This story is the second in a two-part series about school districts and education technology. You can find the first part here.
(Updated at 6:35 a.m. on Aug. 15, 2018 to add that Steve Kupfer said he’s never been affiliated with ERDI.)
Teachers’ unions are scrutinizing school district budgets right now as they bargain for pay increases. Salaries make up the bulk of public education budgets, but districts also make significant technology purchases.
In the Kent School District, some parents are upset about the sole-source purchase of budgeting software that they say exacerbated the district’s budget mess.
The software came from a Baltimore-based startup called Allovue. A YouTube interview posted in early 2015 showed Chief Executive Jess Gartner describing the origin of her company.
At that point, the company was very new. In late 2012, Gartner said she didn’t even have a sketch on a napkin for her company idea when she applied and was accepted into a startup accelerator program in Baltimore. As a former teacher, she wanted to create a better financial management system for school districts, though she said she didn’t have experience in that.
“I did not have a business background, I did not have an engineering background, and I did not have a finance background, so making the decision to start an education-technology company building financial software was a pretty big leap of imagination,” Gartner said.
How did this startup company catch the attention of one of the largest school districts in Washington state?
Calvin Watts took over as Kent superintendent in June 2015. In a recent interview, he said he didn’t realize at that point that the district faced serious budget challenges. But he wanted software that would help the district spend its money equitably and wisely.
“How could we draw conclusions between the dollars that we spent, whether it’s federal dollars or general fund resources, that they actually impacted teaching and learning?” he said. “And that’s where Allovue came in.”
But how such a brand-new company got connected with the Kent school district and won a contract without competitive bidding is still something of a mystery.
Parents in Kent have filed a complaint with the school board alleging that the superintendent has possible conflicts of interest and flagged this software purchase as one of the problems. The company may have pitched the software to Kent because an Allovue board member and investor named Steve Kupfer had already met Superintendent Watts.
“I know Steve Kupfer was a part of or at least part of the conversation,” Watts said.
Kupfer worked for a now-defunct company called SUPES Academy that was at the center of two high-profile scandals. The former heads of Chicago Public Schools and Baltimore County Public Schools are now both serving time in prison for steering no-bid contracts to SUPES Academy in exchange for kickbacks.
Court documents in the Baltimore County case explained how Kupfer pushed for that no-bid contract and rewarded the superintendent with lucrative consulting gigs. Kupfer did not respond to numerous requests for comment via email and through Twitter.
Superintendent Watts took part in a SUPES Academy administrator training program before he came to Kent and said he may have crossed paths with Kupfer then.
“I think I did meet him while I was in SUPES Academy, but most recently he’s been a part of ERDI,” Watts said.
ERDI stands for Education Research and Development Institute, a company that arranges meetings between superintendents and tech companies.
Kupfer did not respond to numerous requests for comment via email and through Twitter before publication.
He sent an email after this story was first published and said Watts’s claim that they encountered each other through ERDI was false.
“At no point, formally or informally, have I had any affiliation whatsoever with ERDI,” Kupfer said in the email.
Kupfer was aware that Watts had been hired in Kent. He congratulated Watts on Twitter when he was chosen as superintendent in March 2015.
In August of that year, he sent an email to Watts introducing him to Allovue, according to Allovue CEO Jess Gartner. She answered questions by email but declined to do a recorded interview.
“Steve sent an email introduction to Dr. Watts on 8/17/2015 after Dr. Watts mentioned goals-aligned budgeting and finance as part of his strategic vision for Kent,” Gartner said. “Steve was involved in no meetings, calls, or communication beyond the introductory email.”
As for why the Kent school district bought the software without seeking proposals from other companies, Watts said that’s because it’s a one-of-a-kind product and the initial purchase was $44,000.
“The first contract, because it was part-year, did not meet the original threshold dollar amount for a competitive bidding process,” Watts said.
All told, including the initial purchase, the district has spent more than a quarter million dollars on the budgeting system.
Concern From The Teachers' Union
But it faced resistance from the teachers’ union. The Kent Education Association asked to bargain over the software.
Christie Padilla, president of the teachers’ union, said they were worried it would be used to single out teachers who receive comparatively higher pay but whose students get low test scores.
“We exchanged proposals back and forth because of course the district wanted to use the data on test results and that was an absolute no on our part that we weren’t going to negotiate that piece,” she said.
She said the district has often placed highly experienced teachers who earn more money in classes with the most vulnerable kids who might not test that well, so comparing test scores with pay would not be fair. The district agreed not to use the data for that purpose.
But some Kent staff who were trained on the software said they didn’t really use it at all. They didn’t want to be do recorded interviews for this story but they said it duplicated programs the district already had.
Watts said the district has opted not to renew the license for this coming school year.
“We realized that the product and service did not support the needs of the organization,” he said.
He said Kent is still working with Allovue to figure out why it didn’t work as expected. Allovue CEO Jess Gartner said that the union’s demand to bargain and the district’s deep financial troubles presented challenges to implementing the software, but the company is still working with the district to evaluate next steps.
After the district implemented the software in January 2016, “it quickly became clear that there were major underlying issues related to internal budgeting and accounting processes that needed to be immediately addressed,” Gartner said. “The district was on track for short-term deficits and long-term insolvency. Allovue responded to the district’s immediate needs and shifted focus to spending analysis and recommendations for internal process improvements.”
Some parents are frustrated and said the district should not be the testing ground for new software.
“I think it’s an egregious waste of money,” said Lori Waight, a parent who is part of the group that filed a complaint to the Kent School Board calling for Watts to be terminated.
Waight said this is an example of mismanagement. After all, the Kent school district has been in financial straits and has laid off some staff and administrators. Last year, the teachers’ union even put out a call for donations of toilet paper.
“Two hundred sixty thousand dollars when teachers are having to do GoFundMes for sets of books in classrooms – that’s not putting kids first,” Waight said.
This isn’t just a Kent issue. Washington taxpayers statewide are putting more money into public education because of the McCleary school-funding lawsuit.
Larry Cuban, professor emeritus of education at Stanford, has researched the use of technology in schools and said things can go wrong, but the backstop for taxpayers is good oversight.
“Mistakes do happen and you learn from that, that’s fine,” he said. “But if there’s any hint or appearance of a conflict of interest in the initial purchase, then that becomes a board of education matter to be fully aired.”
Kent School Board President Maya Vengadasalam said in an email that the board is now doing an inquiry into what happened with the Allovue contract. She said it’s too early to say this was a waste of tax dollars because the district is still working with the vendor.