Follow the money

Audit: NYC issued $2.7 billion in noncompetitive education contracts — and often violates its own rules

PHOTO: Alex Zimmerman
City Comptroller Scott Stringer.

The city’s education department routinely violated state law and its own policies in issuing contracts worth billions of dollars — mostly awarded without a competitive bidding process.

That’s according to a blistering audit released Friday by city Comptroller Scott Stringer, the first major audit to scrutinize contracting by the de Blasio education department. It found that the department issued $2.7 billion contracts without a competitive process in fiscal year 2016, or roughly 64 percent of all spending on contracts.

The education department routinely failed to properly oversee its vendors, paid them late, and often directed them to begin work before proper paperwork was filed with the comptroller’s office, according to the audit.

“This investigation shows that DOE acts as though the rules don’t matter,” Stringer said in a statement which included 20 recommendations to fix the process. “When it comes to contracting, this is an opaque agency that refuses to accept responsibility, that often uses inaccurate arguments to defend backwards organizational practices.”

Some highlights:

  • Out of 521 “limited competition” contracts, the city directed vendors to begin work before filing appropriate paperwork on 85 percent of them. In one case, a contract was filed two and a half years after the vendor began work.
  • The education department did not correct sloppy oversight of vendors, despite a 2015 audit that urged them to do so. In some cases, “there was no evidence the DOE conducted performance evaluations, as required by the DOE’s own procurement rules,” the audit found.
  • The DOE spent $2 million to pay for “goods or services that had already been improperly purchased in violation of DOE’s procurement rules.”

Stringer’s findings come less than a month after the comptroller blasted the city’s management of education technology in a separate audit that found the education department has lost track of thousands of computers and failed to create an appropriate tracking system for them. Stringer’s harsh criticisms of Mayor Bill de Blasio’s education department come shortly after endorsing the mayor’s re-election bid.

The Bloomberg administration also faced sharp criticism for awarding contracts without soliciting competing bids. The administration’s critics said the mayor was inappropriately applying business practices to public spending. But Joel Klein, Bloomberg’s longest-serving chancellor, dismissed the criticism, saying he’d “never seen [an audit] that didn’t say you couldn’t follow procurement rules a little closer.”

Will Mantell, an education department spokesman, said the city’s procurement process is “rigorous” and “many of this audit’s conclusions are incorrect.”

“We perform background checks on all vendors and post them online, maintain the appropriate documentation on procurements, and recently implemented an electronic performance evaluation system,” Mantell added.

Spread the wealth

A few Colorado charter schools won ‘the lottery’ in this year’s round of school construction grants

Samantha Belmontes, 7, tries to keep a foam ball rolling in the center of her tennis racket for as long as she can in a class at Ricardo Flores Magón Academy in 2011. (Photo By Helen H. Richardson/The Denver Post via Getty Images)

Five Colorado charter schools are among the nearly three dozen schools getting new roofs, HVAC systems, or even entire new buildings courtesy of state land proceeds, lottery funds, and marijuana tax revenue.

The State Board of Education this month approved $275 million in grants through the Building Excellent Schools Today or BEST program, with schools and districts contributing an additional $172 million for $447 million in total construction projects.

This is the largest award the state has ever given, a 60 percent increase from the nearly $172 million given out last year. It’s also likely to be the largest award for some time to come. With this grant cycle, the board that oversees the BEST program used up its existing ability to issue debt, similar to the limit on a credit card, and next year’s grants will be limited to cash awards of roughly $85 million.

Charter schools traditionally have not done well in the competition for BEST grant money – a sore point for advocates because the schools can’t bond off property tax revenue like school districts can –  but this year, with more to spend overall, the committee that distributes the money also gave more of it to charter schools.

In a typical year, the grant program funds about half of the requests that come in, after prioritizing them based on a number of criteria, including health and safety concerns. This year, almost 70 percent of requests were funded.

Jeremy Meyer, a spokesperson for Colorado Department of Education, said officials in the capital construction program also made a deliberate effort to reach out to charter schools and explain the requirements of the grant program. Some of the successful applicants had applied before and were able to make refinements to this year’s applications. Representatives of charter schools, meanwhile, said this iteration of the BEST board seems more receptive to their needs.

“A lot of it was a function of them having more resources to distribute,” said Dan Schaller of the Colorado League of Charter Schools. “It’s a very positive development, but it’s important to keep it in context that over the last five years, charter schools have received in aggregate less than 1 percent of the funding.”

About 13 percent of Colorado students attend charter schools, which are publicly funded but independently run and exempt from some rules.

Legislation passed in the 2018 session increases the amount of marijuana tax money going to the grant program to 90 percent of all recreational marijuana excise tax revenue. Before, it had been capped at $40 million a year, even as the state took in far more pot tax money than was originally projected. Of this money, 12.5 percent will be set aside for charter school facilities needs.

However, state lawmakers balked at allowing the BEST program to borrow off of marijuana revenue, given the uncertain regulatory future under President Donald Trump and Attorney General Jeff Sessions, who is hostile to legal marijuana.

Without the ability to issue new debt, future awards are more likely to go to roof replacements and new heating and cooling systems than to new buildings, like the new elementary school approved in Adams 14 or the new buildings for Ricardo Flores Magón Academy in northwest Denver and Swallows Charter Academy in Pueblo.

Having the state fund a new building for a charter school is “like winning the lottery,” said Jane Ellis, who works with charters to find low-cost financing for their facilities.

This was Flores Magón Academy’s third attempt at getting a BEST grant. The state-authorized charter school serves roughly 300 students from kindergarten through eighth grade, most of them from low-income families. The school sits in a pocket of unincorporated Adams County at West 53rd Avenue and Lowell Boulevard, near Regis University, and most of the school’s families live in Denver.

In 2011, the school bought the Berkeley Gardens Elementary building, which had been shuttered for a decade. The school was built in 1906 and has several additions.

“Each add-on is very unique and reflective of its decade and comes with its own delightful challenges,” said Kaye Taavialma, a former executive director of the school who is working as a consultant on the building project. “We have to be very cognizant and aware of any precipitation.”

The roof leaks, the pipes leak, there aren’t enough bathrooms, and there’s asbestos in the walls and in the glue that holds down multiple layers of carpet. Portions of the school have been blocked off due to mold problems. The office is in the center of the building, without a clear line of sight on the entrances, creating security concerns. During one storm, a window blew out in a classroom. Fortunately, no students were injured, Taavialma said.

The school got $15.5 million from the BEST program and through a waiver only has to contribute $818,000 to the total project cost, rather than the $3.3 million that would normally be required under a state matching formula. The new building will be built on the site of the play fields and should open to students during the 2020-21 school year.

“For our school, this is tremendous because coming up with $3 million would have been darn near impossible,” Taavialma said. “As we see charters continue to proliferate and they’re being asked to move into buildings that either weren’t constructed to be school buildings, or like we experienced, a school building that has been sitting vacant for a long time, I hope this is a trend that continues.”

You can see the full list of grant winners here.

Fund Students First

Memphis locals rally for extra school funding, demanding it be spent on student needs

PHOTO: Rebecca Griesbach
About 40 education advocates met before today's commission meeting to rally for more direct funding for student needs.

Lobbying for how Shelby County Schools should spend an extra $12.7 million just granted from the county’s surplus, a crowd of 40 parents, students, and education advocates lined the glass-paneled doors of the county commission office today and demanded the money be used to “fund students first.”

But after the commission voted to use the funds only for one-time expenses instead of recurring costs, it is unclear that the advocates’ demands will be met.

Among the crowd was Brenda Crawford, a former student at Georgian Hills Middle, where she said she’s had “firsthand experience with ripped textbooks, leaky roofs, permanent subs, lack of technology, and cut programs.”

Now a rising sophomore at Trezevant High School, Crawford joined Campaign for School Equity’s Student Advocacy Program to push for better college preparation.

“If we get more funding for health specialists and AP classes, then our academic growth can go higher and then kids can have a better learning experience,” she said.

Participating organizations included Stand for Children Tennessee, Campaign for School Equity, Tennessee Charter School Center, Shelby County Young Democrats, the Memphis Grassroots Organizing Coalition, Memphis Education Fund, Memphis LIFT, Catholic peace group Pax Christi, and grassroots organization Gray Panthers. Leaders in these groups know the power of collective action. The last time they stood together, the commission approved a $22 million boost for local schools.

“Partnership is obviously really important,” said Carl Schneider, community organizer for Stand for Children. “I think sometimes these education advocacy groups are seen as really disparate, and funding for our schools is something everyone can really rally behind.”

District leaders originally planned to use the funds for additional services such as behavioral specialists, workforce training, school resource officers, and school counselors.

“Our schools need every one of those things,” said Daniel Henley, a pastor at Journey Christian Church. “And I think this $12.7 million is just a start… Yes to behavioral specialists, yes to guidance counselors – we need them all.”

But some parents are wary that the money may not be spent responsibly, and they urged each other to hold school leaders accountable.

“I don’t want you to make more administrative positions, or make more offices,” said Mahalia Brown, whose son just graduated from Memphis Business Academy. “Make sure the money goes to the kids, to the teachers, to people who actually need it, not just administration.”

Sarah Carpenter, executive director of Memphis LIFT, said she wants the money to go to efforts that tackle adverse childhood experiences as well as special education and facilities fees for charter schools. Her biggest wish, though, was that the money not go to waste.

PHOTO: Rebecca Griesbach
Commissioner Eddie Jones, a supporter of the extra funding, talks with Memphis LIFT parents before the meeting.

“If you got all that money before, and now you’re coming back asking for more money, you’re just throwing money at things and ain’t nothing happening,” she said. “You don’t give kids $100 to go to the mall and they come back with a pack of candy and all their money is gone.”

Commissioners Van Turner and Eddie Jones are both graduates of Memphis public schools. At the pre-meeting rally, they echoed support for additional funding – and for spending it wisely.

“Funding education and funding education properly are the greatest public safety platform or plan that we can have,” Turner said.

If the commission can come back with a plan to make a “smart dollar investment” in its local public schools, said state representative Raumesh Akbari, then political groups like the Shelby County Democratic Caucus and the Tennessee Black Caucus of State Legislators will have renewed momentum.

“You’ll give us the credibility when we go into this new administration in 2019 and we talk about sending some state dollars down to match those county dollars,” he said.