By Joyce Ajayi, Mavuto Kalulu, and David Lee
Year after year we are seeing more laws and initiatives go into effect to encourage local levels of government in Arkansas to have more online transparency. For example, Act 564 recently mandated all Arkansas counties to publish their annual budget and financial reports online. Why is this important? Local government transparency initiatives play an integral role in increasing citizen’s trust in government. We need more strategic transparency initiatives at lower levels of government as shown by a 2019 study by Mavuto Kalulu, Terra Aquia, and Joyce Ajayi “Creating an Index to Measure Transparency in Arkansas Counties” published in the Southwest Business and Economics Journal.
School districts are a great place to focus transparency initiatives because they receive a lot of tax dollars and it is hard to know how those dollars are spent. A 2013 assessment of online transparency by Kristin McMurray “2013 Transparency Report Card: Bringing State & Local Governments to Light.” published by the Sunshine Review revealed that lower levels of government such as counties and school districts are not as transparent as states. Yet, they are entrusted with billions of taxpayer dollars. From 2015 to 2019, school districts in Arkansas spent over $5 billion annually.
Recently researchers at the Arkansas Center for Research in Economics (ACRE) began looking into how school districts in Arkansas are doing with regard to online transparency. We are starting with the school district’s procurement process. “Procurement” refers to the process of acquiring goods and services from third parties. Goods and services can range from contracts for work to be done, or services to be performed, or for equipment, materials or supplies to be sold to the district.
The procurement process is governed by ACA §6-21-301 thru §6-21-306, which gives school boards the authority to formulate guidelines for the procurement process. The board can designate the purchasing authority to a lawfully designated purchasing official. For purchases equal to or greater than $20,000, the purchasing officials are required to solicit bids from potential suppliers. School districts announce intentions to purchase goods or services through a request for proposal (RFP)- a document that specifies details of sought goods and services including the criteria the officials will use to evaluate bids. The winning bid is determined by scoring each criterion and the bidder with the best score is awarded the contract. The criteria includes, among others, price, quality and delivery time. In the event all bids are rejected, purchasing officials can negotiate the contracts individually but they have to give an opportunity to all the bidders to enter into the negotiation to ensure the process remains competitive. Purchases less than $20,000, can be solicited without bids but purchasing officials are prohibited from splitting a purchase worth more than $20,000 to circumvent the bidding process. For example, on April 7, 2020, Fort Smith School District put out a request for quotation for paper supplies to restock its warehouse. The contract to supply the requested materials was awarded to DGS Educational Products, National Art & School Supplies, Pyramids School Products, School Specialty Inc. and standard Stationery Supply Co.
With billions of taxpayers’ dollars, comes the responsibility of informing residents how they are spent. Government officials must be above suspicion in matters of spending and procurement ethics. They can ensure transparency by providing residents with easy access to information on the procurement contracts online. Publishing current and prior years vendors and the value of their contracts allows residents to see who is being awarded the contracts and eliminates the mistrust some residents may have in the procurement process. Especially for purchases that require competitive bidding, officials should publish online requests for proposals (RFPs) as well as bid winners so that residents can see what was requested and compare it with what was delivered.
When residents are able to provide this extra layer of scrutiny, it encourages purchasing officials to adhere to the guidance set by the school district board resulting in reduced opportunities to abuse the system without getting caught. Good rules can also minimize the temptation for public officials to award contracts to preferred vendors through manipulating the requirements to favor certain vendors. This would also prevent even bolder misuses of funds like when Brandi Freeman of Westside School District stole $178,391 in 2017. Almost $68,000 of this amount was for unauthorized payments for personal expenses and payments to personal vendor accounts and a fictitious vendor. You can learn more about this case in the “Special Report of the Arkansas Legislative Audit: Prosecuting Attorneys Disposition of Matters Referred by the Legislative Joint Auditing Committee 2017”
Transparency also saves money. A report by Rachel Cross, Michelle Surka and Scott Welder, “Following the Money 2018,” documents the cost savings various states have made by publishing contract information on their transparency websites. Because the information is public and easily accessible, contractors and vendors are less inclined to overcharge for the goods and services provided. In addition, when this information is easily accessible, it encourages more vendors to apply. Increased competition results in lower prices. For example, a 2015 report by Rachel Cross and her colleagues reported that the launch of Florida’s contract database was partially responsible for saving $40 million during the period 2013-2014 to 2014-2015.
Current Arkansas laws do not address how residents can access the information regarding school districts’ procurement process or who ultimately gets the contracts so the online publication of this material is voluntary. While some of the information can be obtained through FOIA, publishing the information online facilitates a smooth flow of information between school districts and residents. As argued earlier, it reduces the number of requests as well as providing residents quick access to information. Our research team randomly selected 20 of the 269 school districts for a pilot examination of online procurement information. The sample includes districts of varying sizes and population across the state. The table below shows the information that we found online for each of the school districts in our sample.
To ensure the accuracy of our online examination of the websites, we contacted all 20 school districts via phone and email to gather more insight on their bidding procedure. Eighteen out of the 20 districts responded. Only two school districts had not returned our call or emails by April 5th 2020. We learned that school districts keep bidding information for a varying length of time. According to Ark. Code Ann. § 14-59-114 “bids are counted as support documents, and must be maintained and archived for a period of four years”. Eight schools indicated they held the bids for about five years after the contract was awarded. One school district indicated that it actively destroys their records after completion. This is not only a breach of Ark. Code Ann. § 14-59-114 but also unwise considering the possibility that a vendor or other party may be unsatisfied and may seek documentation for a court case.
Fort Smith school district publishes more bidding information online than the other nineteen school districts. They include current and prior year’s requests for proposals and bid winners. Three other school districts, namely Jonesboro, Little Rock and Texarkana have sections for RFPS on their websites but none of the actual documents were in there when we examined them in April 2020.
Billions of dollars are spent by school districts procuring goods and services. This information should be easily available and easily understandable. School districts already have an online platform and are already required to post other information online by the state. Alternatively, the state could create a transparency portal for school districts to publish their contract information. Missouri’s Show-Me Checkbook data portal provides Missourians access to expenditure data for both state and local governments. The data is searchable by vendor. While Missouri’s portal does not show data for school districts, it is advisable for Arkansas to consider expanding its state transparency portal to include school districts. These transparency portals do not provide all the information regarding bids such as bid amounts of other bidders but at least the residents can track down how the money is spent by their government. Although there is currently no state mandate for school districts to keep an online record of their bids or any information regarding them, it is a transparency issue and taxpayers and parents have a right to know how these processes are being conducted and the outcomes of the processes.
Mavuto Kalulu and Joyce Ajayi are policy analysts with the Arkansas Center for Research in Economics at the University of Central Arkansas in Conway and coauthors of “Access Arkansas: County Web Transparency,” an annual report on the accessibility of fiscal, administrative, and political information in Arkansas counties.
David Lee is a student worker and was tasked with the gathering of information from school districts through direct contact by phone and email. He also searched for the information on the school districts’ websites.
The views expressed in this article are those of the authors and do not necessarily reflect those of the University of Central Arkansas.