State subcommittee says hire both consulting companies offering bids or neither

A legislative panel on Wednesday rebuffed the state House and Senate Education committees’ proposal to hire a Colorado consulting firm to study the state’s process for paying for public education.

Instead, the Policy Making Subcommittee of the Arkansas Legislative Council voted to require the education committees either hire both of the companies submitting bids for the study or none at all.

The subcommittee’s recommendation will go before the full Legislative Council on Friday.

Wednesday’s action was the latest complication in a controversial process splitting lawmakers for several years. In addition to disagreements about which company should study Arkansas school finance, legislators have disagreed about the scope of such a study and whether such a study is necessary.

Under the motion approved Wednesday, the education committees would have to enter two contracts

— one for $499,236 with St. Louis-based Shuls and Associates and another for $659,580 with Denver-based Augenblick, Palaich and Associates.

If lawmakers ultimately hire both companies, the cost will exceed $1.1 million.

Those in favor of the motion said more information from separate groups would benefit the committees as they made recommendations for education funding changes. There was also concern from some members Augenblick, Palaich and Associates would recommend large funding increases.

Looming over the process is the prospect of another lawsuit — such as the 2003 case prompting an overhaul of how the state pays for public schools — if the recommendations of a consultant aren’t implemented.

“We’d be providing a piece of evidence in a lawsuit that we didn’t produce adequacy,” state Sen. Bob Ballinger, R-Berryville, said. “The experience [Augenblick, Palaich and Associates] have comes back and says, ‘You’re not spending enough on education.’

“If we have two groups that come back and say we’re not spending enough on education, then we’ll be stuck, but at least at that point, we’ll have a couple of ideas.”

FUNDING STUDY

There has been growing, bipartisan appetite in the Legislature in recent years to hire an outside group to review the education committees’ process for making public school funding recommendations every two years. The process hasn’t received an indepth, outside review since two college professors were hired to help develop a new formula in 2003 after the Arkansas Supreme Court’s Lake View School District No. 25 v. Huckabee landmark decision deeming the state’s funding model unconstitutional.

Every two years, the committees review the formula, typically making small tweaks, but it remains largely the same as it was 16 years ago.

Sen. Joyce Elliott, D-Little Rock, said hiring two groups was unnecessary.

“I don’t know that it’s fruitful for us to have these separate companies doing the work of adequacy,” she said. “That seems to be just a recipe for spending more money and prolonging what we’re doing.”

Sen. Blake Johnson, R-Corning, noted school money comprises a huge chunk of state spending. Indeed, public education accounts for the largest single category of state spending. It comprises about 41% of the general revenue budget, making up about $2.25 billion of this year’s $5.75 billion budget.

“I don’t care that you spend another $400,000,” Johnson said. “The more info we can get as a body, the better off we are.”

SURPRISED REACTION

The House Education Committee chairman, Rep. Bruce Cozart, R-Hot Springs, said he was surprised by the Policy Making Subcommittee’s action Wednesday. He said he expects the education committees will support hiring both, but he’s not sure how it will play out.

“I’ll be blatantly honest; the people that didn’t want [Augenblick, Palaich and Associates] I think were trying to figure out how to do something different,” he said. “I don’t have a problem doing it the way they want to do it. I just don’t know about spending that amount of money.”

Cozart noted several members who supported Wednesday’s action raised concerns about the higher bid Augenblick, Palaich and Associates submitted to a broader request for adequacy study proposals issued in the spring. The $943,605 proposal was ultimately rejected, and the committee issued a new bid request with a narrower scope.

“The first time the proposal came in, they were just about to have a cow,” Cozart said. “I guess that cow just jumped over the moon.”

Officials from both Augenblick, Palaich and Associates

and Shuls and Associates were a bit bemused by the General Assembly’s process on this contract, and neither company committed to accepting a contract with simultaneous studies from both companies.

Justin Silverstein, co-CEO of Augenblick Palaich and Associates, said he wanted to confer with his team before making a commitment, though he expected the company would be willing to continue with the contract.

Augenblick, Palaich and Associates is one of the few firms in the country doing studies similar to the one being proposed in Arkansas. The firm has worked in 50 states over the better part of the past four decades, and it has done adequacy studies in more than 20 states.

“We haven’t seen a process quite like this,” Silverstein said after Wednesday’s meeting.

Silverstein said Ballinger was correct his firm had often recommended significant funding increases, but those recommendations typically came in states in the early stages of educational adequacy — such as Arkansas in 2003.

This study, Silverstein said, is tailored to look at the state’s process and structure, not whether school spending is adequate. Thus, he said his firm wouldn’t be providing any “full-system dollar amount” recommendations.

MISSOURI GROUP

Shuls and Associates is a new group created in August with the Arkansas contract in mind. James Shuls, an assistant professor at the University of Missouri-St. Louis, formed the company, and he proposed partnering with the University of Arkansas’ Office for Education Policy and a handful of other individuals to study Arkansas’ education funding methods.

Several lawmakers questioned the timing of Shuls and Associates’ formation as well as the publicized opinions on school choice issues and teacher pensions

by Shuls and other members of his team.

One lawmaker asked legislative staff to contact Shuls, among others, about bidding on the contract, which prompted questions from some other committee members, but that member never identified himself or herself when other committee members asked. Bureau of Legislative Research staff say they are precluded from divulging conversations with lawmakers.

Shuls has said he was never contacted by a lawmaker from Arkansas nor did he contact one.

The education committees didn’t vote to hire Shuls’ group.

Shuls on Wednesday said no one from the state contacted him about possibly being re-included in the process. He said he wanted to wait to comment until he talked with his team and received word from the state.

However, he said he was a bit frustrated by the process. He noted the initial request for proposals was taken down earlier and reconfigured in hopes more consulting firms applied.

“I formed a firm for that very purpose,” Shuls said, noting the projects and bidding process is long and complex. “Then, they question my character. And they wonder why there are so few firms who do this work.”

House Speaker Matthew Shepherd, R-El Dorado, attended the subcommittee meeting Wednesday. He said he became somewhat involved in the process because there was a lot of disagreement about how to approach the consulting contract.

He said he hoped hiring both groups would find a “middle ground,” and said he didn’t think the Policy Making Subcommittee’s action undermined the education committees. He said under Wednesday’s proposal, the education committees would still receive Augenblick, Palaich and Associates input just as it would’ve if it was the only company hired.