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.

Following the money

Tennessee school systems are getting the money they’re promised — more or less, state comptroller reports

A comprehensive review of funding for Tennessee schools found that almost every district received either too much or too little money this year based on the state’s formula for educating its children.

But in a budget of $4.5 billion for K-12 schools, the mistaken allocations were relatively small, and the review ostensibly verified that districts are receiving roughly what they’re supposed to under Tennessee’s Basic Education Program, or BEP.

The state comptroller’s report, released Thursday, said that allocations were slightly off for 141 out of 142 BEP-funded districts, based on the review by its Office of Research and Education Accountability. The discrepancies were mostly due to how districts reported their data on local funding capacity.

As a result, the state over-allocated almost $7 million and under-allocated almost $10 million. A spokeswoman said the Department of Education already has adjusted distributions accordingly.

This is the second year that the comptroller — charged with making sure that taxpayer money is used effectively and efficiently — has reviewed state spending on schools to make sure that allocations are in line with the BEP, a complex formula based on 45 components ranging from special education instruction to staff benefits and insurance.

“We spend over 4.5 billion state dollars on BEP, and it’s an enormous amount of money,” said Russell Moore, who directs the comptroller’s education oversight arm known as OREA. “That’s why Comptroller (Justin) Wilson has repeatedly emphasized the importance of making BEP spending transparent, understandable and verifiable.”

On that note, OREA has updated its interactive BEP calculator to allow anyone to estimate how changing components or ratios under the formula affect funding. For instance, how much would the state contribute toward adding school nurses under the BEP? The calculator, available for download on OREA’s website, provides a line-by-line breakdown of the BEP calculation for every school district.

trumped up problems

As budget talks begin, top New York lawmaker eyes cuts from Washington

PHOTO: Photo by Jonathan Fickies for UFT
UFT President Michael Mulgrew interviews New York State Assembly Speaker Carl Heastie.

It’s Washington politics — not Albany’s — that are keeping state Assembly Speaker Carl Heastie up at night as he girds himself for New York’s coming budget season.

New York is facing its own $4.4 billion budget deficit amid ongoing power struggles in Albany. Yet it’s the tax overhaul being pushed by Congressional Republicans and President Donald Trump, along with possible federal spending cuts — both of which could take a bite out of funding for New York schools — that are worrying Heastie, a Democrat who represents the Bronx and is closely aligned with the New York City teachers union.

“Absent any other federal action that can do damage, I think we can manage that so that our schools will be fine and our healthcare can be fine,” he said Tuesday during a preview of next year’s legislative session hosted by the union. “It’s the unknown of what’s going to happen. What’s the next bad thing that Washington is looking to do.”

He was speaking at the union’s headquarters in Manhattan’s Financial District, where he was interviewed by UFT President Michael Mulgrew as part of an ongoing discussion series. (Critics were quick to pounce on the event as evidence that Heastie does the union’s bidding.)

Heastie — who will negotiate the state budget with Democratic Gov. Andrew Cuomo and the state Senate — has championed union issues in Albany. He supports the creation of “community schools,” which are filled with social services for students and their families, and has been less friendly to charter schools than his counterparts in the Senate.

During the discussion, Heastie did not say how much funding he would like to see allocated to education in the 2018-19 budget. But he noted that Cuomo typically builds a roughly billion-dollar increase to school aid into his budget — and that the Democratic-controlled Assembly usually looks to add more.

The state’s top education policymakers, the Board of Regents, released a budget proposal on Monday calling for a $1.6 billion increase in education spending. That is significantly less than their request last year, a sign they are nervous about the current budget climate.

Despite the funding uncertainty, Heastie can at least breathe a sigh of relief that he will not have to battle again this year to keep a different ally — Mayor Bill de Blasio — in charge of the city schools. For the first time, de Blasio secured a two-year extension of mayoral control last year, giving him and his backers a break from a fight that consumed the last three sessions.

Instead, charter-school policy could once again flare up. Last year, a dispute over charter funding helped push the budget well past its deadline. This year, Heastie said, he is not yet aware of any new charter-related bills heading into the new legislative session, which begins in January.

Meanwhile, he and the union are mulling changes they’d like to see to teacher evaluations.

In 2015, after fierce resistance by the unions, the state tied teacher ratings much more closely to state test scores. The move helped spark a statewide boycott of the tests, leading the Board of Regents to pass a moratorium on the use of grades 3-8 math and English tests in teacher evaluations.

However, the moratorium is set to sunset in 2019, which will likely eventually force lawmakers to change the law. Heastie did not say that he will push for a repeal this year, but did say it is time to “start the dialogue” about how to improve evaluations.

“I don’t know if we can get to a final idea,” he said. “But I think the earliest we could give schools and school districts around the state [notice] that there will be a different way to look at our student progress, I think the better.”