AUSTIN, Texas (AP) -- The State Auditor's Office on Tuesday issued a report criticizing as too vague a $462 million contract that allows a Britain-based multinational firm to produce standardized tests for Texas public schools, and says education officials lacked proper oversight to make changes and ensure they get what they pay for.
Auditors concluded that that will hinder the Texas Education Agency's ability to assess the full cost of the Texas Legislature's reducing from a nation-leading 15 to five the number of state-mandated exams high school students across Texas must now pass to graduate.
The report says the agency "complied with most requirements" in its agreement with NCS Pearson, Inc. to produce and grade state-mandated exams, but "it did not ensure that the contract contained sufficient detail about deliverables and costs to independently determine the reasonableness of changes in the price of the contract."
It also found that Texas lacks "adequate processes for monitoring the contract." All of that "limits the agency's ability to assess the fiscal effect of changes to statewide testing requirements."
Texas has long been a national leader in steep school and academic accountability standards measured by frequent standardized testing. But facing a backlash from students, parents, teachers and school administrators who complained about "over-testing" in classrooms, lawmakers approved this session a law dramatically reducing testing requirements.
That will affect Texas' existing contract with Pearson to produce standardized tests statewide between September 2010 and August 2015, but Tuesday's report means education officials may struggle to make those adjustments.
NCS Pearson is incorporated in Minnesota but its parent company is English. The firm has been criticized by tea party activists and other conservative grassroots groups who feel its agreement with the state lacked proper oversight.
Some are also suspicious of a company whose headquarters is outside the United States having so much influence on Texas public schools — though Pearson also maintains a large presence in the state.
Education Commissioner Michael Williams released a statement saying the State Auditor's Office's recommendations can strengthen his agency's oversight of student testing contracts.
"I am confident that the Texas Education Agency has been an effective steward and watchdog of taxpayer dollars from the inception of this important contract," Williams said. "However, the SAO review has provided recommendations that can help us better track and strengthen our oversight."
Tuesday's report also notes that the Texas Education Agency doesn't comply with regulations requiring disclosure if its former employees or retirees now work for Pearson since the testing contract was amended in May 2011 to remove certain disclosure clauses.
Williams said the agency has worked with the auditor's office for months during its review, and that while the original contract with Pearson was for $468.4 million, it has already since been reduced by more than $6 million. He also said the Pearson agreement accounts for 61 percent of the funds spent on all agency contracts.
Pearson says that during the 2011-2012 school year, it administered more than 11.5 million tests to public school students in grades three to 12.