DALLAS — He has been under fire for a budget deficit and a botched plan to fix it.

Now, Dallas Independent School District Superintendent Michael Hinojosa may have a new problem; former middle school principal Mary Davies is accusing him of retaliation.

Davies, who worked at Spence Middle School, is suing the district, claiming Hinojosa abused his power trying to protect himself from rumors about his personal life.

Davies was recommended for demotion after a recent investigation by DISD's elite unit of former federal agents in the Office of Professional Responsibility or OPR.

"We have highly credentialed people there," Hinojosa said . "They've worked in very important organizations, including the Internal Revenue Service, the Federal Bureau of Investigation; they are highly credentialed."

The OPR was initially created by Hinojosa in the wake of the DISD credit card abuse scandal two years ago. OPR has since referred several cases of theft and fraud for criminal prosecution.

Last April, when Davies was accused of "starting a rumor that the Superintendent of Schools was having an inappropriate relationship with a teacher," she said she was stunned to learn she had become the subject of an OPR investigation.

Two months later, OPR came back with a 64-page internal investigation report concluding that the rumors being spread about Hinojosa were false and that Davies lied when she said she told only two people the rumor.

According the OPR report, "corroborated testimony revealed Davies has actually told four DISD employees."

Last month, Davies — who said she had never been warned or written up by the district — was demoted to assistant principal of an elementary school.

She is now suing DISD for retaliation.

But the suit raises a potentially sticky issue for Superintendent Hinojosa, saying: "It is now apparent that the real purpose of the OPR investigation was to determine who had knowledge of the alleged personal relationship," and put a stop to it.

The lawsuit alleges "OPR and Hinojosa misused their authority. OPR was created to investigate fraud, waste and abuse, not to protect Hinojosa."

The wording of the lawsuit is taken directly from the OPR mission statement, which empowers the unit to "investigate instances of fraud, waste and abuse. "

When asked whether he would direct OPR to investigate someone who was spreading rumors about him, Superintendent Hinojosa told News 8: "If they brought this to my attention or they got information off a hotline, they would ask me how to look at it, that's their responsibility to do. If they asked me, 'should we look into this?' I would say, 'yes.'"

Just days ago, the OPR investigative unit was the subject of a News 8 investigation. Questions were raised about numerous possible oversights or omissions in an OPR probe into grade-changing irregularities at South Oak Cliff High School.

So many problems were identified that Superintendent Hinojosa called for a separate, outside re-investigation of the improper grade-changing allegations.

Only one investigator was assigned to the South Oak Cliff case; two were assigned to investigate the spreading of rumors about the superintendent's personal life.

When asked about using such manpower to investigate rumors about him, Hinojosa said: "They need to prioritize their projects; they know what scope they have, and I would expect them to do that."

E-mail bshipp@wfaa.com