Former DC Chancellor of Schools Michelle Rhee’s famous “warehouse tour” in 2007 showed stacks and stacks of district purchases that would never make it into classrooms. It made the nightly news (and numerous ed reform documentaries), showing the average American that there is incredible waste in K-12. Ten years later, not much has changed.
When educators have a need for a product or service, they face a procurement lag. By the time the purchase is researched, budgeted, evaluated, approved, and ultimately acquired, the need may no longer even exist. At the same time, budget logistics mean educators often concentrate their spending at the end of a fiscal year, simply to use up remaining dollars. Despite more awareness of these problems in procurement, increased transparency and efficacy in school spending has a long way to go. In the meantime, these 5 uncomfortable truths about school spending waste hold true:
1. A recent audit revealed one district spent $2.7 million on wasted tech. It isn’t an outlier.
Through an internal audit, one district discovered that more than $2.7 million worth of computer equipment and technology purchased by the district was actually “unnecessary” and/or unused after seven years. The district had also paid hundreds of thousands in annual maintenance fees on the unused equipment. Cases like these are not rare, because it is tremendously difficult for districts to have effective roll-out when initial purchasing happens in a silo. As hard as the purchasing department may try, the end user (i.e., the teachers) are often absence from the decision process.
2. Higher spending does not always translate to higher achievement.
Local and state spending on education is nearing $870 billion annually (for K-12 and higher education)–and it increases every year. Yet, relative achievement has flatlined. WalletHub looked at the most populous US cities, dividing test scores in 4th and 8th grade reading and math by the city’s total per-capita education spending. They also adjusted for socioeconomic factors, including poverty rate and home language. The researchers found that many cities display very inefficient spending. For example, in 2015 Rochester, New York was second in total spending, but had the lowest test scores. Rochester’s average standardized test score was only 24% (Rank), but per capita expenditures were $3,176. Compare that to Grand Rapids, Michigan at 84.99% and $1,237.
3. Districts rely on informal sources over data and evidence to make purchasing decisions.
Peer recommendations guide district decision-making, even over longitudinal studies and hard data. Digital Promise’s landmark “Improving EdTech Purchasing” study surveyed district officials about their procurement practices. Around 60% of the district officials surveyed cited peer or consultant recommendations as influencers in their process, while only 49% cited rigorous evidence.
4. Governments often rely on “whistleblowing,” over preventative measures or high-tech solutions.
Most school waste is, unfortunately, never discovered. There is no single centralized system that flags purchase orders and alerts districts about possible uncompetitive practices or potential waste. The Department of Education’s Office of the Inspector General largely relies on a “Fraud Prevention Hotline” where individuals may report examples of waste, fraud, or abuse. Indicators may include missing funds, large cash payments, no separation of duties, payments for services that never occur, and altered, inadequate, or missing documents.
5. Procurement processes are inefficient and outdated.
State procurement rules and regulations have not changed much in the last 25 years. As a result, existing laws have not been adjusted to line up with the digital age we live in today. Countless districts are still using paper-based RFP processes, meaning boxes and boxes of copied vendor responses clogging offices every time a large purchase happens. One district’s year-long audit yielded more than 200 recommendations around classroom spending. The auditor’s office identified “outdated and inefficient operations that cost taxpayers millions of dollars” in addition to “an inconsistent contracting process, a toothless internal audit system and serious security and privacy concerns.”
It’s time to change the status quo. The overwhelming majority of school officials are doing all they can to be compliant with spending rules. They want the right products and services to make it into classrooms. But they are stymied by a bloated system begging for innovation.
Districts deserve tools that leverage stakeholders early in the purchasing process, increase competition for their business, and track efficacy. Districts deserve ways to spend smarter, because throwing money at the system is simply not working. Districts deserve to be confident in their buying, knowing they are investing in products and services that positively impact student outcomes.