Analysis: Idaho picks a fledgling firm to ship $50 million of grants to parents

By Kevin Richert

In just three weeks, more than 18,000 Idahoans have applied for a piece of the state’s Empowering Parents education grants program.

Parents have applied for more than $37.5 million, which would gobble up more than three-fourths of the $50 million set aside for the grants.

The job of processing this surge of applications — and sending out money to cover families’ out-of-pocket education expenses — falls to a relatively new vendor with no experience in Idaho, and limited experience nationally.

New York-based Primary Class Inc., stands to receive nearly $1.5 million to execute the Empowering Parents program. Primary Class was not the low bidder on the project, and it wasn’t even all that close.

Why did state officials hire a relatively inexperienced contractor for a high-profile education initiative — one that will connect directly with thousands of parents and businesses across Idaho?

Here’s the story — pieced together from interviews and contractor bids, which Idaho Education News obtained through a public records request.

State officials were behind schedule, and in a hurry

Before they even solicited bids, state officials were behind schedule.

The bill that created the Empowering Parents grants program — which Gov. Brad Little signed into law on March 1 — directed the State Board of Education to get the program running within 45 days. “We didn’t come anywhere close to meeting that,” State Board executive director Matt Freeman said.

Passed overwhelmingly by the 2022 Legislature, the Empowering Parents program puts $50 million of federal coronavirus aid into education grants. Families will be able to use a digital wallet to pay for education programs, from a menu of approved vendors. Grants will max out at $1,000 per student or $3,000 per household. Families with household incomes of $60,000 or less will get first priority.

By early summer, State Board staff and the Idaho Department of Administration’s purchasing division were talking about options. A full-blown request for proposals would probably have taken 90 to 120 days, further delaying the rollout. A streamlined process, known as a request for qualifications, would have required the state to take the low bidder, and the State Board was uncomfortable with that option, Freeman said.

State officials settled on something in between: a request for qualifications process that allowed the State Board to ask some questions of its bidders.

The state opened the bidding on July 26 and accepted bids through Aug. 2, a seven-day window. On Aug. 8, Primary Class signed a contract with the state.

The State Board had two priorities, Freeman said. The board wanted a vendor who could get an Empowering Parents website up and running in 30 days. And it wanted a vendor who had successfully run projects in other states.

A new contractor courts Idaho, and lands its first statewide deal

Primary Class met one of those objectives: the 30-day deadline. Its website was up on Sept. 7 — and during a test launch that day, nearly 50 parents signed up.

However, Primary Class’ out-of-state experience is limited. In its application, the company pointed to contracts in Arizona and Colorado, where it runs privately funded microgrant programs on behalf of nonprofits. However, Empowering Parents is the company’s first full statewide launch, CEO Joseph Connor said in an interview Tuesday.

An attorney with background in education regulation, and a former teacher, Connor founded Primary Class about 18 months ago. He said he saw a growing market: grant programs designed to help families cover educational expenses.

Primary Class also saw opportunity in Idaho. As the Empowering Parents bill worked its way through the Statehouse, the company began networking in Idaho.

The company heard a common message from parents and businesses. While Idaho’s 2020 $50 million Strong Families, Strong Students grant program was geared to cover pandemic-related education expenses, parents in 2022 said they needed help with tutoring, music instruction, therapy or other in-person services. And after the 2020 grants largely went to the tech sector, local education vendors were hoping to position for a share of the 2022 market.

In its application, Primary Class touted its work to build its Empowering Parents marketplace, the online portal where parents will spend their grant dollars. The company said it had identified 538 Idaho vendors who were interested in joining the marketplace. “That really became a big point of emphasis for us,” said Connor, who anticipates most of these businesses to join the marketplace at some point.

As of Wednesday, the State Board said only 50 vendors had applied for the marketplace. But according to Blake Youde, a Boise lobbyist representing Primary Class, those vendors will serve more than 100 locations statewide.

Meanwhile, Primary Class also sought to build an in-state coalition. With its bid, it submitted several letters of support with its application — from the Lee Pesky Learning Center, the Idaho Association of School Administrators and the Idaho Commission on Hispanic Affairs, among other groups. The letters might not have held much sway, though.

“Letters of support and other information that was not specifically requested by the Division of Purchasing were not considered,” the state Department of Administration said in a written response to questions from Idaho EdNews.

Cost was a secondary consideration

While letters of recommendation were a non-factor, cost was a relatively minor factor.

Primary Class’ bid came in at $1,485,000. That wasn’t the high bid; Bloomington, Ind.-based Sid3car Co. bid $2 million. But the low bidder, Merit International of Milbrae, Calif., came in at $1,065,000.

But cost was a relatively minor part of the Department of Administration’s equation.

Bidders were scored on a 1,000-point scale, with cost counting for no more than 200 points. As low bidder, Merit International received the full 200 points.

The remaining 800 points were doled out based on six technical bid aspects. Because it racked up the top overall technical score, Primary Class received the full 800 points.

Here’s the scoring breakdown:

Still, the technical ratings were a mixed bag.

According to a scoring breakdown — obtained through Idaho EdNews’ public records request — Primary Class received high marks in several areas. Its plan for technical support received the state’s top score, and the bidder also received points for lining up agreements with Idaho education vendors.

But unlike Sid3car and Merit International — which have experience running online grant marketplaces in other states — Primary Class received no points in this category. In other words, Primary Class received Idaho’s top overall technical score despite its lack of out-of-state experience — the very experience that the State Board said it was seeking in the first place.

A familiar vendor gets bumped

Before the Department of Administration chose between three bidders, it knocked a fourth competitor out of the running.

ClassWallet — the Pembroke Pines, Fla.-based vendor that managed the 2020 Strong Families, Strong Students grant program — sought the Empowering Parents contract as well.

But the vendor and the state quarreled over cost estimates.

In a letter sent on Aug. 5, three days after the bid deadline, ClassWallet CEO Jamie Rosenberg said his company could manage the Empowering Parents project for $754,200, or roughly half the Primary Class pricetag.

Later that day, the state said ClassWallet had failed to submit a detailed cost estimate in time, and said it would not consider the company’s bid. “The (purchasing) division cannot accept this late submission,” Department of Administration buyer Michael Piccono wrote in a letter to Rosenberg, obtained by Idaho EdNews.

ClassWallet contested the decision. But in an Aug. 16 letter, Department of Administration Director Keith Reynolds again said the ClassWallet bid failed to meet the state’s requirements.

Represented by former state superintendent and state GOP chairman Tom Luna, who lobbied on the company’s behalf, ClassWallet received a no-bid contract to manage the Strong Families, Strong Students program. Ultimately, ClassWallet received more than $2.6 million, according to a recent Idaho Capital Sun investigation.

Asked if performance on the 2020 contract played any role in the state’s 2022 decision, the Department of Administration said only that the ClassWallet bid was “non-responsive.”

“Therefore, its quote was not considered,” the department said in a written response to Idaho EdNews.

Company spokesman Henry Feintuch said little about the state’s decision.

“ClassWallet is proud of the work it did on behalf of the state of Idaho. That said, we are respectful of the state’s procurement process and we fully accept its decision to award the Empowering Parents program contract to another provider.”

The rollout — and the next big deadline

The Primary Class marketplace software, known as Odyssey, was tested as soon as it went live. Within 24 hours, 7,000 parents had logged on to apply. “There was a pretty big pent-up demand,” Connor said.

The site stayed up.

While the State Board said it wanted a vendor with out-of-state experience, board spokesman Mike Keckler said Wednesday that the Primary Class rollout is going smoothly so far:

• The State Board confirmed that the Odyssey site has been live since the launch, with no crashes.
• The board also said the vendor is meeting its pledge to resolve customer service issues within an hour. Primary Class has closed out 1,482 customer service tickets so far, in a median time of 12 minutes.
• Based on anecdotal accounts, parents who also applied for Strong Families, Strong Students grants say the new platform is easier to use. The Odyssey site uses enrollment data to confirm applicants have children in the K-12 system, and State Tax Commission data to confirm income eligibility.

Another test is looming.

Under the Empowering Parents law, the state is supposed to start awarding grants within 30 days of opening the application process. That means the money has to start going out by Oct. 7.

For the 18,000 parents who have applied for grants, this is the big deadline. The whole premise of Empowering Parents is to cover household education expenses, anything from a computer to a tutor.

Ultimately, the state’s relatively inexperienced contractor has one daunting job: moving money out the door, and getting it in the hands of eligible families who need it.

Kevin Richert writes a weekly analysis on education policy and education politics. Look for his stories each Thursday. 

About Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. He is a frequent guest on KIVI 6 On Your Side; “Idaho Reports” on Idaho Public Television; and “Idaho Matters” on Boise State Public Radio. Follow Kevin on Twitter: @KevinRichert. He can be reached at  krichert@idahoednews.org

From idahoednews.org