dollars and cents

Comptroller: Taxpayer dollars "squandered" on DOE contracts

The worst examples of overspending on DOE contracts, according to Comptroller William Thompson.

Department of Education contracts routinely cost the city far more than initially estimated, according to an analysis that City Comptroller William Thompson issued just before today’s City Council hearing. The under-estimations could be costing taxpayers a fortune in the price of things like Xerox machines and cafeteria equipment, whose prices could be negotiated at much lower rates if the city could accurately predict just how much schools would end up using them.

One out of every five DOE contracts that ended in the last two years went over its estimated cost by at least 25 percent, according to Thompson’s analysis. In the most egregious overrun, a contract with Xerox Corporation to lease copy machines to schools ended up costing the taxpayers more than $67 million. It had been estimated at a cost of $1 million.

In a crossly worded letter sent to Chancellor Joel Klein today, Thompson, a mayoral candidate who has been highlighting public school issues as part of his criticism of Mayor Bloomberg, called the overruns part of a “troubling pattern of mismanagement” at the department.

Department of Education officials strongly disputed Thompson’s accusations and his figures in an interview and in testimony to the City Council today. The contracts at issue, called “requirements” contracts, can stretch above their estimated costs because they never actually set a total amount of services to be provided. Instead, they set a certain price for the service — say, renting a copy machine, or of placing a classified ad — and let the number of times the department will buy the service stay open-ended.

School officials said that spending more on these contracts than was expected is not necessarily a bad thing. “Whether it’s that more schools actually want the service, that it was actually successful, or whether we found that there was more need in the school, they required more training, say — that’s why you see those contracts,” Photo Anagnostopoulos, the department’s chief operating officer, told City Council members today.

School officials also said Thompson’s analysis overstates the difference between projected and actual costs, sometimes “wildly.” Contracting staff at the department have already found several cases where the comptroller’s figures are “wildly different” from their own records, David Ross, who runs contracting for the department, told me in an interview.

Ross said that city records show that the Xerox contract was estimated originally at $31 million, not $1 million, as Thompson reported. That means the overr-run was $36 million, not $66 million. He said another contract for copy machines, with T&G Industries, was originally estimated at a higher cost than it ended up being: $31 million, compared to an ultimate cost of about $14 million. Thompson’s report said T&G’s estimated original cost was $1 million.

In his letter to Klein, Thompson argues that under-estimating how much schools will want to use a service hurts the Department of Education’s leverage in negotiating a low price. He describes that as “contrary to sound business practice.” In an interview with reporters today, he called the practice “frightening.” “If it was a few contracts that would be one thing,” he said. “But…the over-spending continues and continues to grow.”

Ross said he agrees that under-estimating the amount of interest schools have in services could be a problem if it means giving up opportunities to negotiate a lower price. (If the school system knew it was going to buy, say, a thousand Xerox machines rather than 10, it could probably persuade Xerox to lower the price of each machine.) “I understand my responsibilities here,” he said.

But he said that the department does hunt for these kinds of opportunities. In one of the cases the comptroller’s letter to Klein highlights, a contract with Meizner Inc. for computer software, the department actually realized a few years ago that it was spending above its estimate — and negotiated a 20% price discount.

The comptroller’s report lists the estimated cost of the contract at $135,000, which then ballooned to spending of $5.6 million. Ross said his figures suggest the actual estimated cost was $1.35 million. He said the $5.6 million figure could have been even higher had officials not negotiated a price discount.

The comptroller’s letter to Klein and full press release are after the jump.

Thompson’s press release:


-Comptroller probe finds 1-in-5 contracts balloon past costs, including one that jumped by 6,700 percent-

New York City Comptroller William C. Thompson, Jr. today charged that the Department of Education has routinely let hundreds of contract costs balloon well past their expected costs – including one that jumped by 6,700 percent.

“It’s simply a case of runaway contracts,” Thompson said. “It’s reprehensible that the Department of Education plays by its own rules and goes on some insane spending spree. And who pays? Taxpayers, parents, children, all of us.”

Thompson aimed his harsh criticism in a harshly worded letter to Schools Chancellor Joel Klein for not containing the swollen contract costs. Thompson then submitted testimony spelling out his fiery findings to the New York City Council Committees on Education and Contracts.

“The Department of Education continues to maintain a long-held and ill-considered opinion that its contracts and other purchases do not require the same stringent safeguards as those of other local and state agencies,” Thompson said. “As a result, taxpayer money continues to be squandered through an opaque process that does not take advantage of the competitive marketplace. This is unacceptable.”

What did Thompson find?

  • One out of every five – or 20 percent – of the Department’s contracts that ended in the last two fiscal years inevitably cost well over the estimated amount by 25 percent or more.
  • That rate already continues to climb. So far, in the current fiscal year, 27% of the Department’s requirement contracts have swollen costs topping 125% – and there’s still three months left until the fiscal year ends.
  • One contract, with the Xerox Corporation, was supposed to cost at most $1 million – but the Department spent close to $68 million – a 6,759 percent jump in costs. Another, with Ideal Restaurant Supply, jumped from $15,000 to more than $852,000 – a 5,530 percent jump.
  • During those two fiscal years combined, the Department issued 372 requirement contracts, originally estimated to cost $325,236,416 but which inevitably exceeded those estimates by 25% or more. The final tab wound up at more than $1 billion.
  • Additionally, many recipients of the contracts – 127 of them – got the lucrative work without any competition because the Department didn’t put the work out to bid. Those 127 contracts were supposed to cost $195 million at most. But the Department spent $525 million on them.

“The Department’s purchases exceed contract amounts by such a large margin that it raises fundamental questions about the integrity of the Department’s entire contracting process,” Thompson said. “These actions display a clear pattern of mismanagement when it comes to expenditures, and the Chancellor and the Mayor must fix this situation and rein in these costs.”

The Comptroller over the last seven years has repeatedly exposed fiscal incompetence and a lack of accountability and transparency in budgeting and contracting at the Department of Education. Key among his concerns has been a disturbing pattern of so-called no-bid contracts, which are executed without competition.

“The Department must create and follow an open and formal procurement practice and demonstrate that it will spend the public’s money in an accountable manner,” Thompson said. “I call on the Department to take immediate action to ensure that the scarce public dollars entrusted to it are used prudently. Doing so will benefit not just our schoolchildren and our school system, but our city as well.”

call out

Our readers had a lot to say in 2017. Make your voice heard in 2018.

PHOTO: Chris Hill/Whitney Achievement School
Teacher Carl Schneider walks children home in 2015 as part of the after-school walking program at Whitney Achievement Elementary School in Memphis. This photograph went viral and inspired a First Person reflection from Schneider in 2017.

Last year, some of our most popular pieces came from readers who told their stories in a series that we call First Person.

For instance, Carl Schneider wrote about the 2015 viral photograph that showed him walking his students home from school in a low-income neighborhood of Memphis. His perspective on what got lost in the shuffle continues to draw thousands of readers.

First Person is also a platform to influence policy. Recent high school graduate Anisah Karim described the pressure she felt to apply to 100 colleges in the quest for millions of dollars in scholarships. Because of her piece, the school board in Memphis is reviewing the so-called “million-dollar scholar” culture at some high schools.

Do you have a story to tell or a point to make? In 2018, we want to give an even greater voice to students, parents, teachers, administrators, advocates and others who are trying to improve public education in Tennessee. We’re looking for essays of 500 to 750 words grounded in personal experience.

Whether your piece is finished or you just have an idea to discuss, drop a line to Community Editor Caroline Bauman at

But first, check out these top First Person pieces from Tennesseans in 2017:

My high school told me to apply to 100 colleges — and I almost lost myself in the process

“A counselor never tried to determine what the absolute best school for me would be. I wasted a lot of time, money and resources trying to figure that out. And I almost lost myself in the process.” —Anisah Karim     

Why I’m not anxious about where my kids go to school — but do worry about the segregation that surrounds us

“In fact, it will be a good thing for my boys to learn alongside children who are different from them in many ways — that is one advantage they will have that I did not, attending parochial schools in a lily-white suburb.” —Mary Jo Cramb

I covered Tennessee’s ed beat for Chalkbeat. Here’s what I learned.

“Apathy is often cited as a major problem facing education. That’s not the case in Tennessee.” —Grace Tatter

I went viral for walking my students home from school in Memphis. Here’s what got lost in the shuffle.

“When #blacklivesmatter is a controversial statement; when our black male students have a one in three chance of facing jail time; when kids in Memphis raised in the bottom fifth of the socioeconomic bracket have a 2.6 percent chance of climbing to the top fifth — our walking students home does not fix that, either.” —Carl Schneider

I think traditional public schools are the backbone of democracy. My child attends a charter school. Let’s talk.

“It was a complicated choice to make. The dialogue around school choice in Nashville, though, doesn’t often include much nuance — or many voices of parents like me.” —Aidan Hoyal

I grew up near Charlottesville and got a misleading education about Civil War history. Students deserve better.

“In my classroom discussions, the impetus for the Civil War was resigned to a debate over the balance of power between federal and state governments. Slavery was taught as a footnote to the cause of the war.” —Laura Faith Kebede

Weekend Reads

Need classroom decor inspiration? These educators have got you covered.

This school year, students will spend about 1,000 hours in school —making their classrooms a huge part of their learning experience.

We’re recognizing educators who’ve poured on the pizazz to make students feel welcome. From a 9th-grade “forensics lab” decked out in caution tape to a classroom stage complete with lights to get first graders pumped about public speaking, these crafty teachers have gone above and beyond to create great spaces.

Got a classroom of your own to show off? Know someone that should be on this list? Let us know!

Jaclyn Flores, First Grade Dual Language, Rochester, New York
“Having a classroom that is bright, cheerful, organized and inviting allows my students to feel pride in their classroom as well as feel welcome. My students look forward to standing on the stage to share or sitting on special chairs to dive into their learning. This space is a safe place for my students and we take pride in what it has become.”

Jasmine, Pre-K, Las Vegas, Nevada
“My classroom environment helps my students because providing calming colors and a home-like space makes them feel more comfortable in the classroom and ready to learn as first-time students!”


Oneika Osborne, 10th Grade Reading, Miami Southridge Senior High School, Miami, Florida
“My classroom environment invites all of my students to constantly be in a state of celebration and self-empowerment at all points of the learning process. With inspirational quotes, culturally relevant images, and an explosion of color, my classroom sets the tone for the day every single day as soon as we walk in. It is one of optimism, power, and of course glitter.”

Kristen Poindexter, Kindergarten, Spring Mill Elementary School, Indianapolis, Indiana
“I try very hard to make my classroom a place where memorable experiences happen. I use songs, finger plays, movement, and interactive activities to help cement concepts in their minds. It makes my teacher heart so happy when past students walk by my classroom and start their sentence with, “Remember when we…?”. We recently transformed our classroom into a Mad Science Lab where we investigated more about our 5 Senses.”


Brittany, 9th Grade Biology, Dallas, Texas
“I love my classroom environment because I teach Biology, it’s easy to relate every topic back to Forensics and real-life investigations! Mystery always gets the students going!”


Ms. Heaton, First Grade, Westampton, New Jersey
“As an educator, it is my goal to create a classroom environment that is positive and welcoming for students. I wanted to create a learning environment where students feel comfortable and in return stimulates student learning. A classroom is a second home for students so I wanted to ensure that the space was bright, friendly, and organized for the students to be able to use each and every day.”

D’Essence Grant, 8th Grade ELA, KIPP Houston, Houston, Texas
“Intentionally decorating my classroom was my first act of showing my students I care about them. I pride myself on building relationships with my students and them knowing I care about them inside and outside of the classroom. Taking the time to make the classroom meaningful and creative as well building a safe place for our community helps establish an effective classroom setting.”


Jayme Wiertzema, Elementary Art, Worthington, Minnesota
“I’m looking forward to having a CLASSROOM this year. The past two years I have taught from a cart and this year my amazing school district allowed me to have a classroom in our school that is busting at the seams! I’m so excited to use my classroom environment to inspire creativity in my students, get to know them and learn from their amazing imaginations in art class!”


Melissa Vecchio, 4th Grade, Queens, New York
“Since so much of a student’s time is spent inside their classroom, the environment should be neat, organized, easy to move around in but most of all positive. I love to use a theme to reinforce great behavior. I always give the students a choice in helping to design bulletin boards and desk arrangements. When they are involved they take pride in the classroom, and enjoy being there.”