Sunday, October 12, 2014

Texas Virtual School…another CSCOPE?

When CSCOPE hit the news, most of the attention was focused on the lessons.

Much less attention was paid to the money side of CSCOPE. 

picture 2But there were so many questionable practices from contracting to accounting, that the Texas State Auditor was asked to get involved.

The Auditor’s report stated that the ESCs had such poor accounting practices that:

“auditors were not able to fully answer the audit objective to determine the amount of revenue and expenditures related to the development, installation, distribution, and marketing of CSCOPE.”

The ESCs collected $73.9 million for CSCOPE, but they couldn’t account for over $6 million of public funds.

No one involved suffered any consequences. They are all still on the public payroll because, according to the Auditors report:
  • “the education service centers do not have specific contract laws that they must follow “
  • “there were no specific state funds appropriated for the development, implementation, and operation of CSCOPE.”
  • And even though the CSCOPE contracts “lacked fundamental provisions to help protect the State’s and taxpayers’ interests,” none of it was illegal because
  • “education service centers are not required to comply with the contracting processes in the State of Texas Contract Management Guide.”
picture 3

That was a surprise to many
Texans, like myself, who assumed that our public education dollars were being protected by at least the minimum in standard contracting and accounting procedures.

But we were wrong.

Were these practices unique to CSCOPE or was this the way ESCs operate in general?

To find the answer I decided to investigate an ESC program that:
  1. does have specific state funds allocated by the Legislature,
  2. is contracted through TEA (thus required to meet State of Texas contract standards) and
  3. does have legislation outlining specifications.

I chose the:

picture 5What I found, from the standpoint of financial accountability, is another “CSCOPE.”

But this time, instead of just having poor contracting and accounting procedures with public funds, I have a video of a government entity explaining how they defied the Legislature and by-passed Texas law in order to operate TxVSN, and their elected officials rationalizing their actions.

I don’t have enough room to print everything, so I have chosen a few highlights of my findings to share here.

The Texas Legislature passed SB 1788 in 2007 establishing the Texas Virtual School Network (TxVSN) and funding the operations with state funds.

The Commissioner of Education was given authority over the network resources and instructed in statute to contract with an ESC for  the ESC to operate the network.

The Legislature chose ESCs to operate the network because one of their statutory purposes is to   “implement initiatives assigned by the legislature.” (8.220)

picture8Texas Education Agency (TEA) issued a Request for Proposals (RFP) entitled “Central Operations for the Texas Virtual School Network” with the deadline for submission 3/5/08. Eligible proposers were limited to the 20 Texas ESCs.

The purpose was to identify the regional service center to operate the network.” The RFP stated, “a collaborative of ESCs will also be considered.”

The RFP included other qualifications such as HUB percentages, an understanding of TxVSN, etc. as well as a statement that the proposer had not
 “communicated directly or indirectly the proposal or bid made to any competitor or any other person engaged in such line of business during the procurement process for this contract.”

According to discussions held in a public meeting on 2/26/13, The Harris County Department of Education (HCDE) wanted to bid for Central Operations of TxVSN, but was excluded by the mandates of the legislation because they are not an ESC.

Excerpts from HCDE’s public discussion concerning TxVSN:
(Note: Translation is approximate because some is difficult to understand. Please watch video for exact wording.)
John Sawyer (HCDE Superintendent): “… we wanted to bid on the contract. So I negotiated with (ESC)Region 10 who said, “We don’t know how to do it.” And I said, “We do. But we can’t bid.” So they bid and we are doing about 70% of the infrastructure work. And they are the front of the Texas School. And they handle the money and the student registrations and all that. ..“
Angie Chesnut (HCDE Board President): “You might explain why we couldn’t bid directly.”
John Sawyer (HCDE Superintendent):“…When the law was passed the wording in the law said that the only people who could bid were Regional Service Centers…We don’t qualify as a Regional Service Center. I never could decide if that was purposeful or accidental, but it didn’t matter. We got our share of the business anyway…”
Kay Smith (HCDE Trustee): “I have a question just for clarification. We could not bid on this directly?”
Sawyer:That is correct”
Smith:So they bid on it and then they sub it out to us?”
Sawyer: “The director at Region 10 is a former school superintendent that I happen to know pretty well… When I realized that we were not going to be allowed to bid on the project, and the bid was due in Austin on Tuesday of (the) next week…I called Buddy and said, “OK. Here is the deal.” I told you that conversation. He said, “John, we don’t know how to do this.” I said, “We do. But we can’t bid.” So we sent a team to Dallas…And spent the weekend. Wrote the proposal. We delivered it to TEA on Tuesday. Jointly. I mean we helped them with the proposal. And they got awarded the contract and we get about 70% …”

View the full Board discussion video: here 

(Note: After the discussion, only one Trustee, Kay Smith, voted not to approve the contract.)

Three weeks before the final proposal for Central Operations of TxVSN was due, TEA held a conference in Austin “to assist potential proposers in clarifying their understanding of the scope and nature of the work…” It was open to “all potential proposers. 

Records show exactly who attended:
picture 10
ESC-11  sent 3 people
ESC- 4   sent 1 person
ESC-12  sent 1 person
HCDE - not qualified to bid - sent 6 people


Yet, TEA awarded the contract to operate the Texas statewide on-line school to ESC-10, an ESC that:
  • did not even attend TEA’s proposers conference, and
  • John Sawyer claims said, “We don’t know how to do it.”
(Note: I requested to view the winning bid from ESC-10, but TEA asked for a ruling from the Texas Attorney General Open Records Division – brings back more memories of CSCOPE.)

picture 12

Esc-10's first TxVSN contract period was 4/10/2008 through 8/31/2008 for $750,000.

picture11picture 13

ESC 10 immediately
subcontracted with HCDE

(NOT an ESC and NOT an HUB) to provide 74.5% of the work for $559,138.

The first sub-contract with HCDE covered the same dates, 4/10/2008 through 8/31/2008.

But records show the work began months before the contract was formally signed. 

HCDE’s Board didn’t even vote to approve the contract until 2 WEEKS BEFORE IT ENDED.

  • 4/10/08 - Sub-contract began
  • 7/15/08 – HCDE’s expenditure sheet for $325,997.98
  • 7/24/08 - ESC-10 signed sub-contract
  • 7/28/08 - ESC-10 received $325,997.98 HCDE invoice
  • 8/19/08 - HCDE’s Board approved sub-contract
  • 8/31/08 - Sub-contract ended

picture20 picture15 picture21
(Note: I did not find records showing the date HCDE signed the contract.)

This sub-contract has been renewed or extended every year with the same discrepancies repeating themselves.

During HCDE’s February 2013 Board meeting, HCDE Trustee Erica Lee Carter asks this question about their 12/13 TxVSN contract:

Why are we voting on a contract that started last September?”

But dates and signatures are only part of the contracting concerns.

picture22Documents show that ESC-10 did not request bids before it sub-contracted the development of TxVSN Central Operations to HCDE.
Instead, ESC-10 claimed, “No bid required since professional services.”

But this was a TEA contract which had to follow State of Texas contract guidelines. Texas Government Code 2254 defines “profession services” as services within the scope of the following professions:
landscape architecture
land surveying
professional engineering
real estate appraising
professional nursing

Technology is not listed.

Appendix 1 of the TEA contract reads:

"No funds shall be used to pay for food costs (ie refreshments, banquets, group meals, etc.) unless requested as a specific line item in the budget by the contractor and approved (prior to expenditures occurring) by TEA.
I did not find budget line items or TEA prior approval documentation, but I did find the following purchases in the HCDE check registry under TxVSN budget codes:
picture 4
(Note: HCDE has removed links to its check registries online so I was only able to collect data from a link I had saved.)

Statute dictates that an ESC will operate the network and TEA awarded ESC 10 the Central Operations contract.

But I found multiple contradictory statements as to who is actually “operating” the network:

  • The TEA website claims: “ESC Region 10 serves as central operations for the TXVSN” and “oversees the day to day operations of the network
  • The ESC 10 website claims:ESC Region 10, in collaboration with the Harris County Department of Education, has been awarded Central Operations of the TxVSN”
  • The TXVSN website claims:ESC Region 10, in collaboration with the Harris County Department of Education, is Central Operations.”
  • The HCDE website claims: “Harris County Department of Education, in collaboration with the Education Service Center (ESC) 10, has been awarded central operations of the TxVSN.”
Harris County Department of Education was awarded Central Operations of the TxVSN.”

Since TxVSN is online school for thousands of students across Texas, I decided to see who is really operating the network by checking who registered and owns “”

The result?   HCDE

picture31I checked the form participating school districts need to send to TxVSN Central Operations for the mailing address.

Whose address is it?     HCDE


If you call the TxVSN Central Operations Help Desk…

Where is the phone answered?  


Then I looked at the original “Scope of Work” descriptions spelled out in ESC-10’s sub-contract with HCDE, it is obvious who is actually “operating” the TxVSN.

TEA / ESC -10


picture14 picture17

But there are two major issues with HCDE operating the TxVSN.

First – State statue dictates that an ESC will operate TxVSN. HCDE is NOT an ESC. (30A.052)

Second – Documents show the name “HCDE” is actually an “aka” of the “County School Trustees of Harris County.”

Why would a government entity go down to the county courthouse and file documents in order to conduct business under an assumed name?

Well, HCDE is actually an old county school board leftover from the days when counties still ran the public schools (1889 to mid-1900s) – before Texas instituted our current ISD system. They still exist in Harris County because of a loophole in the law which allows them to remain in operation under old, repealed county school statutes.(11.301)

One of those old laws, TEC 17.94 states:
“After December 31, 1978, no state funds shall be used to support … a board of county school trustees…”

TxVSN central operations is funded with state dollars. (30A.152)

Would someone question a contract using state funds being issued to “County School Trustees of Harris County?”   

They might.

Would someone question a contract using state funds being issued to “HCDE?”   

Much less likely.

Just as with CSCOPE, I end up asking a whole series of questions….

  • When it comes to Texas education dollars, who is watching the store?
  • Do the ESCs and other government business enterprises like HCDE really operate unchecked?
  • Do the Commissioner of Education, TEA and the Legislature really not know what is going on – or are they part of the problem?

Could the answers to all of these questions be something as simple as… … follow the money?

Is it just a coincidence that less than a year after leaving TEA, Robert Scott, the Commissioner of Education from 2007-2012, became a paid “consultant” for HCDE?

1st Payment to Scott in HCDE Check Registry

Is it just a coincidence that when leaving the Legislature Rob Eissler, Chairman of the House Public Education Committee from 2007-2012, also became a paid “consultant” for HCDE ?
1st Payment to Eissler in HCDE Check Registry

(Note: Notice this first payment from HCDE to Rob Eissler was 12/21/12  - while he was still officially the Chairman of the House Public Education Committee??? )

sawyer emails day 3 170
Is it also just a coincidence that emails show when HCDE’s Superintendent warned Rob Eissler this past May that his lobbying group's $269,500 HCDE “consulting” contract may be in jeopardy, Eissler called a current member of the Texas House Public Education Committee, Rep. Dan Huberty, who then called HCDE Board President, Angie Chesnut, and the contract remained intact?

I am sure, just like the HCDE name change, they are all just remarkable coincidences.

With CSCOPE, the ESCs got off scott free because the Legislature left so many loopholes in the statute governing them. 

But with TxVSN, the Legislature dictated the funding and the operations in statute so I have personally asked the State Auditor's Office to investigate the contracting of the TxVSN.

If you agree, you may contact the State Auditor's Office and urge them to investigate Texas Education Agency's TxVSN contracting with ESC-10 and HCDE @ 512-936-9500 or email.

You may contact the Texas Senate Education Committee and urge them to request a state audit of TxVSN contracting @ 512-463-0355 or email

You may contact the Texas House Public Education Committee and urge them to request a state audit of TxVSN contracting @ 512-463-0804 or email

Colleen Vera


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