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 criticized the city's ability to keep track of education technology in July.

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.

Alliance

Memphis just gained an important ally in its legal battle with Tennessee over school funding

PHOTO: MNPS
The board for Metropolitan Nashville Public Schools voted Tuesday to become a co-plaintiff in Shelby County Schools' funding lawsuit against the state of Tennessee.

For more than two years, a funding lawsuit by Memphis school leaders has been winding through the state’s legal system.

Now, as the litigation inches closer to a court date next year, Shelby County Schools has gained a powerful ally in its battle with Tennessee over the adequacy of funding for its schools and students.

The board for Metropolitan Nashville Public Schools voted unanimously Tuesday to become a co-plaintiff in the case.

The decision ends almost three years of talk from Nashville about going to court.

In 2015 at the urging of then-director Jesse Register, the district’s board opted for conversation over litigation with Gov. Bill Haslam’s administration about how to improve education funding in Tennessee.

But Register moved on, and the board’s dissatisfaction grew as the percentage of state funding for the district’s budget shrank. Adding to their frustration, Haslam backed off last year from an enhanced funding formula approved in 2007 during the administration of his predecessor, Phil Bredesen.

“We’ve just come to grips with the harsh reality that we are a chronically underfunded school system,” said Will Pinkston, a board member who has urged legal action.

Nashville’s decision is welcome news for Memphis. A statement Wednesday from the state’s largest district called the lawsuit “the most important civil rights litigation in Tennessee in the last 30 years.”

“When you have the two largest school districts in Tennessee on the same side, I think it’s very powerful,” added former board chairman Chris Caldwell, who has championed the lawsuit in behalf of Shelby County Schools.

Both boards are working with Tennessee-based Baker Donelson, one of the South’s largest and oldest law firms. It has offices in both cities.

“We believe that our original case had a strong message about the inadequacy of education funding in Tennessee,” said Lori Patterson, lead attorney in the case from Memphis. “We believe that having the second largest district in the state join the suit and make the same claims only makes the message stronger.”

PHOTO: TN.Gov
Gov. Bill Haslam

Haslam’s administration declined to comment Wednesday about the new development, but has stood by Tennessee’s funding model. In a 2016 response to the Shelby County lawsuit, the state said its formula known as the Basic Education Plan, or BEP, provides adequate funding under state law.

But Shelby County, in its 2015 suit, argues that not only does the state not adequately fund K-12 schools, it doesn’t fully fund its own formula. And the formula, it charges, “fails to take into account the actual costs of funding an education,” especially for the many poor students in Memphis. To provide an adequate education, the lawsuit says the district needs more resources to pay for everything from math and reading tutors to guidance counselors and social workers.

States often get sued over funding for schools — and frequently lose those cases. In Tennessee, state courts heard three such cases from the late 1980s to the early 2000s, siding with local districts every time. Those suits keyed in on built-in inequities in the state’s funding formula that cause some districts to get more money than others.

This time, the argument is about adequacy. What is the true cost of educating today’s students, especially in the shift to more rigorous academic standards?

Tennessee is also the defendant in a separate funding lawsuit filed in 2015 by seven southeast Tennessee school districts including Hamilton County Schools in Chattanooga.

Pinkston said Nashville opted to join the Memphis suit because its arguments are most applicable to the state’s second largest district. “Our student populations are very similar in terms of high socioeconomic needs,” he said.

transportation

Parent concerns prompt Denver Public Schools to change how it’s spending a chunk of tax dollars

PHOTO: RJ Sangosti/Denver Post
An RTD bus heads downtown along Colfax Ave. in 2016.

Denver Public Schools is changing course on how it will spend $400,000 in local tax dollars earmarked for student transportation after parents and community organizations claimed the district had not followed through on a promise to increase options for high school students.

The dollars are part of a $56.6 million tax increase voters approved in November. This school year, the district allocated $273,000 to buy bus passes for 630 additional students at two schools: Northfield High and Denver School of Innovation and Sustainable Design. However, it earmarked the remaining $127,000 to pay for transportation for special needs students.

Superintendent Tom Boasberg announced Monday evening that the $127,000 set aside for special needs transportation would be immediately reallocated so that all $400,000 is being spent on bus passes for high school students.

“We’ve heard loud and clear from the community,” Boasberg said.

Parents and other advocates say that while the reallocation is a move in the right direction, it doesn’t relieve all of their worries about how the money will be spent.

“That’s great,” parent Karen Mortimer said. “But what is your next step?”

Transportation is a hot-button issue for Denver Public Schools. The district has been nationally recognized for its school choice system, which allows its 92,000 students to request to attend any one of its more than 200 schools. However, DPS does not provide transportation to most students who choose a school that is not the assigned school in their neighborhood.

Critics argue that not providing transportation to all students leaves families who don’t have a vehicle or the means to transport their children across town with no choice at all.

Nearly half of the district’s 20,623 high school students — 9,256 — don’t qualify for DPS transportation because they don’t attend their assigned schools, according to numbers presented to the school board at a work session Monday night.

Another 4,394 don’t qualify for transportation because they live within three and a half miles of their assigned schools, a distance the district considers walkable.

In a bid to reduce those numbers, a committee of 75 parents, students, teachers and taxpayers tasked with recommending how to spend the tax revenue suggested earmarking $400,000 each year for a “new effort to increase high school students’ access to high quality schools and educational opportunities through greater transportation options.”

Whereas most ideas for how to spend the $56.6 million in tax revenue came from DPS staff, the idea to expand transportation originated with the committee members.

The final recommendation, which was adopted by the school board, said DPS would “work with community stakeholders to secure matching funds, and design and implement a test effort to positively impact students,” which has not yet happened.

If the test effort wasn’t working, the recommendation said, the district could use those funds “for other efforts to increase access to educational opportunities.”

In a statement Friday, Superintendent Tom Boasberg said the district was using the funds “as promised,” a contention advocates disputed, to pay for transportation for high school students and students with special needs. DPS saw an increase this year of 78 students whose needs exceed the district’s capacity to serve them and who are being bused elsewhere by third-party companies, according to a district spokeswoman and information provided to the school board.

But Boasberg said Monday that as of this month, the $127,000 that was earmarked for special education transportation would be spent on high school students instead. District officials estimated that sum would buy an additional 370 bus passes. Boasberg said they “look forward to a discussion with the community” about how to distribute them.

Meanwhile, community members said they’re still confused about how DPS distributed the 630 additional passes it already purchased with the $273,000 in tax revenue.

“The community was left out of the loop,” said Matt Samelson of the Denver-based Donnell-Kay Foundation, which has been pushing for the district to come up with a plan for how to use the $400,000 before February, when families must make their school choices for next year. (The foundation is a financial supporter of Chalkbeat).

District spokeswoman Nancy Mitchell told Chalkbeat that most of the 630 passes went to students at Northfield High, a comprehensive high school that opened in northeast Denver in 2015. The district had been providing yellow bus service to Northfield because the Regional Transportation District didn’t serve the area. But it does now, Mitchell said, so Northfield students who meet the district’s criteria for bus passes got them this year.

To qualify for transportation, high school students must attend their assigned schools and live more than three and a half miles away. District policy allows other students to receive transportation, too. That includes those learning English as a second language, for example, or those attending certain types of schools, including magnet and Montessori schools.

Students at Denver School of Innovation and Sustainable Design, which also opened in 2015, received a portion of the 630 passes because the district “determined DSISD most resembles a pathway school for purposes of transportation, as they do not have an enrollment boundary,” according to a statement from DPS spokeswoman Jessie Smiley.

“Pathway” schools are alternative schools that serve students who’ve struggled elsewhere. DSISD is not a pathway school. It was rated “blue” this year, the highest rating on the district’s five-color scale.

Not counting the students who received the 630 extra passes purchased with the tax money, 2,565 high school students were eligible this year for Regional Transportation District bus passes, according to district officials. That’s up from 2,376 last year. In addition, nearly 5,000 high school students qualify for yellow bus service because they attend a school in an “enrollment zone,” which is essentially an enlarged boundary that contains several schools.

Boasberg said that while the district would like to provide transportation to even more students, it must balance spending money on buses with spending money in classrooms. DPS already spends $26 million of its nearly $1 billion budget on transportation, according to information provided to the school board. Even if it wanted to hire more drivers, district officials said they’re having a hard time finding them in a thriving economy; DPS is down 40 drivers this year.

To come up with a solution, Boasberg said the district must collaborate with the city and the Regional Transportation District, which has commissioned its own task force to come up with new pricing recommendations. DPS officials have been participating in that group.

“Ultimately, RTD has assets and abilities as a transportation entity to specialize in what they specialize in,” Boasberg said at Monday’s school board work session. “Our specialty is in educating students. The more we can be collaborative with RTD … the better.”

But advocates said participating in other agencies’ processes isn’t enough. DPS should be leading its own investigation into how to expand transportation options by gathering parents, students and community members to come up with ideas, they said.

“There have been lots of conversations but DPS hasn’t led any of them,” Samelson said.

Unlike other programs and initiatives funded by the tax increase and suggested by district staff, the transportation expansion proposal hasn’t gotten the attention it deserves, he said.

“We’re trying to help the district increase access to schools for students but we feel pushback, we feel stonewalled, we feel like we have to argue our way into this premise that increased transportation is good for kids,” Mortimer said. “We just don’t understand it.”