Devastating audit of DOE's contracting process, which violates the City Charter and state laws

Last week I wrote about the problems with the new $670,000 DOE contract for Joel Rose's blended/computerized math instruction program, which was originally promised to be provided free to NYC schools in perpetuity since Rose developed it with about a million dollars of city funds while at DOE. The Panel for Educational Policy is due to vote on this contract on August 23.

Yet since his company New Classrooms went private, NYC has been charged many hundreds of thousands of dollars for this program with a highly questionable educational value.  Subsequently, Gary Rubinstein also wrote about the program's low quality, at different times called School of One or Teach to One.

All this cronyism is not an anomaly, sadly, but is consistent with the scandalously lax oversight of DOE contracts -- including a $1.1 billion contract proposed in 2015 for a contractor who had been involved in a kickback scheme just a few years ago --later thankfully rescinded by the Mayor's office and rebid for savings of between $163 million and $727 million.

On Friday, the NYC Comptroller Stringer released a follow-up audit showing how the DOE continues to violate  state law and its own rules when it comes to contracting.  More on this from the New York Daily News, New York Post and Chalkbeat.

From the Daily News:

In fiscal year 2016 the city school system handed out more than 500 contracts worth $2.7 billion without competitive bidding or required protections, Stringer's investigation found.
That’s 64% of the agency's total contract spending of more than $4 billion for that year....the city agency didn’t bother to evaluate vendors or keep track of their work — or to register contracts with Stringer’s office for review.

From the Comptroller's summary: 

A review of 521 limited competition contracts and contract actions revealed:

• DOE directed 442 of the vendors — approximately 85 percent — to begin work before the contract was even registered with the Comptroller’s Office, in violation of the New York State Education Law, the City Charter and DOE’s own rules;
• DOE submitted 302 new contracts and renewals to the Comptroller’s Office, on average, 258 days after their start dates, while 140 extensions of existing contracts were submitted on average 137 days after work began;
• In the most egregious case, a contract was submitted to the Comptroller’s Office 910 days — nearly two and a half years — after the vendor began work; and
• DOE submitted dozens of contracts to the Comptroller’s Office after the contract’s end date.

I myself discovered that of the 27 contracts approved at last month's Panel for Educational Policy meeting , 13 were retroactive—meaning at least some or all of the vendor's work had already started –  rendering the vote of the PEP pretty much irrelevant.  Contracts are only submitted and registered by the Comptroller after the PEP has voted. 

For the audit they specifically looked at how many contracts were registered retroactively.  Of 358 contracts and contract renewals, 84% of the vendors started work before registration,  an average of eight months prior to submission.  More than 10% of the contracts were submitted after the work had already ended.  In another data set of 163 contract extensions, 86% had started before submission,  an average of 137 days prior.


The Comptroller’s audit also found these continuing problems:

• DOE still does not provide sufficient guidance for contract assignments, and, in particular, it fails to ensure that a proposed new vendor’s capacity and history are adequately assessed. In addition, assignment files lack sufficient information justifying the assignments, detailing prior performance and documenting adequate insurance coverage, among other things.
• DOE has not developed written procedures or guidelines to help staff detect the warning signs of possible collusion when awarding contracts via actions other than fully competitive solicitations.
• While general guidance to contract managers appears to be available now in DOE’s contract management training manual, it does not offer the contract managers specific instruction about handling their responsibilities. For example, the training manual is silent on the performance evaluations that must be conducted throughout the contract period and on the frequency of such evaluations.
• Despite DOE’s representation in response to the previous audit that it would implement a standard format with standard criteria and ratings for evaluating vendor performance and a schedule for conducting such evaluations, we found that no such implementation has taken place.
• DOE still does not conduct required performance evaluations of contractors seeking renewals or extensions.
• DOE still does not adequately monitor its contract managers to ensure that contract monitoring and performance evaluations are conducted in accordance with its PPP manual.
• DOE does not ensure that limited-competition and non-competitive contracts are registered with the Comptroller prior to vendors beginning performance. As a result, vendor payments are delayed, which could potentially decrease competition and raise prices.

David Ross

The question of evaluations is key; many DOE contracts are renewed several times without any evidence that any assessments had been done of the quality of their previous work.  Even when an evaluation was done, in the case of New Classrooms for example, which showed no significant gains  through a randomized experiment, this study was unmentioned in the DOE Request for Authorization document, which asked the PEP for approval.

All these problems are not new, but occurred during the previous administration as well, under the aegis of David Ross.  Ross spent 12 years at the DOE as chief procurement officer,  and is now going to oversee contracts at the MTA – another troubled government agency that cannot afford to waste a single penny of public funds. Will the new contract head at DOE clean up this horrible mess?  We will have to see, but from the weak responses to the audit from DOE, I would not bet on it.

The person ultimately in charge however is Chancellor Fariña.  We've had four Chancellors in a row who were lax in terms of allowing the waste of  millions of dollars in taxpayer money, while more than 300,000 NYC children continue to languish in classes of 30 or more.  Will Fariña stick around after the election?  And if not, who will replace her?

NYC DOE still putting out false discharge data and inflating the graduation rate

Throughout the Bloomberg years, when the administration would trumpet rising graduation rates, I noticed how the discharge numbers were very high and seemed to be increasing. Every student listed as a “discharge” rather than a “dropout” can inflate a school’s figures,  as he or she are no longer counted in the cohort  -- in either the denominator or the numerator for the purposes of calculating the graduation rate.

So in 2009, I co-authored a report with Jennifer Jennings, entitled High School Discharges Revisited: Trends in NYC’s Discharge Rates, 2000-2007.   Our analysis showed that discharge rates had increased over this period, especially among Black and Hispanic students, students with disabilities, and English language learners.  

 Between the classes of 2000 and 2007, the discharge rate for students with disabilities increased from 17 to 23 percent, including in the class of 2005 where it spiked at 39 percent.  The report provided evidence that a thousand students had been “moved” into the special education cohort that year, possibly in order so DOE could claim an increase in the overall graduation rate.  Finally, we pointed out how some of the students categorized as discharges according to the DOE codes, such as students who left school to attend GED programs or because of pregnancy, should have been listed as drop-outs instead, according to state and federal standards. 

Our report led the DOE to change its coding for some of the categories and the City Council to pass a law called Local Law 42, to require detailed and disaggregated discharge reporting each year.  The results of that reporting are here.

A related law, Local Law 43, was also passed required the reporting of discharge rates at closing high schools, shown here; in these schools the discharge and drop out rates increase sharply.  Here is my testimony in support of both these bills.

Also as a direct result of our report, Betsy Gotbaum, then the Public Advocate, asked the NY State Comptroller to audit DOE’s discharge rates.  When the results of that audit were finally released in 2011, they revealed that 14.8% of students who were labelled as discharged should have been identified as dropouts instead, and fully 20% of the special education students. Moreover, the auditors found that DOE had no evidence to show that more than half of their sample of discharged students weren't actually dropouts; taking DOE months to come up with documentation. 

Just a few weeks ago, on Sept. 9, 2014, the NY State Comptroller’s office released a little noted, follow-up report showing almost no improvement in this area. According to a DOE internal audit from 2012, as many as 14% of reported discharges still should have been reported as dropouts.  A subsequent audit from December 2013 continued to find unspecified errors in DOE’s discharge classifications. 

I have now FOILed DOE and the State Comptroller for these two audits; we will see how long it takes them to respond.  Yet it is disappointing that there has been so little progress in the accurate reporting of this data, whether out of sloppiness or to inflate NYC's graduation rate, especially given DOE’s claims of being a “data-driven” agency.

Audit on school overcrowding released today confirms our findings that the crisis is getting worse

Today's Daily News, and no that it not me screaming in facepaint.

Today's audit from the City Comptroller reinforces the findings in our recent report, Space Crunch, showing that DOE continues to put out misleading data to minimize the worsening crisis of overcrowding in our schools, and has no real plans to deal with it.   See the Juan Gonzalez front page story in the Daily News today about the audit.  The unacceptable level of overcrowding was also delineated in a recent study from the Independent Budget Office. 

Overcrowding has a host of negative impacts on students, including excessive class sizes, high rates of disengagement and disciplinary problems, safety issues, and a sense among students that the system doesn’t care enough about their needs.  More than 330,000 students were in classes of 30 or more last year.  We also found that the DOE undercounts the number of students in trailers by many thousands.

Though the audit found that about 1/3 of kids were in overcrowded buildings by looking at the Blue Book’s “historic” 2011-2012 figures, we analyzed more recent “target” figures from 2012-13 and found nearly half of all students were in overcrowded buildings.   

The “target” formula is somewhat more accurate but still underestimates the actual level of overcrowding in schools.  This means more than 480,000 students were in extremely overstuffed buildings last year. The audit found the same trend line as we did– worsening overcrowding, particularly at the elementary and middle school levels.

The most interesting aspect of the audit involved their asking for documentation of what the DOE Offices of Portfolio Management and Space Planning had done to address the problem of overcrowding:

DOE’s Offices of Space Planning and Portfolio Management lacked any statistical or documentary evidence showing the substantive steps they took to alleviate school overcrowding. This failure constitutes a significant internal control deficiency. The lack of documentation may be partly attributed to the absence of written policies and procedures for either office. Through interviews and discussions with DOE personnel we were able to ascertain that Portfolio Management and Space Planning had some procedures in place and that they had attempted to follow these procedures to alleviate overcrowding. [Like what? They do not say.]

However, no documentation or evidence existed with in these two offices to indicate what these steps were or whether they had been taken….

Portfolio Management staff explained that the process for alleviating overcrowding is “organic,” consisting of “borough teams” that monitor schools monthly and annually, conduct monthly meetings, and hold telephone conversations with principals. According to Portfolio Management and Space Planning staff, written documentation, meeting minutes, and telephone logs of this process were not maintained. Therefore, there is no way to assess whether DOE was in fact, taking steps to alleviate overcrowding and whether those steps were effective.”

The DOE now claims that Portfolio has been abolished and a new office created called District planning, but several people in the know say the office has much the same personnel and apparently the same mission: to cram new co-located schools into existing school buildings which further overcrowds them.

From a footnote in the audit: “Portfolio Management, prior to its dissolution, did not have an organizational chart for its approximately 50 person staff, nor did it maintain a list of school buildings where the office attempted to address problems.”

We estimate that at least 100,000 seats are needed to alleviate the space crunch in our schools—more than double the number in the current capital plan, or else it is likely that NYC kids will be stuffed into even more overcrowded classrooms and substandard trailers for years to come.  It is time that the new administration confronts this ongoing crisis honestly and takes meaningful steps to address it.