more government than any one human being ought to be able to buy," said Tom "Smitty" Smith of Public Citizen, a private watchdog group. He called Leininger the "poster doctor" for campaign finance reform.

Leininger said he understands but disagrees with the idea that anyone can buy a House seat.

Campaign finance reform would save him a load of money, he said in an interview, describing himself as something of a lonely warrior for his cause.

"The only thing that keeps me going is that I don't see anybody else out there standing up for the children. ... If some other organization or somebody else wants to do it, I would gladly step into the background or step into retirement," Leininger said.

A former emergency room doctor who founded medical equipment company Kinetic Concepts Inc., Leininger home-schooled his children years ago because of his dissatisfaction with public schools.

Described as devoutly religious and personally modest, he turned that dissatisfaction into a crusade for vouchers.

To demonstrate his faith in the idea, Leininger created and funded the Horizon program to provide scholarships to private schools for low-income and minority children in the Edgewood Independent School District.

He has spent $40 million alone on Horizon. When other education endeavors are taken into account, including scholarships in other cities and capital items such as school buildings, the total approaches $100 million.

But he doesn't plan to continue bankrolling Horizon when it expires in 2008, and he casts a bleak future unless legislators approve a state-supported voucher program.

"The money is gone in two years and the program is over. I think it will be a disaster for all these kids" if a voucher program doesn't continue, Leininger said.

As he pushes for the state to take up where he plans to leave off, defenders and critics alike note that his campaign spending is a perfectly legal exercise of his wealth.

But they can't help noting the size of that exercise.

Leininger is almost entirely financing the campaigns of the five challengers to targeted GOP legislators, mainly through a political action committee that pays directly for advertising and other services on the candidates' behalf.

Last week, the anti-voucher Texas Freedom Network filed an ethics complaint against the PAC and another one supported by Leininger, claiming they violated campaign finance laws.

"I think the real tragedy is not that he's doing it, but the fact that he's able to do it under Texas law," said Rep. Joaquín Castro, D-San Antonio, whose district includes Edgewood ISD.

"Our system gives too much power to one or two people — to a handful of big contributors who can dictate public policy to the people they elect. It hurts democracy."

Other critics call the PAC an effort to not only control how money is spent but to obscure the source of contributions, requiring a look through more than one campaign report to identify Leininger's giving.

Leininger — who generally has preferred to work behind the scenes through a network of organizations and political committees — disputes such criticism.

"If I donate money to a PAC and then they donate to a candidate, I mean, how hard is that? Maybe they have to look at one other report. They're trying to make it something sinister, trying to make a campaign issue out of somebody's generosity, frankly," he said.

Critics also contend the primary campaigns he is bankrolling mislead the public about incumbent lawmakers' records and hide his voucher aims from the voters he's trying to influence in House districts across Texas.

Despite the vast amount he is pumping into the challengers' remarkably similar campaign materials, those materials don't mention vouchers but instead focus on other issues, such as taxes.

Leininger-backed candidates say they aren't Leininger's pawns, contending they'll vote for their constituents' interests.

At least three of the five say they either wouldn't support vouchers in their own districts or that vouchers wouldn't be appropriate in their areas — although they might vote for a pilot program to be used elsewhere.

Although Leininger's backers note he has every right to promote his beliefs, the questions and criticism arise because it's Leininger himself who says it's the voucher issue that drives his involvement.

"Somebody has to stand up and say enough's enough," said former acting Lt. Gov. Bill Ratliff, a Republican who reached out to support the five targeted incumbents amid memories of an over-the-top campaign that unsuccessfully tried to oust him in 2002. "Somebody has to cry foul.

"Local people should not allow a multimillionaire from San Antonio to come in and use big-lie techniques to try to convince them how to vote," Ratliff said. "None of these campaigns even mentions vouchers. ... The other issues are a smoke screen."

Ratliff, a former state senator from East Texas, was a leader on education and, after leaving office, became a lobbyist and a consultant to the voucher-opposing Texas Association of School Boards.

Leininger said he takes a hands-off approach toward campaign strategy and wasn't aware vouchers aren't being touted in the districts he is targeting.

"I don't know what's going on in the campaigns and, frankly, I don't know what the issues are in their districts. If I had to take a guess, I would say that vouchers don't affect any of those districts, so it's not an issue in those districts," he said

Texas Workforce Commission Chairwoman Diane Rath, who worked for Kinetic Concepts in the late 1980s and early 1990s, said Leininger is committed to helping people through programs such as vouchers and has a strong "level of comfort with himself and with his beliefs and with his actions — so what other people think about him is not an issue.

"That's the one thing that's most impressive about Dr. Leininger in person," she said, "is the strength of his commitment, his ability to find a way to help people."

Money flow

Leininger's commitment is evident in the primary, as is his disregard for the attendant criticism, even when he says it's inaccurate. Among other points, he said he has been wrongly called a billionaire because "I'm not even halfway there at this stage of the game."
His wealth was estimated at more than a billion dollars in late 2004. But he has lost several hundred million on paper because of a drop in his KCI stock holdings.

"You know the old communist manifesto — if you can't attack the message, you attack the messenger, and that's what they are doing. They're trying to paint me as this evil billionaire trying to buy the Legislature. I'm only half-evil," he said with a self-deprecating laugh. "Whenever you get beat up, you've just got to grin and bear it."

As he bears it, Leininger is spending nearly six times as much on this GOP primary as he has on any other primary back to 1997, according to Texas Ethics Commission records and an analysis of them by the Texas Freedom Network. He has spent more than $3.2 million on PACS and candidates, including legislative candidates, plus $200,000 to pass two ballot propositions.

Craig McDonald of Texans for Public Justice, which monitors the flow of campaign money, said the effort is unprecedented in the 10 years his group has been examining the issue, both in the amounts given to House candidates and the percentage to the five campaigns from a single source.

Some of the money went to incumbents, but nearly $2.5 million headed to the five challengers to Republican Reps. Carter Casteel of New Braunfels, Roy Blake of Nacogdoches, Charlie Geren of Fort Worth, Delwin Jones of Lubbock and Tommy Merritt of Longview.

Leininger's money accounts for 78 percent to 97 percent of the campaign spending of the five challengers: Nathan Macias against Casteel, Wayne Christian against Blake, Chris Hatley against Geren, Van Wilson against Jones, and Mark Williams against Merritt.

The previous primary record for Leininger and his wife, Cecelia, was $563,851 in the 2001-02 election cycle, according to the Texas Freedom Network, which tracks contributions as part of its effort to counter what it calls the "radical right."

"In Jim Leininger's gamble to buy the Legislature, he just went all in," said Freedom Network president Kathy Miller. "And if he wins, private schools will take the pot and public schools will foot the bill."

Voucher opponents say the program would hurt already underfunded public schools by draining money from them.

Voucher supporters such as Leininger say competition spurs improvements while providing a direct way out of bad schools for those who couldn't otherwise afford it.

Leininger disputes that the program would cost schools money. He said voucher students do better and that the competition means public schools work harder on remaining students. He said that means they also cut their dropout rates and get more attendance-based state funding.

Voucher opponents disagree.

"The bottom line is that vouchers take millions of dollars from neighborhood public schools that are already short of the funds they need to educate our kids. Those tax dollars then go to private schools that pick and choose what students to accept, and that don't meet the same standards required of public schools," Miller said.

But Leininger holds firm in his stance that even public schools would benefit overall.

"In a business, if you lose a few sales over here but you get a whole bunch more sales over there, the net is a big success," Leininger said. "But they don't look at it as success. They just look at the handful who left and say, 'Oh my goodness; it's a disaster.'"

And as always, he's putting his money where his mouth is.

Path upward

Leininger built his wealth through Kinetic Concepts. And his political involvement, as he tells it, stemmed from the company, too.
He has said he decided to get involved in pushing for curbs to civil lawsuits after his company lost its liability insurance. Although his company has used the courthouse itself, his first step was to create a PAC to support Texas Supreme Court candidates who brought conservative views to personal-injury cases.

His interest in education also stemmed from his business experience, when he learned that some of his employees could not read or write.

For his early efforts on vouchers, Leininger in 1992 was invited to the White House under then-President George Bush. The bigger Horizon program offering vouchers for Edgewood students to attend private schools was launched in fall 1998.

Horizon was scheduled for 10 years and will end in May 2008, said Jessica Sanchez, program director for the Children's Educational Opportunity Foundation, which administers the vouchers.

The foundation so far has awarded vouchers to more than 5,000 children, some for single years and others for multiple years, Sanchez said. The tuition assistance ranges from $2,000 to $4,700 a year.

Parents of children receiving vouchers have been informed that assistance will run out after two more school years, Sanchez said.

Leininger's giving elsewhere also has been generous.

He has poured millions into organizations, committees and campaigns that helped strengthen the state GOP, elect Republican statewide officeholders and secure a GOP majority in the Legislature.

He has been a notable host of fundraisers for candidates, along with other GOP heavy-hitters in San Antonio, including one for Republican Rep. Joe Straus featuring former New York Mayor Rudy Giuliani.

Leininger has met with legislators in the Capitol and has the ear of Republicans, including Gov. Rick Perry, whose ascent he assisted with donations and by helping guarantee a last-minute $1.1 million loan in Perry's 1998 race for lieutenant governor.

The same year, he helped guarantee a $950,000 loan to help Carole Keeton Strayhorn become comptroller. She has now launched an independent run against Perry.

Leininger was part of a group that went to the Bahamas in 2004 with Perry before a special session on education, and he sought to convince lawmakers, including New Braunfels' Casteel and Lubbock's Jones, in personal meetings last year to support a voucher plan.

Despite his political clout and elbow-rubbing, Leininger in his personal life remains "a very modest man," said a family friend, "which is hard to imagine when you see how much money he pours into things.

"If you see him, if you see his family, if you see his wife — they don't spend it on material things," said the friend, who didn't want to be identified.

Leininger and his wife, Cecelia, live in Hill Country Village. Their 5,600-square-foot home is valued at less than $1 million, according to the Bexar Appraisal District. With land, the property is valued at $1.45 million.

"If you saw his wife, she's probably got a $30 handbag. It's not in the furnishings in the house. It's not on art. It's not on clothing. They don't spend their money that way," the family friend said.

A private individual, however, who can take his personal interests a long way — and not only in his public passion of school vouchers.

Take basketball.

Leininger and his brothers and other company officials played basketball during their lunch hour at KCI's former location on East Houston Street, using a crude court set up in the company parking lot.

As his wealth grew, he became a part owner of the Spurs. He also turned himself into a coach for his children's home-school team.

Leininger also enjoys fishing, hunting and his Florida-based boat, the friend said, and he always has been sensitive to health and medical issues. His business interests include Promised Land Dairy, which produces high-quality milk.

Friends say his wife carries significant influence with him.

"People don't appreciate the strength of their relationship because Cecelia is very quiet, very unassuming," the family friend said.

Part of an unassuming pair in private life, perhaps, but Leininger is powerful nonetheless.

Through the years, he has supported passage of lawsuit limits and, most recently, a ban on gay marriage, which was moved to the ballot by the GOP-majority Legislature and approved overwhelmingly by Texans after a campaign effort to which he heavily contributed.

Despite support from Perry and other GOP leaders for a pilot voucher program, that issue has failed to gain traction.

That has been true not only under Perry but also under then-Gov. George W. Bush, who is among those who have publicly praised Leininger.

It has failed despite the Republican legislative majority that Leininger helped install in the 2002 elections, in part because all those Republicans didn't get on board.

Zero hour?

And so comes this year's battle.
The San Antonio voucher program may be on its last legs, and some say there's a growing sense that policy and political timetables are coming together in such a way to further block the already tough-to-pass voucher issue.

Legislators working to pass an education reform package by the 2007 regular session may be loathe to take up the voucher issue again for at least a decade if they succeed on the education reform, said GOP consultant Royal Masset, who first met Leininger in the late 1980s and describes himself as a "big fan."

"I really think he sees this as the last shot," Masset said. If lawmakers don't take up the issue in a spring special session, he said, the 2007 Legislature "may be it."

Public Citizen's Smith agrees that this is prime time for Leininger, given the focus on education and the fact that House Speaker Tom Craddick, R-Midland, supports vouchers.

"Education reform is going to have to pass sooner or later," Smith said. "This is the moment to stick that bill on. If it's in the package of education reforms, it's far more likely to pass."

A victory in the five targeted races could turn the tide not only by potentially turning votes but by increasing other lawmakers' fear of Leininger's wealth if they oppose him, Smith said.

"The votes have been very close on this. Swinging four or five votes will make a huge difference. The fear factor will drive other Republicans to vote with Leininger if he's successful," Smith said.

A loss, on the other hand, "empowers the independents," said Harvey Kronberg, editor of nonpartisan political newsletter Quorum Report.

Besides the proposed timing of policy changes, Masset said there's a widely shared view that the GOP has reached a high point in Texas, given factors including a growing Hispanic population seen as benefiting Democrats in the long run.

As he takes his shot, Leininger's expenditures have led some to hold him up as the example of why campaign finance reform, including contribution limits, are needed.

"The question is, how much democracy can anyone buy?" said Public Citizen's Smith. "He is spending hundreds of thousands of dollars to influence the outcome of legislative races in communities far away from his legislative district."

The concern also comes from other longtime political observers such as Kronberg.

"The candidates — no matter how well-informed and well-intentioned they are — they're a passenger on this bus, not the driver," Kronberg said.

The challengers said they would represent their districts, and Leininger said he's not only not running their campaigns, he would welcome contribution limits.

"The best thing that ever happened to people who are generous and who are known donors was when the federal government put limits on how much you could donate," Leininger said. "I would certainly welcome that sort of thing at the state level, too."

Leininger lamented what he described as a cynical attitude that many citizens hold for the political process, resulting in a lack of interest and non-voters.

"In a way, we're giving away our heritage," he said. "I would applaud any change that would get more people involved in the system so that the few people that are involved would not have to do so much, frankly."

But because he can, Leininger is creating heartburn for incumbents. Case in point: the mailers he's financing that don't mention school vouchers but generally criticize various incumbents for:

Supporting the state appropriations bill — which Republicans authored.

Supporting a payroll tax — which was part of a GOP-authored tax bill.

Opposing expansion of the homestead tax exemption — which Democrats offered and GOP leaders opposed.

"It tells me that he's talking out of both corners of his mouth," New Braunfels' Casteel said.

Jack Willome, a Boerne-area resident, had been impressed with Casteel challenger Macias but changed his mind after learning of the heavy Leininger funding.

"As a resident, a constituent of that district, I don't feel that a person who has that kind of lopsided support can represent my interests or the general interests of our district," he said. "The impression that a person gets when they accept this much funding from a single source is that they can be bought."

Longview Rep. Merritt filed a defamation lawsuit against his Leininger-backed opponent.

"They are lying, and my constituents want me to make them accountable," Merritt said.

He fears that the Republican Party will self-destruct.

"Jim Leininger is doing everything he can to destroy the Republican Party," Merritt said. "It's very obvious that Jim Leininger could care less about the conservative values of East Texas. It's only about his special interest."

Sen. Jeff Wentworth, R-San Antonio, survived a Leininger-backed challenger four years ago and predicted all the challengers Leininger is backing this year will lose, too.

"Maybe after March 7, when these five are renominated by the party, (Leininger will conclude) that, 'I've tried this twice now. Maybe I ought to do something different,'" Wentworth said.

Democratic consultant Kelly Fero said Leininger's money has become "toxic" and hurts the candidates to whom it is given once the connection is made public.

"All you have to do is expose the fact that your opponent has taken money from him and you have put your opponent at a disadvantage in the eyes of mainstream voters this year."

Win or lose this time, though, Kronberg expects Leininger to keep at it.

"He is a deeply religious man, and so it's part of, I think, his worldview that if you've been blessed with money, that winning is nice, but participating is more important," Kronberg said.

Leininger describes everything he does as rooted in his religious faith.

"Your faith plays a role in everything you have every day — all your life if it's important to you," Leininger said. "It's one more manifestation of what Jesus Christ said, 'What you do to the least of these my children, you do unto me.'"

He isn't betting on how many of his candidates will win.

"I sure donated a lot of money. I would hope that they all win," he said, laughing before shifting to a more serious tone. "I think when you go against incumbents you're thankful if just one wins. It's long odds. You're obviously taking your risk when you go after an incumbent."

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Staff Writers Jeanne Russell and John Tedesco and Database Editor Kelly Guckian contributed to this report