Scott Westerhuis’s apparent murder-suicide and the burning of his lavish-beyond-visible-means house on September 17 has sent investigators and journalists digging deeper to find what sort of sins or errors might have been going on at Mid-Central Educational Cooperative, where Scott Westerhuis and his wife Nicole worked as business managers, and possibly in the state Department of Education. Ferguson and Ellis write that conflicts of interest are at the core of the MCEC investigation. Indeed, MCEC’s employment of cronies and high state officials within Westerhuis’s trail of corporate entities should trigger those alarms.
But possible conflicts of interest are only part of the MCEC picture. From a policy perspective, there are two more areas that the Legislature’s Government Operations and Audit Committee and the auditors combing MCEC’s books should help us understand: no-bid contracts and multi-layered administrative waste.
First, no-bid contracts. Millions of dollars have flowed into the state via federal grants like GEAR UP. The state Department of Education receives that money. When the DOE uses that money to buy goods and services, one would think the DOE would have seek competitive bids. But when the DOE can hand that money to an educational cooperative like MCEC, which doubles as an “educational service agency” (MCEC is also ESA 3), things get murkier. When MCEC contracts with non-governmental non-profits like the American Indian Institute for Innovation and Oceti Sakowin Education Consortium to deliver GEAR UP services, is the disbursement of that federal money still subject to the competitive bid process? How well can an external entity like GOAC make sure the state’s use of that federal money follows the rules when the money passes through a number of public and private funnels that may be subject to different rules?
Consider these four lines from MCEC’s FY2016 budget:
Over three-quarter million for the American Indian Institute for Innovation, an additional $114K for AIII’s director of student services Brian Wagner, a quarter-million-plus more for former DOE chief Rick Melmer—if these were state contracts, we’d know that AIII, Wagner, and Melmer had to compete for them. We’d be able to look up the particulars of their contracts and know what they’re doing to earn that cash. But since the DOE shifts this money to MCEC, we have no such transparency.
Ensuring competitive bidding should draw GOAC’s attention. Checking administrative waste should draw the attention of the Blue Ribbon Task Force on Teachers and Students.
Consider again the flow of GEAR UP money. The South Dakota Department of Education intends those federal dollars to prepare American Indian kids for college. Until last month, the DOE disbursed that money to MCEC to coordinate statewide American Indian education activities. MCEC business manager Westerhuis apparently created a handful of separate corporate entities, each with their own administrators, to do GEAR UP work for MCEC. MCEC also hired a number of consultants to help execute GEAR UP projects.
Each level of that organizational tree adds waste. DOE staff use staples and stamps. MCEC staff drive to meetings. AIII and OSEC and Rick Melmer and Keith Moore all take their cut for their expenses. And then whatever’s left actually teaches kids.
Do we really need that many pulleys in the system, each introducing friction, each diminishing the energy available to lift kids into success? If we had fewer pulleys, wouldn’t it be easier for the Department of Education, the Legislature, and the public to follow the inputs through the system to their final impact on kids?
With such a complicated system of delivering educational services, it’s hard to tell how much money is actually getting to teachers and students, let alone whether it’s doing any good. And while a lot of the DOE money we’re talking about here is federal and private grant money that can’t be used for the number-one item the Blue Ribbon panel needs to be concentrating on (teacher salaries, kids—teacher salaries), this convoluted system of passing money from the state to coops to consultants to who-knows-whom seems to beg for scrutiny and simplification.
And of course, if we reduce the number of organizational steps between receipt and expenditure of these big grants, it will be harder for conflicts of interest to happen, as it will be easier to connect the dots between, say, a member of the state Board of Edcuation and grant dollars disbursed by the Department that Board oversees.
The EB-5 scandal got the Legislature to make one small, positive change in our conflict-of-interest laws. Perhaps the MCEC scandal will prompt our Legislature to go further to impose more transparency and efficiency on our Department of Education to ensure that we can all better track how our education dollars are being used to help our kids, not our consultants.
I just wish it didn’t take guys shooting themselves in Charles Mix County to get the Legislature to take action against corruption.