UPDATE (11:24 a.m. PT) — State auditors released a blistering review of Oregon's education department and its largest school district Wednesday, recommending that legislators take a hard look at how administrators spend existing money as they consider significant new educational investments sought by Gov. Kate Brown.
Auditors working for Secretary of State Dennis Richardson found that the Oregon Department of Education and the Oregon Legislature didn't do enough to ensure wise spending by school districts.
And they say Portland Public Schools has systematically failed students of color and students from poorer homes, despite spending more per pupil than similar districts in Oregon.
"Today's audit reveals that Portland Public Schools are failing students of color, and this inequity must end," said Debra Royal, the chief of staff in the Secretary of State's Office.
PPS officials were defending themselves even before the audit was released; top district officials and board members met with reporters Tuesday and said the audit focused on past practices, rather than recent improvements.
At a press conference in Northeast Portland, auditors dismissed that accusation from PPS leaders.
"The obstacles that we saw, the challenges in the report were based on interviews with current staff, teachers and principals," said audit manager, Andrew Love. "The transactions they reviewed are current."
The 55-page audit acknowledged as much, from the outset. Auditors wrote that “PPS’s new leadership has taken important steps toward developing a uniform core curriculum, improving training, and adding student support, but still has substantial work to do.”
At Wednesday's press conference, audit manager Love agreed that PPS had made efforts to improve systems and exert stronger oversight.
"However, audits aren't just focused on efforts, we're focused on outcomes and efforts," Love added.
Political Response
Gov. Kate Brown has made finding more money for education one of her priorities in the upcoming 2019 legislative session. In a written response Wednesday afternoon, Brown said she plans to dig into the audit's findings and recommendations with the help of the state's education board.
"We must ensure that we are being accountable for every taxpayer dollar so that each Oregon student gets the highest-quality instruction and educational experience," Brown said. "As superintendent of public instruction, I will convene the State Board of Education in a special session next month to produce a set of rigorous guidelines to improve fiscal responsibility at the district level."
Brown said she also plans to involve district leaders — and not just from Portland Public.
"In order to make sure that the board understands districts' current practices and what is lacking, I will also convene superintendents from districts statewide to outline the barriers they face to streamline their program management," the governor said.
Republicans quickly seized on the new audit, produced by the staff of Oregon's only Republican statewide elected official, as proof that legislators need to examine how school districts spend their money before approving more funding. Richardson promised an audit of Portland schools in his 2016 campaign.
House Republicans sent out a press release slamming PPS and the governor just two minutes after a media embargo on the audit lifted: "Oregonians should not be asked to spend more money for a school district that has been lax in tracking its finances and unable to retain teachers," the statement said.
Democrats, meanwhile, said the audit confirmed one of the key findings they’d drawn from a year-long look into school districts around the state: The need for more accountability over state money. New revenue for K-12 schools is expected to be a central issue of the Legislative session that begins Jan. 22.
“This reinforces everything that we have found and talked about in the last year,” said state Rep. Barbara Smith Warner, a co-chair of the bipartisan committee studying schools. “We need outcome-based funding. We need to set priority categories.”
At the same time, Smith Warner said the report suggested “a basic misunderstanding” by auditors about ODE’s current authority in demanding accountability from school districts, and suggested the timing of the report — on the eve of session — could be political.
Auditors' findings and recommendations are broken down into two main areas: what they say is a lack of financial oversight and a corresponding lack of transparency around how spending translates into improvements for students.
Financial Oversight
Auditors accused Portland Public Schools of overspending in a number of areas that are non-instructional, or tangential to the core focus areas of the district. From the high costs of executive administration and legal battles to the costs of substitute teachers and buses — the audit found PPS should compare itself to other districts and make improvements.
“PPS ... needs to better benchmark its spending against peers and analyze spending trends to identify potential savings areas,” the audit said.
According to the audit, PPS spends at least $2,000 more per student than other large or nearby districts that auditors looked at in Oregon, and was in the top sixth among peer districts nationally. But the audit’s analysis found only 58 percent of that spending went toward instruction, putting Portland in the lower half of peer districts.
The audit suggested that Portland Public Schools needs to look for ways to save money, including scaling back the use of purchasing cards. Auditors noted that 13 percent of purchases on district-issued cards were for food, and that the district spent $13,000 on a group retirement party in 2017, including $1,068 for leis and other flowers shipped from Hawaii.
Along with questioning how Portland Public spends its money, auditors criticized the district for not doing enough to help the public understand where and how education money is used.
“PPS’s budget includes limited program detail, few performance measures, no benchmarking against other districts, little detail on changes in staffing and spending over time, and no information on results from high-priority programs,” auditors wrote.
Portland Public leaders agreed with all of the recommendations, and much of their written response to the audit detailed efforts the district is already doing to better manage its budget and be transparent to the public.
Student Outcomes
The secretary of state’s audit dinged Portland Public Schools and ODE alike for not adequately showing how investments are helping students. In some cases, the audit identified “initiative overload,” in which efforts to institute program improvements seemed to happen too quickly, without proper support.
Rigler Elementary School in Northeast Portland is highlighted as an example. It's a school that’s endured four new principals in the last five years and has some of the lowest scores on state assessments.
“[T]he high pace of change and instability takes its toll, contributing to student conduct issues and frequent classroom disruptions,” the audit found.
That’s just one of five “obstacles” to improvement which the audit identified. Others include under-enrollment at high poverty schools, disagreement over how to handle student misconduct and problems handling teacher turnover and absence rates.
Districtwide, the audit found that Portland Public administrators struggle to teach students living in poverty compared with similar districts. However, PPS compared fairly well with students who aren’t economically disadvantaged, regardless of ethnicity.
The audit underscored persistent achievement gaps between students of color and white students at PPS, by comparing the district with other districts, including Beaverton which "consistently scored higher than PPS in every economically disadvantaged subgroup."
At the press conference, the Secretary of State's Office held to announce the findings, several community advocates listened, spoke and asked questions. Fyndi Jermany said the findings she heard described were consistent with her experience as a former PPS parent and student. She was encouraged by the focus on improvement.
"If the audits don't happen, then things just stay the same — then those are just the answers," Jermany told OPB. "But the audits bring up recommendations and bring a different language to what already exists."
Oregon Department Of Education
The audit found an overall lack of capacity and authority at the state education department to police school district spending and ensure they're being effective stewards of public dollars.
Enforcement of local spending by state regulators is largely complaint driven. A form district administrators are required to fill out to help monitor spending consists of one page of checkboxes. That aspect of ODE's approach to regulation, often called "Division 22" for the state education rule it's part of, was also a target of Gov. Brown's response to the audit Wednesday.
State regulations allow ODE to conduct on-site reviews or desk audits of compliance with the regulations, but state leadership told auditors that on-site reviews have not been done for years since money set aside for that function was eliminated from the department budget.
“There is a lot of patience in the system for mediocre performance,” an unnamed ODE official is quoted telling auditors.
Auditors also found a lack of transparency around the spending of $1.6 billion in federal money targeted to schools with high proportions of low-income students, a stream of money known as Title I.
And the audit found a lack of oversight and lapses in the management of state grants, such as money targeted to improve outcomes for African-American students.
OPB's Dirk Vanderhart and Anna Griffin contributed to this report.