Friday, October 16, 2015

State Audit shows HCDE needs a Sunset Review

In 2013, Rep. Riddle asked the State Auditor’s Office to audit HCDE. The results were released in September of 2015.

The audit confirms the findings by Susan Carroll of the Houston Chronicle showing HCDE’s administration has paid hundreds of thousands of dollars in extra employee stipends for years. But the employee stipends identified in the audit were even greater than Carroll found - $871,610 from 2012-2014 . Of the stipends tested by the auditors, 40% were paid without Board knowledge or approval.

The audit identified multiple issues with HCDE’s contract to run the Central Operations of the Texas Virtual School Network.

And a quote from the audit confirms what conservatives have been saying for years:

“The majority of property tax revenue was allocated for internal expenses related to the Department’s operations and technology support services.”
In other words: HCDE collects a property tax to support itself…not Harris County students.

But…look a little deeper… and you will see what this audit really confirmed …

That Sen Bettencourt and
Sen Garcia were right when
they sponsored SB1216 last session.

A review of HCDE’s programs
and functions by the Sunset
Commission is clearly needed.

To understand why, I’ll borrow a famous line from Paul Harvey’s old radio show…

"…and now for the rest of the story…”

This audit reviewed state funds HCDE received from 2012-2014 to operate three grant programs to make sure the funds were properly used for those programs.

1. Early Childhood Intervention (ECI) – which provides services for local families with children, birth to three years, who have disabilities and/or developmental delays.

2. Texas LEARNS – Statewide adult education administered by HCDE for the Texas Education Agency (TEA)

3. Central Operations of the Texas Virtual School Network (TXVSN) – Online courses for Texas students across the state.

First: Audit reported funds for ECI were properly used

But, what did the audit NOT report about ECI that a Sunset Review would?

HCDE was so incompetent in the ECI program, that in December 2014, the State transferred HCDE’s ECI clients to new ECI providers: MHMRA and Easter Seals.

Records show HCDE was first flagged by the State for ECI noncompliance issues in Feb of 2013 and given multiple opportunities to fix their problems. 

For example, in their first review, the State found that 49% of individualized plans for HCDE’s ECI clients “did not include measurable outcomes expected to be achieved for the child and family.”

After giving HCDE time to fix the problem, a follow up review by the State showed
HCDE’s noncompliance at 47% - only a 2 percentage point improvement.

(Read the series of letters from DARS to HCDE outlining the issues: here)

So, a financial audit found no problems with state ECI funds in 2012-2014. But, a Sunset Review would have identified HCDE’s inability to provide adequate ECI services in 2012-2014 which led to HCDE no longer serving as an ECI contractor in 2015.

A Sunset Review would also evaluate the appropriateness of HCDE charging Harris County taxpayers $132,911 in 2015 to clean up the mess HCDE had made with ECI.

Second: Audit reports funds for Texas LEARNS properly used

But what did the audit NOT report that a 2013 Sunset Review of the Texas Education Agency (TEA) did?

The 2013 Sunset Commission Report on TEA recommended changes to adult education to make it more productive.

“Transfer responsibility for adult education from TEA to the Texas Workforce Commission. This recommendation would ensure more effective oversight and more targeted use of Texas’ adult education funds by requiring TWC to administer the program... TWC should bring the grant administration function in-house as soon as practical after Harris County Department of Education’s contract expires in August 2013.”

So, a financial audit found no problems with HCDE’s use of state Texas LEARNS funds in 2012-2014. But, a Sunset Review did recommend that HCDE no longer contract as the statewide administrator of the program. And the Legislature followed the Commission’s advice. In 2015, HCDE no longer administers Texas LEARNS for TEA.

(Read the Full 2013 Sunset Commission Report on TEA (pages 21-27):here

Third: Audit found need for improvement in managing funds for TxVSN

The audit did find problems in 2012-2014 with the program that HCDE still administers across the State today - The Texas Virtual School Network (TxVSN.) Examples from the audit:

  1. HCDE could NOT provide documentation for $360,906 charged to TxVSN for IT staff salary expenses 
  2. HCDE could NOT provide documentation for $491,531 charged to TxVSN for maintenance and support by HCDE staff for a server, storage, and an operating system. 
  3. HCDE could NOT provide documentation for $86,315 for building improvements to house TxVSN 
  4. HCDE overcharged the TxVSN contract $24,576 in 2013 for space allocated to TxVSN operations 
  5. HCDE charged $2,184 for non-travel-related food to TxVSN even though it is not an allowable expense item 
  6. HCDE Allocated $90,000 in 2013 specifically to expand an emergency alert system; however, that expansion was not performed. HCDE fully expended that $90,000 for purposes other than the purpose for which that funding was budgeted.

In short: The audit found issues with 25% of the funds HCDE received to run the Central Operations of the TxVSN in 2012 alone.

But, what did the audit NOT report that a Sunset Review would?

Just as the Sunset Commission did with Texas LEARNS, it would evaluate TxVSN to see if the current subcontracting scheme established by TEA follows the intent of the Legislature as well as provides the best use of funds and manpower to serve the students of Texas.

Unlike the State Auditor’s office, the Sunset Commission is open and transparent. The Commission not only asks for public input, it holds public hearings so all issues can be openly discussed.

Why would that matter? Here is an example:

The audit reported that HCDE:

  • did not allocate property tax revenue to…the Texas Virtual School Network.
  • charged $2,184 for non-travel-related food to TxVSN even though it is not an allowable expense item

But, with the public’s help, the Sunset Commission would look deeper and find that HCDE DID (AND STILL DOES) USE LOCAL PROPERTY TAX FUNDS TO SUPPORT TxVSN and to purchase food for TxVSN meetings.

Records show HCDE used tax funds allocated for “General Administration - Chief Information Officer” for Jim Schul (CIO) to travel across the State representing TxVSN... 

and to purchase food for TxVSN.

Jim Schul’s salary and his entire department budget is paid with Harris County property tax funds. 

Yet, HCDE is using him to work for TxVSN. 

His HCDE job description even includes: Provide Leadership and Direction for the Texas Virtual School Network.”

So, a financial audit found HCDE did not "allocate” property tax revenue to the TxVSN, but with public input, a Sunset Review would outline exactly how HCDE “redistributes” property tax funds to support not only TxVSN, but other non-Harris-County-specific programs such as Choice Partners Cooperative and Head Start as well.

HCDE "redistributes" tax funds to these programs by giving "free" services for "research and evaluation" as well as "communications and public information"... 

...through two other HCDE departments funded with over
$1 MILLION in local property taxes in 2015 alone. 

But more importantly for the taxpayers of Harris County, the Sunset Commission would evaluate HCDE’s total operation to determine if it operates the way the Legislature intended County School Trustees to function, as well as if the tax they collect is being used the way the Legislature intended – for the “maintenance of Harris County Public Free Schools.” 

The Sunset Commission would take into account Attorney General Opinions issued over the years, such as:
  • #JC-0055 which states: HCDE’s tax funds are distributed by the county department of education according to the provisions of section 18.14 of the Education Code”- which means directly to the ISDs of the Harris County.
  • #V-759 which states: “The county superintendent's duties are confined by statute to various matters pertaining to the public free school system in his county. " 

The Rest of the Story

HCDE is so afraid of a Sunset Review that they used county education funds to hire lobbyists, political consultants, law firms, PR specialists, and a host of other “consultants” to fight against SB1216.

In fact, HCDE is so afraid of the public knowing what their Board attorney did to earn $21,304.35 fighting against SB1216, HCDE went to the Texas Attorney General to block release of their attorney billing records related to SB1216.

What is HCDE fighting so hard to hide from the Sunset Commission?

A Sunset Review looks at the entire entity, its original purpose, performance, and duplication of services provided by other entities, etc. - all to evaluate the continued need for the entity.

What was HCDE’s Original Purpose?

HCDE was established in 1889 to operate all the public schools in Harris County. But they haven’t had that responsibility in over 50 years…so… they surely don’t want that discussed by the Sunset Commission.

What about HCDE’s Performance?

Two of the three programs reviewed by the state audit no longer exist at HCDE because of performance issues. .. so…they surely don’t want that discussed by the Sunset Commission.

What about HCDE’s Duplication of Services?

Some say HCDE uses local tax dollars to duplicate what our state tax dollars are supposed to provide through our regional Education Service Centers (ESC). 

 Even the third grant program just audited at HCDE, Central Operations of the Texas Virtual School Network, is outlined in Texas Education Code Sec. 30A.052 this way:

“The commissioner shall(2) contract with
 a regional education service center 
for the service center to operate the network.”

The Commissioner Rule 70.1001(5) defines TxVSN Central Operations as:

"The regional education service center
that carries out the day-to-day operations
of the TxVSN..."

Part of the Job Description of HCDE’s Chief Information Officer is to “provide leadership and direction for TxVSN.” 

The current job posting for the position of:

 Director of the TxVSN

 is not on an ESC site… is on HCDE’s website.

Looks like HCDE does duplicate the statewide work of the ESCs, but is supported with local property taxes…so…they surely don’t want that discussed by the Sunset Commission.

Makes sense to me now why HCDE fought so hard against SB1216. They are simply terrified of an objective review of their operations and performance before the Texas Legislature – the people who can close their doors once and for all.

Colleen Vera


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