AUSTIN — Dr. James Leininger is known as the Daddy Warbucks of Texas social conservatism — or, as the San Antonio Current recently called him, “God’s Sugar Daddy.”

The 54-year-old San Antonio physician, who made a fortune estimated at more than $300 million by making extremely fancy hospital beds, is an active funder and player in right-wing causes including school vouchers, home schooling, anti-abortion, tort reform, anti-gay rights, anti-unionism, anti-environmental efforts, a right-wing Texas think tank modeled on the Heritage Foundation, and Republican political candidates.

Leininger (pronounced with a hard “g”) now has business interests that include part ownership of the San Antonio Spurs; Promised Land Dairy of Floresville, which is familiar to Texas shoppers at H-E-B, Albertson’s and Whole Foods; Kinetic Concepts International, the medical bed and supply company; and Focus Direct, a direct-mail outfit. One of Leininger’s newest business ventures was the Texas Network, TXN, which was to reach an estimated 10 million Texans a day with television news programs being marketed without political bias or interest.

Just keeping track of Leininger’s political contributions is a major chore. Samantha Smoot, director of Texas Freedom Network, said: “He tends to start political action committees and then close them down after a year. Texas Home School Coalition — now, that one you can tell what it is; he was their only funder. But the Entertainment PAC out of Los Angeles — who knew?”

Leininger tends to give his PACs and foundations innocuous names — Texans for Justice, the Texas Public Policy Foundation, the Texas Justice Foundation, Children’s Economic Opportunity Foundation, Texans for Governmental Integrity, the A PAC for Parental School Choice, etc. According to the Current (a weekly alternative paper), Leininger is also a major donor to, or plays a leading role in, at least a dozen major right-wing groups. Politically, he has given not only to Christian-right school board candidates and right-wing legislative candidates but also to Sens. Kay Bailey Hutchison and Phil Gramm, and he was Rick Perry’s largest campaign contributor ($500,000) in Perry’s race for lieutenant governor.

That’s why members of the Lege are bracing for a big fight over school vouchers this year. The people of Texas are not screaming for school vouchers — the pols are in hock to Leininger.

In a recent edition of the Current is an extensive report on Leininger and his interests by Debbie Nathan — the most detailed to appear so far in any Texas publication. Nathan not only traces Leininger’s religious, philosophical and political interests but brings to light some obscure episodes worth mention.

It seems Leininger gave at least $50,000 to Triad Management Service, the mysterious Republican organization that surfaced during investigations of the 1996 campaign funding scandals. Triad set up two “social welfare organizations” that had no members; their sole purpose was to advise Republican candidates and produce television attack ads against Democrats.

According to the article, during the past decade, Leininger had given at least $1.5 million to Texas candidates and another $3.2 million to move public opinion in a conservative direction. In addition, he has given $5.6 million to politically oriented, far-right nonprofits, including the American Family Association, the Christian Pro-Life Foundation, the Family Research Council, Focus on the Family, the Heidi Group, the Republican National Coalition for Life PAC, etc.

There’s nothing wrong with supporting groups you believe in, although I did have to laugh upon reading that Leininger had founded his Justice Foundation as “a response to the American Civil Liberties Union.” He will wind up on the same side as the ACLU in no time, as the ACLU does more to stop government interference in the lives of individuals than anyone else. (Ask Ollie North.)

But Leininger’s current leading cause, school vouchers, is simply a rotten idea. In the November issue of The Atlantic Monthly, Nick Lemann has an excellent article on what to do about failing public schools. He dismisses vouchers as an alternative because it’s a ridiculous idea.

There are 45 million students in the public schools. Total enrollment in private, nonsectarian schools where the annual tuition is more than $5,000 (what most of us mean when we think of “private school”) is about 400,000 — less than 1 percent of public school enrollment. Catholic school enrollment is 2.5 million. You figure it out.

What do you get out of a legislature for $3.8 million? At the very least, anyone who writes that big a check should get two or three bills passed. Thus far this session, the state’s biggest right-wing Christian funder, Dr. James Leininger, hasn’t exactly gotten what he paid for: a voucher program that would move tax money from public to private schools (and additional tort reform legislation that would further limit the rights of individuals filing suits against corporate defendants).

The fault doesn’t lie with Dr. Leininger or his stars but with Lieutenant Governor Rick Perry – who can’t seem to move the Leininger bills. As has been reported in this publication and elsewhere, Leininger provided Perry the $1.1 million loan that allowed him to make a last-minute media buy that quite likely provided the narrow margin by which he defeated Democrat John Sharp. Dr. Leininger and his extended family also provided Perry with $191,577 in campaign contributions, according to an exhaustive study of voucher funding recently released by the Texas Freedom Network, an Austin-based non-profit group that monitors the extreme right.

When Texas Freedom Network researchers looked beyond Leininger, they found other Christian right funders who (with the San Antonio physician and med-bed manufacturer) put together a total of $5.2 million that the voucher proponents spent on last year’s elections. "That doesn’t take into account the $1 million-plus spent by voucher proponents on public relations and lobbying during each of the last two legislative sessions, the $10 million spent by Dr. James Leininger to acquire a statewide cable news network, TXN, which broadcasts into seventeen of Texas’ nineteen media markets, or the $50 million spent on the nation’s largest private voucher program in Edgewood I.S.D.," the T.F.N. reported. "In San Antonio [location of Edgewood], $45 million of that $50 million is pledged by Dr. Leininger."

Despite all that ungodly freespending, the session’s one big voucher bill remains bottled up in the Senate, where eleven Democrats have signed a statement promising they will vote against bringing the bill to the floor. So Amarillo Republican Teel Bivins cannot muster the required two-thirds vote to bring his bill to the floor – despite intense pressure from Perry. The pressure is growing, as the session winds down and more senators are willing to cut deals to move their own bills.

To make a deal easier, Bivins has reduced the scope of his once ambitious voucher plan and allowed the management of the bill to be given over to the Lieutenant Governor and his staff. Perry, in fact, is telling the press the bill should be more widely acceptable now that it is limited to two smaller school districts rather than four large urban districts. And the latest version of the bill has no income cap, a change that Perry says he always supported.

So what was originally proposed as a mechanism to provide academically struggling, low-income children tuition aid to attend private schools is now wide open to any child who fails to pass the TAAS test, regardless of family income. And as the session comes closer to its May 31 conclusion, voucher proponents in the Senate are getting more desperate – as was evident in the last week of April when they failed in an attempt to tack Bivins’ bill onto a separate teacher pay raise bill.

"They’ve gone from four major urban districts, to two smaller school districts," said a Democratic Senate staff aide. "Next is one district as a pilot, and then they will strip it down to a vote on the concept of vouchers." Through the first week in May, the bill has moved on and off the Senate’s intent calendar, but the eleven senators are still committed to blocking the bill, said Kathy Miller of the Texas Freedom Network.

Leininger isn’t the only voucher supporter to whom Perry is indebted. According to the Freedom Network’s study, Houston chemical company C.E.O. William McMinn provided the Lieutenant Governor $80,000 in campaign contributions. McMinn was the second largest voucher funder, contributing $299,832 to candidates and $207,000 to political action committees. And Dallas oil and gas magnate Louis Beecherl, a former member of the University of Texas Board of Regents, gave Perry $37,000. Beecherl provided other pro-voucher candidates with $299,724 in contributions and added an additional $207,000 in voucher PAC contributions. Along with McMinn, Beecherl serves on the board of directors of Putting Children First, the largest pro-voucher political action committee in the state.

Leininger, McMinn, and Beecherl have secular interests beyond the religious right’s voucher initiatives. The three top funders of the voucher lobby are also heavily invested in tort reform, the decade-old assault on citizens’ right to file suit against corporate defendants. Texans for Public Justice, an Austin research and advocacy group, has run the numbers on tort-reform contributors and found that Leininger, McMinn and Beecherl all made the list T.P.J. calls "Tort Reform’s Sweet Sixteen." Leininger is the number one funder of tort reform candidates and lobby efforts, with McMinn placing third and Beecherl rounding out the Sweet Sixteen list at number sixteen.

But tort reform has also been struggling in the Senate this session. The first time Teel Bivins tried to bring up the session’s big tort reform bill – which would make class action lawsuits more difficult to pursue – Democrats denied him the necessary twenty-one votes to bring it to the floor. The Senate is so protocol-bound that one or two such incidents can erode a bill’s credibility, but one week later Bivins had improved his counting and on April 26 his class action bill passed the Senate. It is hardly assured passage in the House, where it will have to either get through Fred Bosse’s often uncivil Civil Practices Committee or be attached as an amendment to a related bill on the floor. The other major tort reform effort (a third party liability bill) is, according to its Senate sponsor, dead.

Added together, the voucherites and the tort reformers have poured $6 million into their electoral and legislative programs this year and yet they are not exactly getting a big bang for their buck – which suggests that even in the Texas Legislature, a handful of determined elected officials and a wider grassroots effort that money can’t buy can stop even the most well-funded initiative. And one more thing: you don’t always get what you pay for.

School Voucher Movement Displays Partisan Streak

The school voucher movement's ulterior motive -- elect Republicans and defeat Democrats -- has been  exposed in a fundraising letter that advocates the overthrow of Texas House Speaker Pete Laney.

The stark partisan nature of the letter from the group "Putting Children First" prompted Lt. Gov. Bob Bullock to resign as honorary head of the voucher organization's campaign to deploy tax dollars toward private schools. A Bullock spokesman said the lieutenant governor, who is leaving office early next year, will work for a pilot voucher program separately. Also resigning from the group was state Rep. Domingo Garcia, D-Dallas.

As first reported in the Dallas Morning News, the letter by pro-voucher leader Jimmy Mansour said his pro-voucher group was coordinating with Dick Weekly's Texans for Lawsuit Reform to elect a Republican majority in the Texas House.

"Jimmy Mansour calls his organization 'Putting Children First,'" Texas AFL-CIO President Joe D. Gunn said.  "This letter shows beyond a doubt that the pro-voucher movement is really about 'Putting Right-Wing Republicans First.'"

Gunn praised Bullock for pulling out of the voucher organization's campaign.

"Now that the true nature of the voucher movement has been unveiled, Bob Bullock has again proven that he will place the well-being of Texas above rank political agendas," Gunn said.

The Mansour letter said the tort reformers asked his group to raise between $750,000 and $1 million to target open House seats. Copies of the letter, which asked a California ally for $250,000 in out-of-state money, went to Dr. James Leininger, the wealthy San Antonian who is bankrolling politicians from Gov. George W. Bush on down in furtherance of a right-wing agenda.

When the fundraising letter was made public, Mansour claimed that it had been written by Zack Dawes, a Republican political operative, without the knowledge or consent of Putting Children First. Mansour told reporters that Dawes had been fired from the group.

But a subsequent report by Austin American-Statesman political columnist Dave McNeely revealed the truth: Dawes was not fired, but kicked upstairs, going to work for a national voucher group that is also under Mansour's direction. Moreover, Dawes had already resigned from Putting Children First to do other consulting work and was clearly taking the fall for the embarrassing letter.

"Voucher supporters and the right-wing mega-millionaires funding them, like San Antonian James Leininger, should not be permitted to sneak their politics in the back door under false pretenses," Gunn said. "And fair-minded voucher supporters should stop pretending that groups like Putting Children First are politically neutral."

Gunn noted that voucher forces have made progress under House Speaker Pete Laney, but apparently not enough to satisfy the zealots who want to steer tax dollars toward private education at the expense of public schools.

"The letter points up the treachery of the voucher movement, which walks the halls of the Legislature with a benign, bipartisan face only to join the most fervent anti-Laney, anti-Democrat crowd in the partisan alleys," Gunn said.

"Let's be clear on what the Jimmy Mansour-James Leininger voucher program really is: A wedge issue aimed at electing Republicans, not improving our schools."

Starting a statewide TV and radio network is expensive. Drug tests are cheap. And those tests appear to have been an integral part of James Leininger's strategy to weed out employees and cut his losses on a $45 million media deal that went south faster than DrKoop.com's hearse.

At the end of this month, Leininger, the ultra-conservative millionaire from San Antonio, will pull the plug on TXN, also known as The News of Texas, the fledgling news organization that sought to cover the entire Lone Star State by establishing news bureaus in Austin, Dallas, Houston, and San Antonio, and then selling its radio and TV newscasts to affiliate stations in all of the major media markets. The company also launched an Internet operation, hiring more than a dozen people to operate the now-defunct Web sites under the names TXN.com and NewsofTexas.com.

TXN was headed by Bob Rogers, who gained renown in the Alamo City during his long stint as news director at KENS-TV. But Rogers had little success at gaining market share and recognition for the network. Despite the millions of dollars that Leininger pumped into the operation, TXN's news broadcasts were not being shown on any of the major networks in the state's four major cities when Leininger finally made the decision to fold his TV venture. And while it's unfortunate for anyone to lose that much money -- even someone as rich as Leininger, whose estimated worth is in the $300 million range -- the techniques that the hospital-bed magnate used to shut down his operation have infuriated current and former employees alike.

In the days leading up to last month's closing of bureaus in Dallas and Houston and the firing of Rogers, Leininger's company began conducting random drug tests on the more than 100 employees at TXN. Within the first few days of the pogrom, 13 employees had either tested positive or were fired after refusing to take the test, and Leininger was able to void the contracts of all 13. The move likely saved tens of thousands of dollars for the reclusive millionaire who shuns the press. Nicknamed the Daddy Warbucks of social conservatism in Texas, Leininger has backed numerous causes, including anti-abortion groups, tort reform groups, school vouchers, and the Texas Public Policy Foundation, which played a major role in defeating light rail in San Antonio. And his last-minute loans to Comptroller Carole Keeton Rylander and Lt. Gov. Rick Perry assured the two of victory in 1998.

"The drug tests were used as a way to cut down the number of people they had to pay severance to," explains one company insider who asked not to be identified.

Indeed, the surprise tests accelerated the pace of defections from TXN. Jim Moore, TXN's Austin bureau chief and arguably the network's best and highest-profile newsman, refused to take the drug test when Leininger's pee police showed up at the TXN bureau in Austin on June 7. Moore, who was recruited by Rogers to work at TXN after leaving his reporting job at KHOU-TV, was infuriated by the procedure and what it implied.

"For all his career, Leininger has sought to remove government intrusion in our private lives. So why is it that he thinks it's okay to insert himself into the most private aspects of his employees' lives?" asks Moore, who took an independent drug test after his firing from TXN to prove that he was drug-free.


All the Wrong Moves

Although the urine tests allowed Leininger to flush a number of  employees, the company's mismanagement and poor business model had already doomed it to failure. Insiders say the company had taken in just $500,000 in revenue this year, while spending about $6 million. The company simply could not attract advertisers to news broadcasts that weren't being heard or seen on the state's biggest media outlets.

"We were doing pretty well in some of the smaller markets like Corpus Christi, Lubbock, and Amarillo," says Moore. "But those were not the markets advertisers want to sell to. We needed to be on the major networks in Dallas and Houston and Austin. But instead we were being shown on the UHF and public television stations." In Austin, TXN's newscasts are being shown on KLRU. And while being seen on PBS affiliates is far better than no exposure at all, the deal with KLRU and other PBS stations forces TXN staffers to plug holes in the show that would ordinarily be filled by commercials.

Most of TXN ceased to exist on June 13, the day Rogers was fired as president and CEO of TXN, although he continues to have a consulting contract with TXN. That same day, the axe fell on news director Greg Pasztor, assistant news director Marcia Pons, and managing editor David Lauricella, as well as a dozen people working on the Web site and a half dozen who worked for TXN's radio division -- including former Austinite Bob Crowley, who was at KVET/KASE until losing his job in April 1999 after a rift with the station's management. Although TXN's radio and Web operations have been shut down, the TV news division will continue operating until July 31 in order to fulfill the contracts it has with affiliates.

TXN's demise offers a number of lessons on what not to do for a successful TV news operation. Company insiders point to a number of careless business decisions that cost the company massive amounts of money and credibility. For instance, most TV stations rent a satellite transponder, the machinery that sends and receives TV sound and images to satellites. TXN bought its own transponder, along with satellite dishes for each bureau to link to the apparatus. However, some of the bureaus couldn't convince their landlords to allow them to put the satellite dishes on their roofs. That meant bureaus had to transmit stories via microwave towers for which they had to pay about $300 for each 15- to 30-minute window of time. Thus, the company ended up paying twice for a recurring infrastructure problem that should have been handled when the network began.

Profligate spending began even before TXN began broadcasting in January of last year. Rather than wait for a studio and control room facility to be completed in San Antonio, company executives bought a $1.5 million production truck, like those used for big sporting events like Monday Night Football. The idea, according to TXN insiders, was to get the network on the air sooner, rather than later. After the control room was completed, TXN planned to rent the truck to other stations. That never happened. Instead, after the building project was complete, the production truck sat outside TXN's offices gathering dust.

A favorite story among former TXN employees is the Haggar clothing deal. With advertising revenues almost nonexistent, company executives decided to do a barter deal with Haggar. In return for supplying all of TXN's on-camera people with Haggar outfits, TXN agreed to run a tag line at the end of each broadcast saying that TXN's people wear Haggar togs. While many of the reporters objected to the style, or lack thereof, of the Haggar look, all objected to the tax burden the deal placed on them. In a May 17 letter to Rogers, Moore complained about the deal, saying the taxes on the clothes are "estimated to be about $700." Thus, said Moore, he'd be paying tax on $2,000 worth of clothes
that he "did not ask for and was not allowed to select."

Moore and several other former TXN employees blame Rogers for the failure of TXN. They say Rogers failed to properly promote the venture and didn't use the company's media properties to lead viewers and listeners to the company's Web sites. They also say the company simply tried to grow too soon, too fast. Indeed, the company's dreams appear to have been far too grand. Starting any of the three operations -- TV, radio, or  Web site -- would likely be enough for any start-up. Doing all three at once was likely the kiss of death for the venture.

Others say Rogers simply didn't have the background to run an operation as big as his dream. "Rogers was a news guy," says one TXN reporter who is currently looking for other work. "He'd never been a general manager of a station. You've got to have sales people. Plus, it was harder to sell the concept of a statewide news network than they thought."

Rogers who did not return phone calls from the Chronicle, may deserve some of the blame, but Leininger also deserves blame. He jumped into a very expensive business that he knew little or nothing about, and he did it without developing a complete business plan.

But in the end, TXN will likely be remembered not for the quality of its journalism or the soundness of its business plan, but for the cynical way Leininger chose to get out of it. Not only did he use drug tests to jettison employees, he also quit the business at a time when he was fighting with the Department of Labor over having to pay employees for their overtime hours. The dispute stems from a disagreement TXN had with some of its Dallas-based employees over the amount of time they were obliged to put in without being paid overtime. According to TXN insiders, the federal agency sided with the employees earlier this year, and several are pursuing claims against the company.

Leininger did not respond to the Chronicle's request for an interview. Bruce Kates, the news director at TXN, declined to comment on the reasons for the network's failure.

"I don't think you can place the blame," Kates says. "You can make a business plan and project what revenue will be. When you looked at it, it didn't match with what expectations were."

So was there mismanagement? "I don't think I'd put it down as mismanagement," says Kates. "Revenues didn't meet expectations."