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When Maria Penaherrera was removed as principal of Brooklyn’s PS 114 in February 2009, the community breathed a sigh of relief. Her leadership had drawn protests from teachers and parents, and it was well known that the school was in bad shape financially.

But according to a report released today by Special Commissioner of Education Richard Condon, none of those problems caused the city to remove Pena-Herrera. Instead, it was failing to follow proper procedure during an evacuation that cost Pena-Herrera her job.

The report paints a picture of an uncommonly bad principal whose obvious shortcomings went unaddressed by department officials during a period when the city frequently redrew lines of authority over schools.

Pena-Herrera became principal of PS 114 in Brooklyn in 2004 after two decades in the city schools. By the time she was removed, she had amassed a reputation as a “principal from hell” who unsuccessfully tried to bully parents into giving her good marks on the city’s survey. According to the report, she ran up a deficit of more than $100,000, hired and fired four assistant principals, illicitly employed uncertified teachers and paraprofessionals, and paid consultants to replicate support she was already getting. When her replacement inquired about safety issues with a city-funded after-school program that Pena-Herrera had allowed to use school space without a permit, the program’s head offered a bribe of knockoff handbags. A school custodian told investigators that the bribe was typical of the way business was done at the school.

What’s not clear from the report is how Pena-Herrera lasted as long as she did. According to the report, her supervisors saw red flags almost immediately, and in February 2007, two years before Pena-Herrera was removed, city officials convened a meeting to discuss her out-of-control financial practices.

One clue comes from the shifting lines of authority at the Department of Education in recent years. Figuring prominently into the report is Julia Bove, who was the superintendent of PS 114′s district in the 2005-2006 school year. Bove told investigators that she immediately recognized that Pena-Herrera was in over her head. But the following year Bove no longer supervised Pena-Herrera. The year after that, Bove once again worked with PS 114, but she did not have any real authority over Pena-Herrera because she was employed by one of the organizations within the department that competed for contracts with schools. PS 114 paid Bove’s group, the Integrated Learning and Instruction Learning Support Organization, $38,000 for its support, according to the report.

Another clue comes from Bove’s comment to investigators about the city’s priorities for its principals:

Bove reported that the Chancellor’s Office had been ready to remove Penaherrera [sic] during the 2007-2008 school year, but as a result of the massive amount of support provided to Penaherrera, the school’s rating went from an “F” to a “B,” so the Chancellor’s Office left Penaherrera in place.

UPDATE: Department of Education spokeswoman Natalie Ravitz today said the rising progress report grade was “a substantial academic improvement that certainly influenced our decision to allow [Pena-Herrera] to continue on as Principal, albeit with additional support.”

Ravitz said the department is equipped to help principals who struggle. “On occasion, we have talented Principals who struggle to properly manage their budgets and we work — as we did with Principal Penaherrera — to help them stay in line and make appropriate hiring decisions.”

Ravitz said the city would follow the recommendation by Special Commissioner of Investigation Richard Condon to bar Pena-Herrera from working in the the school system. “We were previously aware of some concern about Principal Maria Penaherrera’s budget management skills,” she said. “However, no one in the Chancellor’s office was aware of any allegations or evidence of fraudulent or illegal activity until now.”

SCI report about Maria Pena-Herrera