Friday, September 23, 2011

For Profit Biz Waste In Harris County DOE - Pt 4

Harris County Education AND Lemonade Stand!

This is the Part 4 of a 5 part series on the terrible waste in Harris County, Texas' Department of Education. Discussion of HCDE's OBSOLESCENCEDUPLICATIONUNCONSTITUTIONALITY are found at the embedded links.  To begin at Part 1 go here.

#4 For-Profit-Business

On Oct. 1, 2010, MGT of America, Inc. released its performance review of HCDE. Page 1-12 reads: “…HCDE is currently engaged in instructional programs and services as well as entrepreneurial initiatives.” 


Why on earth is a school district risking local tax dollars on “entrepreneurial initiatives”? Well, when you don’t have any REAL purpose, you have to invent something to do. One is called Choice Facilities Partners (CFP).  According to the report, pages 5-30 (PDF here):

“… (CFP) is a unique purchasing cooperative created in 2006 … to support a variety of facility needs in any governmental agency …both in and outside of Texas. Unlike other cooperatives in the Department, CFP buys nothing and sells no physical product. Most of the other HCDE cooperatives exist at least in part to support HCDE activities, including purchasing, records storage, etc. CFP started as a Job Order Contracting (JOC) program in 2006, but has since grown to provide a wide range of facility-related services, including construction, energy conservation and management, furnishings, fixtures, and equipment (FFE), disaster recovery, and building exteriors and grounds. In each area, CFP has researched the need, issued the RFP, reviewed and approved qualified service providers, and created contracts for others to use. The services are free to the governmental agency and paid for based on a percentage of the contract between the agency and vendor. CFP acts as the conduit to connect the agency with qualified vendors and will monitor, audit, and intervene on behalf of both vendors and contracting governmental agencies, as requested. Through this process, agencies should be able to save time and move forward with projects both more quickly and more efficiently than by bidding for qualified vendors themselves.”

The first 2 years in operation, this taxpayer funded “entrepreneurial initiative” reported  a total loss of revenue of $284,106. But, unlike real business entrepreneurs who have to make a profit to earn a paycheck, CFP stuck it out and in 09-10 made $931,328 in profits.

I know I am only a retired teacher who knows nothing about business, but I can see two major problems with this government run business model. First, CFP is taking jobs away from the private sector; and second, their profits are tax exempt. That makes HCDE an agent of wealth redistribution. Their government run business is taking money that should have been made by private contractors, keeping it all, and sending it to the causes they deem fit. CFP sure has that government run socialism ring to it!

But more disheartening to me is another quote in the report (PDF pg 5-32,33about CFP:

”The data included in Exhibit 5-14 indicates that some staff members have received consultant contracts. In FY 10, staff person #1 received $2,428 and staff person #2 received $72,800. The information provided is not sufficient to determine the work done…One consultant shares office space in the CFP area. He has worked with the Division since 2008-2009. He reports directly to the Superintendent, although he is shown on the organizational chart as reporting to the CFP Director. During the onsite review, MGT was told that he makes regular monthly reports to the Board regarding his activities. A review of minutes since 2007 found only two references to this consultant. Those were reports of presentations with the CFP Director at conferences on 7/17/07 and 4/15/08…

"MGT recommends a complete review and appropriate reduction in the use of consultants providing services for the CFP unit. MGT does not assert that any of the contracts shown in Exhibit 5-14 are inappropriate.  However, MGT believes that CFP has an excessive number of consultant contracts, including contracts for staff that are not based on best practices. Staff should be compensated through the salary schedule and any additional contracts should only be for work that is clearly outside the already paid role of the staff person."

Some might think it sounds great that a school district is running a few profit-making businesses on the side to bring in extra funds. Is it “Great” that their employees can make some extra money on the side as contractors in one of their government run businesses. But then there is that pesky line in the Texas Constitution, Article 7.1 that reads, “…it shall be the duty of the Legislature of the State to establish and make provision for the support and maintenance of an efficient system of public free schools.” The business of a school district should be to use the funds established by the Legislature to educate their local students. Not to risk tax payer funds on business ventures that take jobs away from local contractors.

The final part of our investigation of the Harris County Department of Education concludes in Part 5: Poor Performance.


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