Auditor's report criticizes Missouri's school reform deal

KANSAS CITY, Mo. -- The Missouri education department's process for seeking bids from consultants to study a possible overhaul of the Kansas City School District was biased and included potential conflicts of interest, according to an auditor's report.

The review released Tuesday by deputy state auditor Harry Otto criticized the process the Missouri Department of Elementary and Secondary Education used before contracting with Indianapolis-based Cities for Education Entrepreneurship Trust last year.

State officials were working with CEE-Trust and the Ewing Marion Kauffman Foundation for months before the bidding process began and CEE-Trust received the $385,000 contract despite a competing bid at less than a third of the cost, The Kansas City Star reported.

The Star reported in December that department emails and bidding documents showed CEE-Trust and Missouri Education Commissioner Chris Nicastro communicated for months in 2013 and had hoped the department could hire CEE-Trust without a bid process.

When the state school board last summer directed the department to use a bidding process, it used a procedure that did not guard against bias, Otto said.

State officials who worked with CEE-Trust and the Kauffman Foundation were involved in scoring the bids, and the scoring system did not explain how CEE-Trust's bid earned a significantly higher score for experience, reliability and expertise over the less expensive vendor, the report said. CEE-Trust's bid also did not disclose that the Kauffman Foundation was part of CEE-Trust's nationwide network of not-for-profits and foundations working on education reform.

The bidding process "raises questions regarding the independence and objectivity of the report's findings," the auditors wrote.

The department said in a written statement Tuesday that it would try to implement recommendations from the auditors' review although it listed "no material findings," or significant weaknesses that would endanger public funds.

But Otto said that bidding process should not be repeated.

"That would be material if you continually worked with bidders that way," he said.

The Kauffman Foundation's vice president of education, Aaron North, said in a statement that the foundation aimed to achieve the best possible academic and life outcomes for all students.