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.

Investment strategy

Here are the initiatives Memphis’ education philanthropists will focus on in 2018

PHOTO: Matt Detrich/The Indianapolis Star
A charter leader from Indianapolis, Marcus Robinson is now CEO of the Memphis Education Fund, a philanthropic collaborative that invests in education improvement initiatives for Memphis schools.

A Memphis philanthropic group has shed its “Teacher Town” name but still plans to spend this year recruiting new teachers while also investing in growing the city’s single-site charter operators.

Unlike similar organizations in other cities across the country, the Memphis Education Fund plans to center its search locally — by helping local universities and groups prepare teachers for the challenges of urban education.

Originally called Teacher Town, the fund was created in 2014 by Memphis education leaders and local philanthropists with a goal of transforming Memphis into a destination city for talented teachers. That vision built on a major investment by the Bill & Melinda Gates Foundation to improve teaching in the city.

In 2016, the group adopted a broader goal of improving all schools; brought in a new leader, Marcus Robinson, from Indianapolis; and joined Education Cities, a national collective of local groups seeking to reshape schools in their cities

In part inspired by changes that have taken place in Indianapolis, where Robinson had worked as a charter leader, Education Cities coordinates local groups advocating for the “portfolio model,” a vision in which cities have more charter schools and let district schools operate more like charters.

Robinson told Education Cities a year ago that his next step for Memphis would be “to unite everyone around a common set of operating principles, expectations, and evaluations to create a level playing field for each operator to perform optimally.” This appears to be in line with the portfolio vision, which aims to give all schools flexibility to operate as they see fit, while holding them equally accountability for results.

But instead of bringing the Shelby County Schools district and local charter operators closer together, 2017 saw them waging open competition for students.

For 2018, Robinson is tackling priorities that are not likely to inflame divisions. The fund will continue to focus on principal training, along with helping single-site charter organizations, boosting reading skills among the city’s youngest students, and recruiting new Memphis teachers.

“We’re hell-bent to fill classrooms with teachers,” said Robinson, pointing to elementary schools as having some of the greatest need.

Memphis will need an estimated 3,600 new teachers by 2020, said Lesley Brown, who directs how the fund invests its money to attract, develop and retain talent for local schools.

Rather than recruiting teachers from outside of Memphis, Teacher Town’s original focus, Robinson said the fund is strengthening partnerships with local universities and teacher preparation programs, such as one launched at Rhodes College in 2016 with the help of a $7 million gift from the fund.

The Memphis Education Fund receives support from several local philanthropies, including The Pyramid Peak Foundation and the Hyde Foundation. (Chalkbeat also receives support from Hyde; read about our funding here.)

Robinson added that the fund also is ramping up its support for single-site charter operators, such as helping teachers implement new literacy curriculum at Memphis Delta Preparatory Charter School and STAR Academy Charter School.

“There’s less of an appetite for national charter organizations to move into Memphis,” he said. ”The next phase isn’t national CMOs (charter management organizations), but how do we encourage single-site schools to evolve.”

The group has doled out such grants to charters as part of a larger effort to boost student reading levels and develop teacher training for Core Knowledge Language Arts and KIPP Wheatley.

“Early literacy is a huge focus,” Robinson told Chalkbeat. “When we look at the test scores, early elementary scores are horrific. What’s the root? Access to quality literacy instruction.”

Paying for school

Sweeping study proposes major changes to the way schools are funded in Michigan

Michigan needs to change the way it funds education so that schools get more money for students who need extra attention — such as those who live in poverty and those who don’t yet have a strong command of the English language.

That’s the top recommendation from a prominent group of educators, policymakers, and business leaders who have been studying Michigan’s school funding system for much of the past two years.

While many states use a complex formula that gives schools more money if they serve children facing extra challenges, Michigan has long used a system that distributes the same amount of money for virtually all students, regardless of their needs.

The state provides some extra funding for students with disabilities — but not nearly enough, according to a state study last year that found schools across Michigan are getting $700 million less a year than they need to serve those students.

The study released Wednesday recommends a major restructuring so that schools would be fully funded for special education programs and would get extra funds to provide resources to students who need extra help. With that money, schools could offer lower class sizes, add counselors and social workers, and give teachers more support, the report says.

The study was conducted by Augenblick, Palaich and Associates on behalf of the Michigan School Finance Research Collaborative.

The collaborative — including top business and education leaders across the state — came together in 2016 after an earlier “school adequacy study” was largely ignored by political leaders.

The earlier study, which was funded by the state legislature, recommended that the state significantly increase the amount of money it sends to schools per student.

The collaborative hopes this new more robust study, which clocks in at more than 300 data-packed pages, will have a greater impact.

Since this study used multiple methods to determine the right funding level for schools, it will be more difficult to ignore, the group hopes.

The study — paid for with $843,000 from major foundations and 18 county school districts — included interviews with hundreds of educators, including district and charters school teachers. Those interviews helped researchers determine how much money schools need to more effectively do their jobs.

The study examined geographic cost differences in different parts of the state, labor cost differences, and other factors and determined that schools need approximately $9,590 each for students who don’t have special needs, including funds that would come from the state and federal governments.

The study recommends that schools get 35 percent more for students living in poverty, between 50 and 70 percent more for students who are learning English, 70 percent more for students with mild disabilities and 115 percent more for students with moderate disabilities.

Among other recommendations in the  report is that charter schools receive the same per-student funding as districts. Currently, the state’s funding system pays some districts more per student than others based largely on historic funding levels as opposed to current needs. Some districts — including most charter schools — are currently getting around $7,600 per child from the state while others get thousands of dollars more

It’s difficult to compare how much funding schools are getting now with the proposed $9,590 per student because schools get a mix state and federal dollars and the $9,590 doesn’t include things like transportation dollars.

The report suggests that the state use a new approach to student transportation in which transportation dollars are distributed differently, taking into account differences between urban and rural school districts.

The report did not put a price tag on the cost of implementing the recommendations and did not spell out how Michigan could come up with the extra money. But members of the collaborative said they hope lawmakers will consider the report as they make policy changes. 

“The issue here is not about whether you live in Farmington or whether you live in Ingham County, it’s about every child ought to have the opportunity to be successful and that ought to be our goal in Michigan,” said Randy Liepa, the Superintendent of Wayne County’s intermediate school district. “I don’t think there will be significant pushback on that.”

The findings were released Wednesday morning, with press conferences planned in Lansing, Grand Rapids, and in the Detroit area.

Read the full report here: