Douglas County School District is marketing software for profit

In its effort to “reinvent American education,” the district spent untold millions in tax dollars to develop the technology – partly for commercial use – while slashing instruction time for students.

Douglas County School District is marketing software for profit

The Douglas County School District is marketing a software system it has developed to carry out pay-for-performance and other controversial education reforms, a move its critics say confirms that the district’s free-market majority seeks to spread its methods for “reinventing American education” well beyond its boundaries.

The district, in what it describes as a pilot project, already has sold licensing rights to the software to Mile High Academy, a Christian school in Highlands Ranch. The sale, like the pilot project itself, took place out of the public eye, and is now raising questions about the legality of a public school district launching a for-profit business. 

“The cost of making this scalable to other entities must be enormous,” says Jenny Robertson, a former Douglas County parent who works in software development. “DCSD is not a software company. Taxpayers are not willing investors in the development of a commercial software product.”

Known as “InspirED Innovation,” the software is an integrated suite of web-based software tools “for instructional planning, certified staff evaluation, professional development, student learning objective tracking, and twice annual elementary progress reporting,” according to the district’s website.

While the fact that the district has been developing the software to meet the mandates of state law long has been known — and debated —  confirmation that it has its eye on the commercial market came at an Aug. 2 school board meeting. During that meeting, school board member Wendy Vogel repeatedly pushed administration officials for answers about how much it cost the district to develop the software and whether it intends to sell it.

District leadership has dodged questions from parents and other community members about the software, but last week said its development cost about $5.6 million — a price tag watchdogs who have followed a paper trail of expenses say is roughly one-third of their own estimates.

Whatever the amount, critics question the expense. Five years ago, Douglas County voters rejected a tax proposal that sought to pay for such tech project.

What we have is a district in turmoil that has been diverting millions of dollars from educating our children into a product we know nothing about,” says Anne-Marie Lemieux, one of the newly-elected Douglas County School Board members who for months has been raising questions about the software project.

Gautam Sethi, the district’s chief technology officer, told The Colorado Independent in an email that the goal of the pilot project with Mile High Academy was essentially to conduct a cost-benefit analysis “to see if it is a viable endeavor for DCSD to generate revenue by allowing other schools/districts to use InspirED for meeting their critical needs.”

“What we have been able to validate with the pilot is that we can potentially generate additional revenue to meet district budget needs, if pursued with energy,” Sethi wrote. “The future of this endeavor is dependent on the interest or desire of the Board of Education and district leadership to pursue this further.”

Douglas County is made up largely of affluent bedroom communities south of Denver. Its once highly regarded school system has, over the past six years, become a laboratory for a national movement to overhaul public education.

Backed by hundreds of thousands of dollars in campaign contributions from conservative education reformers, free-marketeers and social conservatives won the board’s majority in 2009. They since have ended the teachers’ union contract, enacted a school voucher program, implemented a controversial pay-for-performance system, rejected the Common Core curriculum used elsewhere in Colorado and put in place a “Guaranteed and Viable Curriculum” they promise will deliver “World-Class Outcomes” among the district’s 67,000 students.

Teachers, counselors, school psychologists, deans and other administrators have been leaving the district, citing their frustration over low morale, funding priorities and the emphasis on technology.

DCSD set out to build the specialized software about three years ago in response to a 2010 state law that based half of teacher and principal performance on supervisors’ reviews and the other half on students’ test scores and other achievements. At the time, the district was also cutting instructional hours, slashing art and music programs, downsizing its staff, and starting to charge for school bus transportation.

Developing new software became a pet project of Liz Fagen, the superintendent who recently left Douglas County for a job in Texas. When Fagen joined the district in 2010, she found there was no off-the-shelf software to support her board’s sweeping accountability reforms. She and her team devised a system that, at the time, they called “Big DATA.” Fagen hoped to make Douglas County “the U.S. implementation and demonstration site” for an international movement using technology to bring public schools more in line with free-market values.

“We believe a system focused on the right outcomes with the capability to both assess and teach them authentically…will be a national model that can change American Education – produce the best-prepared workforce on the planet and continue to be an economic engine for the country,” reads a DCSD brochure written to lure private investors.

 “We are determined to do this work no matter what because it is what our students, teachers and community and country need,” the brochure reads. “We are not asking for an investment in one school district. We are asking for an investment in America.”

But the district was unable to lure the level of private investment needed to develop the software to scale for commercial use. Douglas County voters also weren’t interested in bankrolling the project. In 2011, they rejected a bond to pay for the tech system.

After their defeat at the polls, Fagen and her staff went to work developing the software, anyway. As development began, the district was slashing other programs. It cut middle school spending and renovation and construction projects. It dismantled the sick bank through which teachers could donate accumulated unused sick days to others more in need. And it implemented what’s known as a “six of eight” school schedule that significantly reduced instructional time in high schools. The modified schedule was a way, officials said, to save $3.6 million a year.

“We literally had to tell our students they could only take three out of four classes.  That was 90 minutes a day, in addition to lunch, they weren’t in class,” says Julie Keim, a parent in Larkspur. “They created a scenario where kids basically didn’t even have to go to school for their senior year.”

The district’s reserve fund balance grew as spending was being cut. In 2012, DCSD had $17 million in extra reserves. The board had a $5 million annual contingency fund that kept rolling over each year. Parents and others say they asked about the surpluses, only to be told that they weren’t, in fact, surpluses and that complexities of school finance were difficult for the public to understand.

“I knew something wasn’t adding up,” says Laura Mutton, a Highlands Ranch parent, president of a watchdog group called Strong Schools Coalition and engineer who specializes in accounting software. “But I was ignored.”

“We couldn’t understand how they could have this surplus, but be cutting schools’ funding,” added Keim, a former CPA with experience auditing school districts. She ran unsuccessfully for school board in 2013 on a platform calling for more fiscal transparency. “But now we know what they were doing with all that money.”

In March 2014, the board transferred $7.5 million from the general fund to the capital fund — a move the Strong Schools Coalition and others suspect helped pay for the software system. According to documents reviewed by The Independent, officials logged some tech expenses under accounting codes with no name. Some of those accounting codes have been changed, making it hard to track true costs.

“We’ve asked to quantify it several different times. And every time, we receive different answers and different accounting codes,” says Josh Kuper, an engineer from Parker who has been analyzing the district’s financial records. He says his girlfriend pulled her kids from the district out of frustration with its reforms.

“We’re facing a shell game,” Kuper said. “They’re shuffling money, plain and simple.”

District spokeswoman Paula Hans didn’t respond to an email seeking comment about his allegation and the transfer of funds.

Kuper is part of the coalition of parents and activists who’ve been asking what exactly the software does, how much it costs, where the funding has come from, how much of it is up and running, how much has yet to be built and whether the district plans to sell it.

After combing through online financial records and thousands of documents obtained under Colorado’s open records law, the coalition put the cost of the software project at roughly $16 to $18 million, which it calls a conservative estimate.

“It’s like a blank checkbook, and it’s coming at the expense of our children,” Mutton says.

Though activists long suspected that the district was developing software for commercial sale, they had no confirmation until last week’s school board meeting when members of the minority objected to putting a mill levy and bond for capital projects on this November’s ballot. Board member Vogel said she couldn’t support a tax increase because the district has been less than transparent about its spending practices, especially around the software project. During the meeting, she asked for a total cost, which she had been asking for for several months.

“We’re in the process of collecting that,” Steven Cook, the acting superintendent, told her. “That’s an involved answer that will take some time to get you answers.”

Vogel kept pushing.

“What I have a problem with is significant amounts of dollars being diverted away from our classrooms into building systems and building software packages and programs and data collection and a data center,” Vogel said, asking if the district has plans to sell the software package or its components.

“Not to my knowledge,” Cook responded.

Then came an awkward silence in the boardroom as all eyes fell on Sethi, the district’s chief technology officer.

“What’s… I’m trying to figure out what is the question? ‘Sell?’” Sethi asked.

Vogel repeated her question.

Sethi acknowledged that the district has “shown the product multiple times” to “outside school districts” that have expressed interest in buying it. Among those, he disclosed, was Mile High Academy with which it set up a pilot project. But, he said, DCSD doesn’t yet have the resources to mass market the software.

Regardless of whether the school district has sold one or many licensing agreements, Vogel asked, “Is that something that we’re allowed to do as a public school district? I didn’t know that we were allowed to sell something?”

Robert Ross, the district’s attorney, responded by saying the board discussed the software sale in executive session last summer – before Vogel and the board’s newly elected minority took office in the fall.

Vogel looked displeased.

“I would reiterate again: We are a public school district. We’re not in the business of building software systems or software packages. This is why I have concerns about going to the community to ask for more money.”

The board narrowly voted at that Aug. 2 meeting not to seek a tax increase from voters this November.

An open records request filed by a member of the watchdog coalition after the meeting turned up a contract reviewed by The Independent showing that in August 2015, the district sold licensing rights for a “certain software” to RMC Education, which runs Mile High Academy. The initial licensing fee was for $10,498. Beyond that, the contract calls for RMC to pay an ongoing license of about $8,343 a year. In the contract, the district commits to providing up to three days of software training, plus up to 600 minutes of remote instruction and support.

Sethi told The Colorado Independent that the “contract was built to reimburse the district” for time its employees would be training the private school’s staff.

Parents and community activists are asking how the district launched a pilot project for a for-profit software business without the public’s knowledge.

Calls to former superintendent Fagen and majority board members were not returned at the time of this posting, but The Colorado Independent will continue to update this story.

The debate has the potential to deepen the rifts between members of the board’s majority who are interested both in the district profiting from software sales and using the product as a tool to “reinvent American education” beyond Douglas County, and members of the minority who see selling software as high-risk mission creep.

“What did we buy?” Kuper asked during an interview Saturday.

Keim wondered: “What are we selling?”

Added Kuper: “Yeah, and where’s my dividend?”

 

[Photo credit: Fabien via Creative Commons in Flickr]

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About the Author

Susan Greene

A recovering newspaper journalist and Pulitzer finalist. Her criminal justice reporting includes “Trashing the Truth,” with Miles Moffeit, and “The Gray Box.”
susan@coloradoindependent.com | 720-295-8006 | @greeneindenver

7 Comments

  1. Joe Gawronski on said:

    Lines get blurrier every day. Perhaps it’s strategic? Squeeze the funding from public ed. to the point where districts think “outside the box” for additional revenue, begin creating products for profit to help “close the financial gap,” then the legislators can begin getting Super PAC funding from corporations and districts, and in turn make laws that reward who contributes more? It may sound crazy, but it seems to be happening right under our noses in some cases. Down with “Citizens” United. (or shall we call it corporations united?)

  2. buford on said:

    As expected, more corruption from the Republican party, supported by the Koch party…Yep, the gop is a bunch of corrupt and sick individuals…

  3. Lucas Anderson on said:

    Im glad they charged MHA $10k for our $17m investment. Solid business sense there. Also, Im sure have a school district compete with the software giants of the world is also a solid plan too, seems to fit the skill set of a public entity. Hey, anyone can be a SaaS start up these days right? For a board who likes to think it can act like a free market entity, they sure are ignorant. No wonder they couldnt gat any real private investment, no sane investor would touch this with a 10ft pole.

  4. Lucas Anderson on said:

    I guess we now know why they just hired a superintendent with more experience in technology consulting than in education. Seems like the board wants nothing more than to do anything other than be involved in public education.

  5. Anne on said:

    I do agree that this needs to be legally investigated, and that there is something seriously wrong here.

    I do not, however, appreciate the generalized, partisan accusations. Let’s tackle the real issues here and not people’s party affiliations as if that tactic can reveal the source of every problem.

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