Imagine your boss giving you a check equal to four months salary and telling you to spend it quickly or risk giving it back. That in essence is what leaders in Sacramento and Washington did for California schools after the COVID-19 pandemic abruptly shutdown classrooms.
The result was a series of stimulus measures that allocated $33.5 billion in state and federal funds, a staggering amount of one-time funding for the state’s cash-strapped schools, equal to a third of all the money they got the year before the pandemic.
So how did they spend it? Billions have gone to things like laptops, air filters and mental health counselors – money to help kids. But much of the funding has come with limited oversight and little transparency, according to an investigation by CalMatters, a nonprofit news organization.
Of the $5.9 billion local education agencies have spent so far from the largest of the stimulus funds, more than a quarter went to a category for “other” expenses, according to the state.
“I’m just not sure anyone has a good handle on how this money was spent,” said John Affeldt, managing attorney at Public Advocates who works on educational equity issues.
CalMatters spent three months examining school COVID relief spending across the state, reviewing thousands of pages of records obtained through more than 45 public records requests.
The records offer a unique glimpse at how school leaders grappled with the generational challenge of COVID in dollars and cents. In the East Bay, for example, Castro Valley Unified spent most of its stimulus money on payroll. On the Peninsula, Burlingame schools spent more than $300,000 on Chromebooks. In Southern California, El Centro Elementary School District spent $3.8 million to install shade structures for outdoor eating, school assemblies and teaching space, and Long Beach Unified spent nearly $13,000 on music recorders.
The records also reveal the other pandemic winners – companies that reaped millions as overwhelmed districts, suddenly flush with cash, started writing checks.
Some are established firms well-positioned to fill massive orders for goods. Others are new ventures launched by savvy entrepreneurs to capture some of the windfall, including a limited liability company headquartered out of a UPS drop box that got a $52 million no-bid COVID testing contract in San Diego.
One chain of virtual charter schools gave $11 million – nearly two-thirds of its stimulus spending last year – to the publicly traded, for-profit company affiliated with the schools. And a Southern California public school district spent $440,000 to hire an evangelical group for a program to help at-risk kids.
Other records reveal clear mistakes or misspending. The state told West Contra Costa Unified School District to shift nearly $800,000 in unrestricted funds to reimburse its stimulus money because the district failed to prove certain payroll costs were tied to the pandemic. Oakland Unified had to reimburse nearly $1 million in stimulus money it apparently misspent on things like commercial trucks and a communication system, records show.
Some districts refused to provide CalMatters records showing where their money is going. That includes San Francisco Unified, which got more than $186 million in federal stimulus funds.
And local educational agencies still have billions of dollars of COVID relief left to spend. If they don’t spend it by various deadlines, they may have to return it.
In a written statement to CalMatters, the state Department of Education said it is “encouraged by the impact that stimulus funding is having on the students and schools of California,” and that overseeing the funds is a top priority.
“The department has a robust monitoring system to ensure that (agencies’) expenditures are in accordance with all applicable federal and state requirements,” according to the statement.
Still, it might not be enough. The state auditor’s office criticized oversight in an October report, saying the state is not using the limited data it receives to identify abnormal spending patterns and scrutinize local educational agencies.
“The state Department of Education has not taken a very active role in managing how the money is being spent,” said Kris Patel, supervising auditor who led the team behind the October report.
Money, money, money
Ultimately, California public schools and charters got almost $29 billion in federal stimulus money. Billions more came from state programs lawmakers in Sacramento created.
To get a cross-section of the stimulus spending, CalMatters asked more than 30 school districts for their accounting ledgers. Those districts included the 20 biggest and 10 random agencies across a geographically and demographically diverse swath of the state.
Castro Valley Unified spent $263,000 in stimulus funds on Freedom Soul Media Education Initiatives, an equity consultant, and $93,000 on restorative justice consultants, records show. Santa Ana Unified gave $393,000 to Angels Baseball LP to rent out the major league baseball stadium for last year’s high school graduation festivities.
“There’s a district in the Central Coast area that bought an ice cream truck with their money” to give away ice cream to kids stuck at home during the early days of the pandemic, said Michael Fine, chief executive officer of the Fiscal Crisis and Management Assistance Team, a state-created organization that helps fiscally troubled school districts get their finances in order. “When I was told that I kind of went off.”
One common area of spending was technology. Some districts spent heavily on laptops, hot spots and other hardware, as well as computer programs and support in order to make the switch to virtual schooling when buildings shut down.
Some educators and advocates question the amount of high-tech spending.
“Consulting companies and education service providers have been really aggressive in reaching out to districts to use these funds for new programs that they’re now creating to serve students,” said Amir Whitaker, senior policy counsel for the American Civil Liberties Union of Southern California.
It wasn’t just technology companies that reaped massive paydays from districts flush with stimulus cash. Personal protective equipment vendors and businesses selling indoor air quality products got lots of deals. Firms touting COVID testing-related services also were in high demand.
In September 2021, San Diego Unified’s board ratified a no-bid contract with a firm called Responsive Partners LLC – which formed during the pandemic in April 2020 and lists a UPS drop box in Orange County as its address – to run a COVID testing program. The district amended the contract a few months later and the agreement – which runs through July 30 – is now worth up to $52 million.
The board ratified the initial agreement at a September board meeting with no discussion, a video of the meeting shows. The board approved the amended agreement in January, again, with no public discussion.
School officials say the contract was worth it for a district that’s had a particularly aggressive testing strategy to keep schools open – offering far more tests and testing sites than many other districts.
Curious spending but little oversight
The California Virtual Academies, a chain of nine charter schools across the state, were probably better positioned than most to weather the pandemic. They didn’t need to worry about social distancing or need to suddenly figure out how to teach remotely. That’s because they were already teaching students exclusively online.
So how did the virtual academies use the $18 million in COVID relief money they spent last year? Nearly two-thirds of it – $11 million – went to K12 Management Inc., a subsidiary of the publicly traded corporation that helps run the schools, according to records the schools provided to CalMatters in response to a records request. And while some of that money is listed as going to pay for computers and peripheral equipment for students, $8.6 million went to “student course materials” or “online curriculum” straight from the corporation, the records show.
The charters and their relationship to the parent corporation – Stride Inc., which was formerly known as K12 Inc. – have been the source of past legal problems. In 2016, following an investigation by the Bay Area News Group, the state attorney general’s office announced a $168.5 million settlement with K12 Inc. over allegations the company and schools misled parents to boost enrollment and inflated attendance numbers.
CalMatters spoke to several current or former staff at the virtual academies who worked during the pandemic. They said teachers and counselors were overwhelmed as enrollment grew and questioned why so much money went to the corporation.
In an email, the company told CalMatters that the state didn’t provide additional funding to cover the increased enrollment and that the corporation provides online curriculum, education materials, a learning management system and “a wealth of other items” for students and teachers.
Most districts and schools are facing little scrutiny for their pandemic spending decisions, outside local administrative offices and boardrooms. Last fiscal year, the state Education Department reviewed stimulus spending at 15 local educational agencies – less than a percent of the roughly 1,700 agencies that got stimulus funds. This year the department is reviewing 50.
Those reviews turned up numerous red flags, ranging from poor record keeping to outdated conflict-of-interest policies to outright misspending.
Hayward Unified, dinged by state monitors over stimulus spending in a review last year – has been able to resolve most of its findings without losing money. State reviewers identified six issues at the school in fiscal year 2020-21.
Still, it’s taken a long time for the district to prove to the state it didn’t mishandle money. Districts are supposed to resolve findings within 45 days. As of this month, it’s been more than a year, and one finding remains outstanding.
Hayward’s assistant superintendent of Business Services, Allan Garde, wrote in an email to CalMatters that the district has been busy trying to keep schools open and running, and expected to resolve the last of the outstanding issues by the end of this month.
The slow pace of resolution hints at the limits of state authority.