State auditors flag risks in Washington school apportionment system; OSPI pledges replacement

The Joint Legislative Audit and Review Committee subcommittee heard on June 3 that the Office of the Washington State Auditor concluded the Office of Superintendent of Public Instruction’s (OSPI) apportionment software and supporting infrastructure are outdated, unstable and at risk of producing funding errors for school districts.

"We're here to talk about our recent IT performance audit looking at OSPI's apportionment system," Scott Frank, director of IT and performance audits at the State Auditor's Office, told the committee as auditors introduced a report that assessed whether OSPI's apportionment system is sufficiently designed and managed to ensure accurate school funding allocations.

Auditors described a complex suite of applications established around 2008 that relies on eight OSPI-managed feeder systems. Sonia Singh, the auditor in charge, said failed backups have sometimes consumed available storage and caused applications to be unavailable for days, and that the agency lacks comprehensive documentation and sufficient staff knowledge to operate and validate the system consistently.

"This adds time to staff while also increases the risk of introducing errors in school data," Singh said, summarizing the operational impact of manual workarounds auditors observed.

The audit team tested components of the apportionment calculations representing roughly 78 percent of basic education funding and recalculated allocations for three districts as case studies. Auditors reported nine minor input discrepancies between state law or budget variables and OSPI's implemented calculations; in discussion they estimated such differences could aggregate statewide into the tens of millions of dollars, with one sample district showing about a $90,000 difference.

OSPI officials acknowledged the platform is aging and agreed the core calculation engine and infrastructure need replacement. TJ Kelly, OSPI chief financial officer, said the agency requested replacement funding in 2022, a feasibility study completed in 2024 identified catastrophic‑failure risk, and the legislature has made up to $16,000,000 available in the state IT pool over four fiscal years to support a rebuild subject to OCIO/WATECH and OFM gating and approvals.

"In 2022, we originally requested funding for a replacement system...the feasibility study completed in 2024 was where the quote of the system is at risk of catastrophic failure came from," Kelly said, and added the $16 million is managed through the state IT pool and gate process.

Sean Lewis, OSPI's director of school apportionment and financial services, described why OSPI sometimes uses compensating controls outside the legacy system — for example, running an Excel model for a K‑3 staffing rule and uploading results — because the current platform cannot readily accommodate frequent legislative changes.

Lewis also disputed that the audit revealed a budget inconsistent with statute, saying some differences arose from agency rounding policy and how the system represents per‑student versus per‑thousand inputs. "No difference in the calculation," he said, describing an implementation choice that he said did not change final outcomes when handled consistently.

Committee members questioned whether the apportionment model informs the budgeting process or is used only after appropriations are set; SAO staff said the model is primarily applied to allocate enacted appropriations, and that some discrepancies the auditors saw stem from the budgeting inputs rather than OSPI's model alone.

OSPI told the committee it has advanced procurement steps toward a new platform, expects major work to occur in the next biennium, and plans to strengthen internal controls and hire at least one IT staffer to reduce reliance on contractors. Agency officials cautioned that some fixes to current controls may wait until the new system is in place.

A public commenter, Chloe Pruitt of Everett, urged the committee to press for full implementation of audit recommendations, modernization of the system and stronger internal controls to protect funding streams serving more than 1,000,000 students and roughly $30 billion in biennial allocations.

The subcommittee took no formal action at the hearing. Members said they will follow up with OSPI staff on appropriation timing and implementation details as the procurement and gating process proceeds.