One small win for humankind: Comptroller rejected $27 M no bid Wireless contract

One small but significant victory:  public outrage has managed to stop the state contract with Wireless Generation, owned by Rupert Murdoch and run by Joel Klein.   

As reported in today's Daily News, State Comptroller Di Napoli rejected the egregious $27 million contract that the NY State Education Department  wanted to award the company, to build a statewide data system modeled after the highly deficient city system known as ARIS.  

We were the first to post a petition to Di Napoli, the Regents, and the feds, after the Daily News broke the story, and many other petitions and letters to the Comptroller followed.

For some of the reasons this contract should have been rejected see here.

If you would like to thank Comptroller Di Napoli, you can send an email to: contactus@osc.state.ny.us

Keep safe everyone on the East Coast, from Hurricane Irene, but savor this win for accountability and for someone who dared to say NO to educrats , apparently intent on wasting taxpayer money and reward their friends and cronies with no-bid contracts. These wins have been few and far between in recent years.

The widening Murdoch scandal and the Wireless no-bid contracts: sign our petition now!

A widening scandal envelopes Rupert Murdoch’s News Corp, revealing how his employees in the UK hacked into the cell phones of murder victims, paid off policemen, and may have even stolen the medical records of the former Prime Minister’s newborn son.  What is indisputable is that his papers used offensively bullying tactics against elected officials to dissuade them from criticizing his methods or investigating his activities.  The latest allegation is that News Corp’s journalists may even have hacked into the phones of American victims of the 9/11 terrorist attacks, leading several US Senators to call for a Congressional investigation.  

NYC’s former Chancellor, Joel Klein, now works for Murdoch, and has been put in charge of his “internal investigation” of this scandal. At the same time questions have been raised surrounding several no-bid contracts that the NY State Education Department and the NYC Department of Education intend to award Wireless Generation, the company that Murdoch bought immediately after Klein announced he would run Murdoch’s new online learning division.   

The state no-bid contract is $27 million for Wireless to build a statewide version of ARIS, the expensive data system that has received widespread criticism from NYC parents, teachers, and principals alike, who say that there are far less expensive and more useful data systems available.  There are also troubling conflict of interest questions, given that these contracts were announced shortly before and after Joel Klein’s departure from the DOE. See also the summary of this controversy from Think Progress.

Sign our petition now, asking the State and City Comptroller to reject these egregious no-bid contracts with Murdoch’s Wireless Generation, with copies sent to the State Education Commissioner John King, the NY Board of Regents, NYC Chancellor Walcott, and the federal independent investigator for the US Dept. of Ed (since the state program is supposed to be paid for with federal funds.) 

A timeline of these events, with more explanation and links to back-up information, is available below.

October 7, 2010:  the NYC Panel for Educational Policy votes to approve a no-bid, 17 month extension of a contract with Wireless Generation for their “School of One”, at an annual amount of $1.9 million.  Wireless is the lead partner in Joel Rose’s online learning project, the School of One.  This contract will pay for six consultants not to exceed $2.7 million (which works out to annual payments to each at over 300K per year.) 

 November 9, 2010:  Joel Klein announced he will resign from DOE to work for Rupert Murdoch as executive VP of News Corp, to head its new “educational” online division, “overseeing investments in digital learning companies.”

 November 22, 2010: It is announced that Rupert Murdoch will purchase 90% of Wireless Generation for $360 million; a company with 400 employees; presumably Joel Klein will oversee this company in the new online division.  Some observers say that he overpaid, as the price is “at a plus “6.5x revenue multiple. That's crazy.”  In a story in the NYT , a spokesperson for News Corp claims that the transaction had been in the works for several months and that Klein “had no involvement” in it, though it is hard to believe that Murdoch would purchase his first online learning company with no input from the person who will head the division.

According to the Times article, “Conflict-of-interest rules set strict limits for city employees, both during and after their tenure, which could make Mr. Klein’s transition a tricky one. City employees are never allowed to disclose confidential information about the city’s business dealings or future strategy, and they cannot communicate with the agency for which they worked for one year after they leave. The rules also bar them from ever working on matters they had substantial involvement in as city employees. “

A spokesperson for DOE says that Klein has now recused himself from all business dealings between the department and Wireless Generation “as soon as we learned that News Corp had acquired” the company, which presumably occurred the day before,  but does not mention if Klein had recused himself earlier, when the decision to extend the Wireless contract was first announced.

January 3, 2011: Joel Klein leaves DOE and takes over at News Corp.

May 4, 2011:  DOE announces its plans to “renew” another no-bid contract with Wireless worth $4.5 million — $1.5 million a year for three years. The document describing the contract says that it is for “published and copyrighted assessment and testing materials.”  The DOE refuses to make the contract available to Patrick Sullivan, a PEP member who requested a copy before the vote.

May 18, 2011: The  PEP rubberstamps the contract, as they have with every other contract ever brought before them.  The vote is 8-1, with two abstentions.

June 9, 2011: NY SED asks the state comptroller permission to award a $27 million no-bid contract to Wireless Generation, to build a data system like ARIS; with federal Race to the Top funds, and that the no-bid aspect of the contract is necessary because of the tight timeline. Wireless Generation claims that Klein had nothing do with the state’s decision to grant them this contract.

Wireless earlier took over the ARIS contract from IBM, which cost city taxpayers $80 million to build.  The contract and purchase price was widely called a boondoggle and a super-mugging at the time; later, these warnings were borne out when teachers and principals pointed out its numerous flaws, especially as compared to more useful data systems that were acquired by schools for relative pennies. Recently, NY1 ran a three part series, pointing out the numerous deficiencies of ARIS.

Yet despite the overwhelming negative experiences of NYC educators on the ground, and their views that there are many other data systems that are far superior to ARIS, SED’s waiver request to the state comptroller claims that “there is no other vendor with the experience, demonstrated capacity, or aligned business model” to rival Wireless, and that ARIS . received “national recognition from Arne Duncan.”

The request claims that Wireless has unique capabilities; for example, it “understands what ‘ELL’ (English Language Learner) means and how analysis of data for students who are classified as ‘ELLs’ would be relevant for an educator.”  

June 15, 2011: City Comptroller Liu reveals he has rejected the $2.7 million Wireless contract that the PEP approved in October, a few weeks before Klein resigned.    He also says that he has stopped payments on checks that DOE attempted to pay Wireless, after his rejection.  Liu says the contract was rejected because Klein failed to provide a letter stating that he had not been involved in approving this contract in the first place.

DOE claims that the Comptroller has no right to reject the contract, and provides a letter from General Counsel Michael Best, which says that Klein had recused himself from any work on Wireless Generation contracts as soon as the company was acquired by News Corp, which occurred in late November.  (Again, as before, there is no mention if Klein was involved before that time.)  The City comptroller spokesperson says, "Because of due diligence, we were able to catch these prior to payment …The DOE is attempting to pay outside consultants without registered contracts, in violation of the State Education Law."

Statement on DiNapoli's discharge rate audit

We would like to thank the Comptroller Di Napoli and the Office of the State Comptroller for their hard work on today’s discharge rate audit, which was done in response to a request on April 30, 2009 from Betsy Gotbaum, then-NYC Public Advocate, following a report that we wrote with Jennifer Jennings on the continued high number of students reported as discharged from NYC public schools. (Our 2009 report is posted here)

Even after the OSC office allowed the DOE to provide “additional information and documentation” for randomly selected students who did not have sufficient evidence in their files, 15% of the general education students in the graduating class of 2008 who were reported as discharged, and 20% of those from the special education cohort did not have the required proof to show that they were not actually dropouts. Thus, all these students were improperly removed from the cohort, inflating DOE’s reported graduation rates.

The audit’s findings of an error rate of between 15-20% in reported discharge rates are cause for grave concern that the DOE is not providing sufficient oversight to ensure accurate graduation and discharge figures.

According to the OSC, this means that between 2000-3000 of the general education discharges and between 266 and 539 special education students were “probably incorrect and should instead have been classified as dropouts.”

That fully 20% of the special education sample was incorrectly identified as discharged would lower this groups abysmal graduation rate even further to between 8.9 and 9.3 percent, compared to 9.7 percent reported by DoE.

The OSC concludes: “When we statistically projected the results of our sample to the entire [general education] cohort, we found that the correct graduation rate for the cohort was probably between 62.9 and 63.6 percent, rather than the 65.5 percent reported by DoE. “

Yet as the DOE itself notes; the official overall graduation rate for the class of 2008, according to SED guidelines , was really 56.4%, not 65.5%, so it would have been better for the OSC to provide an estimate of how much lower the actual graduation rate would have likely been, with all students included.

The OSC statement that since the city’s graduation rate was likely less than 5 percentage points lower than originally claimed means that the reported graduation rate was “generally accurate” and that errors “would not negate the upward trends in graduation rates in recent years” is puzzling, since reported increases have only been about 2-3% per year, for general education students, and among special education students much less, so an error rate of 2-3%, as the OSC found, would be about the same as the reported increases.

In any event, a 15-20% error rate in discharges remains very high. This high rate of errors reflects DOE’s lack of proper oversight or any accountability mechanisms to verify that discharges are properly reported at the school level. In addition, as the audit pointed out, some of these errors are related to the DOE’s failure to align its discharge guidelines to those of the state, by counting students who have transferred to non-approved GED programs (outside DOE) as discharges instead of dropouts.

Some important questions remain unanswered:

There remains no explanation as to why the discharge rate of students in their first year of high school has doubled under this administration, as our report noted. There also is no explanation as to why so many of the students reported as discharged are the most at-risk students, including those who are male, ELL, Hispanic and/or African-American, if these figures are more or less accurate.

I urge the DOE to agree to clear up some of these mysteries, by regularly reporting discharges, disaggregated by age, code, special education status, and demographic background, as a recently introduced City Council bill would require, though the DOE has expressed its opposition to such reporting at Council hearings. If they have nothing to hide they will agree to report all this data on a regular basis.

The DOE should also release full graduation and discharge figures in their annual graduation reports, including data for special education students, which they have failed to do since we released our discharge report in April 2009, despite repeated requests.

The NYC Department of Education should report an annual graduation rate that includes all students, rather than continuing to report as its “official” rate just the general education cohort.

I remain concerned that students who have transferred to GED programs within the DOE system but do not receive GEDs should not be classified as discharges, because this artificially raises school graduation rates. Also that students who receive GEDs should not be reported as a regular graduates, because a GED is not a high school diploma, whether or not that conforms to state guidelines. Otherwise, with the pressure on schools to inflate their graduation rates, they will continue to have an incentive to push at-risk students into GED programs and the like.

Finally, the DOE should revise its excessively harsh and punitive accountability system, so as to minimize the incentive of schools to inflate their graduation rates either through increased discharges to GED programs and/or falsifying their reporting. Unless this occurs, schools will remain motivated to shade the truth, and “push out” or exclude our neediest students, because of fears that they will be closed down or have half their teachers fired if their graduation rates do not improve.

Here is one example, from the audit, of a student whom the DOE claimed was a legitimate discharge, because an attendance teacher said that he had confirmed with a neighbor that she had moved to the Dominican Republic, and that this “was later confirmed by the student directly.” (p.31) Yet as the OSC responded:

School officials discharged this student in January 2008 without proper documentation to support their discharge determination. School officials stated they made a home visit in January 2008 and were told by a neighbor that the family had moved to the Dominican Republic (DR). DoE officials provided a memo, dated May 1, 2010, in which the student confirmed having travelled to the DR on December 18, 2007. However, when we spoke to the student, she told us that she and her family had lived at the same address for many years and she had not been visited by any attendance teachers in January 2008. She did acknowledge that a DoE employee had visited her in May 2010 [presumably after the audit began]. She also told us she had traveled to the DR on December 18, 2007, to spend Christmas with her family. She said when she tried to attend school after her return to the USA, she was refused admittance because the school had already listed her as being discharged. Since school officials did not have the appropriate documentation required by SED, this student should have been classified as a dropout or should have remained on the school’s register and included in the calculation of the graduation rate for her cohort. (p. 47)

As long as schools continue to be punished for low graduation rates with the threat of closure, instead of provided with help to improve outcomes, they will continue to exclude students like this one. It is students like these who will suffer the most.