No-bid contracts in state budget reveal divide between lawmakers and education officials
Two years ago, North Carolina lawmakers passed a $26 billion state budget that included $1.5 million for a new education pilot project.
Language in the budget ordered the state’s Department of Public Instruction to sign a contract with MyScholar to use its ScholarPath program. This new online platform would connect rising high school seniors to colleges, employers and military branches to help students pick a career path. Among other things, potential employers would be able to reach out to students to talk about job opportunities.
The budget language was light on details, and it didn’t include a deadline for the pilot project. The contract would be MyScholar’s first — and, to this day, only — statewide deal, though it has worked with a handful of school systems in Missouri, where the company is based.
The ScholarPath platform still hasn’t gone live in North Carolina. The $1.5 million was paid in full, but “no students have been served through this contract,” North Carolina Department of Public Instruction spokeswoman Blair Rhoades said. For much of the past two years MyScholar couldn’t satisfy the state that it could protect student grades and other data the program relies on, she said.
Even so, the latest state budget, which lawmakers passed in September, reserved up to $5 million more for the ScholarPath project over the next two years. The new budget says ScholarPath should be offered to every student in the state, regardless of whether their school wants to participate and regardless of the pilot project’s status.
“I understand that there could be a perception that we’re not delivering. We are,” Geoffrey Gougion, co-chief executive of MyScholar, told WRAL. “We’re doing everything we can. DPI’s doing everything they can.”
The contract shows how state lawmakers are willing to earmark large sums for companies without a competitive bidding process — and sometimes without consulting the agency charged with implementing it, despite lacking a full understanding of the landscape in which the contracts will be performed.
It also raises vetting questions. The North Carolina Department of Public Instruction, the state agency overseeing public schools, says it wasn’t consulted before the ScholarPath pilot project was added to the 2021 state budget. Rhoades said the department advocated for an open contracting process in this latest budget cycle. The company has a short track record, and mixed results, in other states.
ScholarPath isn’t the only example in which the department wasn’t consulted.
Also tucked inside this year’s $30 billion budget is $1.7 million for a program called Failure Free Reading. It’s part of a $2.5 million overall effort designed to help struggling middle schoolers read better. The program is facing criticism over its instructional methods and questions about whether it’s appropriate for middle schoolers struggling to read.
DPI was instructed to sign a contract. Had the agency been in charge of selecting a vendor, it would have rejected Failure Free Reading’s bid.
“Some members of the General Assembly selected a vendor without input from the education experts at NCDPI,” DPI spokeswoman Jeanie McDowell said in an email. “And ultimately chose one whose instructional methods do not align with the research-based Science of Reading and phonics-based literacy instruction that NCDPI has successfully implemented in early elementary classrooms across the state.”
Agency leaders also believe the contract contrasts with state laws that have been passed to specifically emphasize or prohibit certain techniques to teach reading.
‘Phonics is not necessary’
No-bid contracts embedded in the budget are unusual, but not unheard of. And some contracts — particularly those awarded to a specific company in the budget — could skirt competitive bidding laws put in place by the legislature itself.
Lawmakers, sometimes frustrated by state agencies that don’t move quickly enough or seem hostile to key legislators’ goals, occasionally forge ahead without a bidding process, said state Rep. Jason Saine, a key House budget writer.
“We’re supposed to be setting policy, we’re supposed to be changing direction,” Saine said “… when you’ve spent a decade and half of them just not listening, what are you left to do?”
Other lawmakers have expressed this concern, including state Rep. John Torbett, who co-chairs the House committee that works up the state’s education budget.
But without a bid process and more involvement from the agencies focused on the issues the contracts are trying to solve, the state leaves itself open to the risk of failed or ill-fitting contracts.
And with much of the budget crafted in secret by top legislative leaders, there’s little opportunity for even rank-and-file members of the General Assembly to vet decisions.
This year’s 625-page budget bill was released to the public on a Wednesday. The first vote came a day later. By Friday the bill had fully passed the General Assembly with no changes allowed. The bill also included language that would shield lawmakers from public records laws — which in the future may further obscure how certain vendors are chosen.
Joe Lockavitch, Failure Free Reading’s chief executive, said his program’s appearance in North Carolina public schools is a result of his own efforts to market the product. He started with Halifax County Schools, where he said leaders felt positively about the program’s results. That’s how he ended up speaking with legislative leaders in education, including Torbett and Rep. Hugh Blackwell, R-Burke. They wanted to do anything they could to help struggling students, Lockavitch said. Neither Torbett nor Blackwell returned messages seeking comment about Failure Free Reading.
Failure Free Reading advertises itself as targeting “non-readers,” including people with disabilities. “Phonics is not necessary in learning to read,” its website says.
That’s exactly the problem with the company, according to its critics. One of the cornerstones of a state effort to teach reading has been the use of phonics-heavy instruction, which focuses on the recognition and combinations of sounds to decipher words. In fact, the General Assembly’s Republican majority has mandated this, overhauling the state’s elementary school curriculum and complaining that the changes haven’t been implemented quickly enough.
Failure Free Reading says it complements that effort by helping students who struggle with vocabulary.
“There are a number of good programs out there for kids with special needs, dyslexia, [or a] specific learning disability. Failure Free Reading is not one of them,” said Rebecca Felton, a long-time consultant to the Department of Public Instruction.
Felton works with Literacy Moms NC, an organization of parents of children with dyslexia who have been frustrated with the reading services available to many dyslexic students across the state. People with dyslexia specifically struggle with sounds and letters — foundational phonemic and phonic skills that, once mastered, can help unlock reading fluency. The group argues against skipping those steps when students’ disabilities make them extra challenging. Students with dyslexia, particularly when diagnosed later in childhood, can sometimes be several grades behind in reading levels.
That’s a problem when schools stop teaching kids how to read and start expecting them to read assignments to learn other information, like in history textbooks.
“If you don’t know how to decode, apply the alphabetic system, then you’re lost,” Felton said.
Students with dyslexia may not be the sole subjects of Failure Free Reading’s Verbal Master program. Lawmakers established the program for any middle school students reading below grade level in certain schools. They don’t need to have a reading disability or be reading at exceptionally low levels. At least one school system receiving funding will use the program for English language learners, not necessarily students with disabilities.
Failure Free Reading doesn’t teach phonics at any grade level, including elementary grades. Lockavitch says he has no problem with phonics but that teaching them doesn’t work for some children.
“We are designed to be a subset of the science of reading,” Lockavitch told WRAL News. “What good is sounding a word out if you don’t know what it means?”
Instead of phonics, Lockavitch promotes memorization, sentence structure and stories that allow students to make sense of words based on context clues.
The new state budget specifically prohibits what’s called the “three-cueing” method of teaching reading. That’s any way of teaching reading that teaches students to recognize words based on clues elsewhere in the text that they’re reading, specifically “meaning, structure and syntax, and visual cues.” The budget bans “a curriculum with visual memory as the primary basis for teaching word recognition.”
When asked if Verbal Master includes three-cueing, Lockavitch asked WRAL News to define the term for him and then said, “No, not really… we don't use pictures.”
But Lockavitch said he still asks students to decide whether their reading of a sentence makes sense. He gave the example of a student who might read a passage about a family visiting park but may not recognize the word “father.” If they sound out the beginning of the word, they may guess that the rest of the word is “father,” because that makes sense.
He says that’s not three-cueing. But experts argue that it is because it causes students who may be struggling with more basic phonetic skills to use context clues to guess the word instead of reading the word.
“It's the exact opposite of what science tells us kids need in order to become good readers,” Felton said.
IT delays frustrate
Meanwhile, the ScholarPath program trudges along. Gougion, the MyScholar executive, told WRAL News the initial $1.5 million state investment helped lay important groundwork in North Carolina, including funding for seven or so workers who recruited potential employers and colleges to the career-path project.
MyScholar’s inclusion in the budget had support from Saine. “I would say that Chairman Saine is really the reason we’re in North Carolina,” company co-founder Doug Mitchell said.
In addition to the delays caused by the data security problems, there were also issues with ScholarPath trial runs. In a March email, released through the state Open Records Act, DPI officials complained that ScholarPath’s portal showed different numbers than test data DPI had fed the company.
Gougion said those issues have been handled, that security questions have been answered and that a security recertification that the state is waiting for to green-light student-data sharing will be finished soon.
There’s no rollout date for the platform.
Saine said it’s hard to know who to blame for the project’s delays. Technology projects often move slowly in state government, and Saine said lawmakers sometimes feel agency officials — not upper DPI leadership, but long-time employees – slow-walk projects on purpose.
It’s an “undercurrent in state government across multiple administrations,” Saine said.
“The staff doesn’t want to do it, so then staff controls the process whether it’s successful or not,” Saine said. “And it’s happened across multiple IT projects since I’ve been here and before. So then it becomes very hard as to who to believe.”
Rhoades said there “are legitimate frustrations in state government with how long, and cumbersome, the procurement and contracting processes can take” and that DPI is “one of many who has expressed concern with the timeliness of these processes.”
“Real change to enhance and expedite these processes would require legislative action,” she said.
As for ScholarPath: “This vendor repeatedly experienced delays in meeting certain benchmarks necessary for a smooth and seamless roll out,” Rhoades said.
Mitchell cited DPI as the hold up, adding that if the state would let MyScholar pull data directly from school districts the platform could be up and running now. The company pushed for this access earlier in the year, but DPI said as long as this is a statewide effort, it would need to run through the state.
“DPI/The Superintendent already have parents contacting us worried about their student’s privacy and data,” Jamey Falkenbury, DPI’s liaison to the General Assembly, said in a late May email to the company. “We are not going to be responsible for student data being turned over (at the state level) unless parents are fully aware of what is involved. Especially if that data is going to be shared with third parties and parents will be getting notifications by those third parties.”
Few other schools involved
A MyScholar spokesman said the ScholarPath platform is live in three Missouri schools.
WRAL News reached out to all three and heard back from two: St. Charles High School and Troy Buchanan High School. Spokespeople for both said the schools had contracts with ScholarPath in the recent past but no longer do because their school districts changed student data systems, meaning ScholarPath would have to interface with a new system.
“I think ScholarPath does have potential,” said Lincoln County schools superintendent Mark Penny, who oversees Troy Buchanan High School. “We just haven’t seen the full potential in Missouri. I wouldn’t cast it aside.”
Rhoades, the Department of Public Instruction spokeswoman, said the department is “willing to work with any vendor named in statute that is committed to supporting North Carolina’s public school students.” Once a rigorous testing process is satisfied, “we look forward to continuing to work through this process” with MyScholar, she said.
Gougion said: “It’s just a matter of going through these checkpoints so that we can prove to them that this thing is operating and that it works.”
The company said it has memoranda of understanding with five North Carolina’s 115 public school systems and two charter school groups who plan to participate. None of the state’s largest systems, including Wake County and Charlotte-Mecklenburg schools, have signed on, but Gougion said he expects more systems to get involved once the pilot project gets rolling.
“I’m fully confident that it can come into existence in North Carolina,” Gougion said.
