Mr. Pederson’s Legacy
Disortes, Nebraska, population 416, although a few years ago we were up close to 500. It would go without saying that Disortes is a quiet town, hundreds of miles from any city larger than 50,000, and the passenger trains stopped going through here in 1954, and the interstate went so far to the south of us that we’re not sure whether it is quicker to get on the road to somewhere going south or going west.
And yet, it is a thriving town, unlike so many around us, and this is Mr. Pederson’s Legacy. Sterling Pederson came here to teach in 1958. He was not all that young even then; he was in his mid-thirties, and unmarried. There were rumors of a divorce in his background, and in truth he was a bit of an odd duck, socially awkward as we say now, and he was color-blind and wore loud socks that never matched, but he was the only person who applied for the position as the high school math teacher, and so he got the job.
Mr. Pederson never mentioned that he came from a wealthy family. When his father died in 1961 Pederson inherited $212,000 in various bank accounts, plus several houses, a department store and 4,000 acres of ranch land out around Buchanan. By the time Sterling had disposed of his other assets he was sitting on some very large amount of money, and, not having any idea what to do with this money, he invested it in the stock market on the advice of a childhood friend. The stock market was booming in those years, and the advice of the friend turned out to be reliable, and so by the mid-1960s Mr. Pederson’s wealth had outstripped his ability to keep track of it.
He was being paid $6,250 a year to teach math to high school students, and, when he took stock of his life options, he decided that this was what he wanted to continue to do. As I say, he was always a bit of an odd duck. Being around women and new people made him nervous. He had an old, wooden, spring-backed chair that he sat in while he taught, and he said it was the most comfortable chair he had ever found. He was comfortable in Disortes, and he figured that if he didn’t keep working he would start to drink, and the idea of drinking that much made him nervous. He was thinking a lot about money, about the power of money to disrupt and destroy men who were living otherwise peaceful and productive lives, and the power of money to motivate people to work harder, and so it was that he made his fateful decision.
On the first day of school in the fall of 1965, Mr. Pederson announced to his classes that students who did well in his class would be rewarded with small amounts of cash. It wasn’t a lot of money—a dollar for doing well on a test, $5 for getting an A for the semester, $10 for finishing first in the class. He asked the kids to keep these small rewards a secret, just between him and them, and they did, for awhile.
It wasn’t much money, but Pederson was surprised at how much impact it had. Not surprised; he was shocked. The level of effort in his classes was unlike anything he had ever imagined. Pederson taught six classes a day, averaging about fifteen students in a class, and he had never before given more than 22 "A’s" in a semester, all together; he kept records. Usually he would give about 15 A’s, 30 B’s, 30 C’s, 10 D’s and 5 F’s. In the fall of 1965 he wound up giving 71 A’s, 16 B’s, 4 C’s and one F, to the Fortenelli kid who never came to class. And he had no behavior problems.
Pederson was stunned, and his first thought was "can I afford this?" He had budgeted about $75 for kids who got A’s, and here it was $355, plus all the dollars here and there for kids who did well on tests; it came to $783. He asked his financial adviser whether he could afford to keep doing this, and the old friend laughed as if that was the funniest thing he had ever heard, and explained to him that the money he had made on his investments during that semester was two hundred times what he had paid out in scholastic bonuses.
Mr. Pederson didn’t think that was right.
He didn’t think it was true, to begin with, and then when he finally was convinced of the truth of the matter, he didn’t believe in its justice. Why should I earn all of this money, he asked himself, when these kids come to school in scuffed shoes without socks, and will work so hard for $5?
Pederson decided to increase his bonuses for the second semester; $10 for an A, $50 for finishing first in the class, $30 for finishing second. It seemed like a lot of money, but his advisor assured him that he could handle it. He began to pay small bonuses for kids who cleaned up before they came to his class.
It is hard to say when word of Mr. Pederson’s bonuses began to leak out to the community, just as it is hard to say when the cheating started. A few kids had to explain spending money to their parents, to begin with, and then they whispered to their younger brothers and older sisters about the program, and with the passage of time more and more members of the community had actually been in Mr. Pederson’s classes. In the early 1970s there was some grumbling from the other members of the staff about the "payola". "Some of the kids don’t do their homework in my class," said Carolyn Hauser, "because I can’t afford to bribe them. They’ll just skip writing papers for me so that they can be sure to get their math done."
By this time, however, Pederson was beginning to come to terms with the scale of his ever-expanding fortune, and he solved this problem by giving money to the other teachers, so that they, too, could pay bonuses for classroom performance. By this time he was paying $50 for an A—and giving out a lot of "A’s". He gave the other teachers $1,000 a semester for bonuses, and then $2,000. He asked his old friend whether he could afford to do this. The old friend threw back his head and roared with laughter.
That was the time of the school consolidations. The other little towns around here all had their school systems slapped together against their will, because somebody in Lincoln was certain that it would be cheaper to educate kids in schools of 500 than in schools of 85 and 100. Disortes, however, was left out of the school consolidation debacle, because our schools were doing so well that everybody was afraid to mess with them. In 1965 we had 19 graduates, of whom two went on to college. In 1973 we had 17 graduates, of whom 16 went on to college. Principal Joe Spearman was very pleased to take credit for this, and would do so on every appropriate occasion, but many people suspected that it was the incentive program that had turned the kids around.
Oh, we had heroes, then; oh, my, we had heroes. We had a sign on the edge of town: Welcome to Disortes—Where kids grow up to do well. By the early 1980s we were known throughout the state as the place where all the kids went to college, where the school was always clean, the community always involved. A study in 1983 found that kids who had grown up in Disortes were now running 41 banks in other Nebraska towns and cities—banks, or Savings and Loans. People moved to our town so that their kids could go to the Disortes schools—people with good jobs and good incomes. They’d drive 80 miles each way every day so that their kids could grow up in Disortes. A house in Disortes was worth four times what the same house was worth in Natural Springs, which was ten miles away.
Newspapers would write stories about us: What is the magic of Disortes? Mr. Pederson’s bonuses were never mentioned in these stories. By now the teachers were paying $100 for an A, and nobody was ashamed of this, nobody was embarrassed by it, but. . .well, they just never saw fit to mention it to the newspaper people.
Nobody knows for sure when the cheating started; maybe it started right away. Jack Hodges, who went on to become the President of Pembroke Industries, was in that first class, back in the fall of ’65, and he swore that he could never understand how Petey Crosswhite got an A in Algebra 1. He had been going to school with Petey since they were in the first grade, and Petey couldn’t tell you what seven plus six was without making three ink marks on the back of his left hand.
Some people blame Pederson because he didn’t pay any attention to it. Pederson just wanted the kids to do well; he didn’t care how they got there. One of the things that started to happen, once the money got bigger, was the cheerleaders would start to go out on dates with the brainy kids, a couple of times a semester. Pederson used to laugh about that, and say, "Well, what’s wrong with it? They’re not doing anything they wouldn’t do anyway, are they? So the smart kids get the dates once in awhile rather than the jocks, so what’s wrong with that?" But the cheerleaders would show up on exam day with notes written along the top of their brassieres, where they could look down and see them and nobody else was allowed to check. The kids were stealing tests, which was not unusual—kids have been stealing tests since testing was invented—but also, what was more unusual, they had worked out a series of hand signals for multiple-choice tests, so that if one kid knew the answer, the whole room knew the answer.
"Yes, they’re all in it together," said Mr. Pederson. "They all want everybody to do well. I don’t approve of cheating, but you have to admit it’s kind of neat, don’t you? Everybody wants everybody to do well—and they do."
Oh yes, they did; they all went to college, and many of them did well in college, and went on to become leaders in industry. Some say that it was with the Lincoln Savings and Loan disaster that the wheels began to come off. The Disortes kids who went on to become Savings and Loan executives had arranged for their high school friends to sit on the boards of their Savings and Loan co-operatives. It was a mostly honorary position; you’d pay other people who had experience in the industry $2,000 a year to look over your books and make sure you were running the business right. The only thing was, $2,000 a year became $5,000, $10,000, $25,000, $50,000—and you’d get three or four of your buddies on your board, and they weren’t really doing much oversight. They’d arrange "organizational retreats" a couple of times a year, which were really golf outings at high-end resorts, paid for by the depositors. That all came to a head late in the mid-1980s, and some of the Disortes kids had their reputations sullied a little by that.
Mr. Pederson retired in 1989. Over the years he had become a mythic figure in recitations of the Disortes Miracle, the selfless educator whose dedication to his students transcended everything else in his life. He made the cover of Newsweek magazine one week: The Mr. Tibbs of Disortes. Newsweek asked about his plans for retirement. "I’ve made it as far as Omaha a couple or times," said Pederson. "I’m hoping I’ll have time to see Kansas City before I die."
Somebody started a fund to build a statue of him, to put in the town square. It was estimated that the statue would cost $68,000. Money poured in from banks all over the state, and in no time the commitments in hand were three times what was needed. "Well, now, it wouldn’t do to build a statue of me because of what my students have accomplished," said Pederson. "I won’t have it. You take that money, and I’ll give you another $200,000, but I want you to build monuments to the men and women that it has been my great honor to teach." By the late 1990s there were eleven statues standing. There was a statue for Jack Hodges of Pembroke Industries, and I will never forget the look of pride on old Emma Hodges’ face when the statue of her son was unveiled. There was a statue for Sally Tasinski, who founded SuperCareers (for Super People), and there was a statue of Barney Baranca, who in his remarkable career had taken a turn as the President of three different Fortune Five Hundred companies. There were statues for three or four bankers, and a Hollywood director whose work perhaps would not ordinarily have merited a statue, and one for a baseball player who had a four-year career with Atlanta and Toronto.
This was a proud town, ten years ago. We were very proud of all of these sons and daughters of Disortes, but the biggest and brightest statue was the one in the town square, the statue of Sterling Pederson, seated in his rickety wooden chair. Sterling died on September 8, 1998, about eight o’clock in the evening. He left all of his money to the school system—money for a new gymnasium, money to endow the "chairs" of each and every teacher, and money set aside "for the continuing operation of the programs unique to the Disortes tradition." We had no problem getting the best teachers. . ..hadn’t had for years, but with the new endowments, teachers were fighting for the chance to teach in Disortes.
It was Barney Baranca who went first. He was accused and convicted of insider trading, although the real issue was his looting of retirement funds. I saw Barney a few years ago, after he got out of jail. "The Unions finally got me," he said. "I played hardball. They played hardball. I wasn’t as tough as I thought I was."
Eartha May Arnold, President of the Friends of the Rainforest, was brought down when it was learned that only 6% of the money raised by her foundation had ever been passed on to anybody else--and that went to an "environmental solutions company" headed by her cousin. Jack Hodges had perhaps the saddest story of all. He had been married for 36 years to a former Disortes cheerleader, but the marriage ended badly when he told a newspaper that she had been involved with 300 other men during the course of their marriage, and she fired back that he had been cheating on his taxes. The IRS didn’t care how many men Rosemary had slept with, but it took an interest in the tax issue.
One by one our heroes fell. I had never heard of a Ponzi scheme, but apparently SuperCareers was a Ponzi scheme. The bankers were all forced from their banks—some of them, or so they said, were being driven from their jobs just by the taint of the Disortes name on their resume.
High school kids started defacing the statues—urinating on them, spray-painting them. This took a turn for the worse. The kids began hooking one end of a chain to a tractor and the other end to the arm of a statue, just to see if they could rip the arm off the statue.
"I don’t know that we were such terrible people," Barney told me one night after his fourth whiskey sour. "I still can’t see that we were. We just wanted to do well, and we wanted our companies to do well. We took a few shortcuts. Maybe we never deserved to have statues in the first place, but I certainly don’t think we deserved to have our statues ripped apart."
In 2004 the Disortes city council passed an ordinance prohibiting anyone—even parents—from paying bonuses to students for academic performance. Joseph Spearman, who retired in 1991 after 33 years as principal at Disortes High, was threatened with a racketeering indictment for allowing cheating to run rampant at the school. He insisted that he not only had never endorsed the practice of paying for grades, he had never heard of it. He was shocked to discover that this had been going on. He died of a heart attack in 2005, still protesting his innocence—and, in truth, there was no legal case against him.
One by one, in separate actions, the Disortes city counsel ordered the removal of all of the statues. They were mostly too damaged to stand, and they’re all gone now—all but one. There is still money in town—a house here is still worth twice what it would sell for in Natural Springs—but the pride is gone. The sign at the edge of town hasn’t been repainted in years; due to un-repaired vandalism is now reads "Welcome to Disortes—where kids grow up to do time." The statue of Sterling Pederson still sits proudly in the town square, guarded by floodlights, a slightly goofy grin on his face and his socks, at the order of the sculptor, repainted once a year in brilliant but mismatched colors. This is all that remains of the glorious and graceful sunlight that once shown upon our town, but we are rebuilding, and we are preparing for a brighter future. Perhaps one day there will be statues in our city once again.