The $9 Million Contractor Scam: How HUSD Outsources Everything While Claiming Budget Crisis
District admits it can’t staff basic positions, enriching contractors while taxpayers foot the bill
By Tom Wong, Independent Investigative Reporter
July 7, 2025
The most damning evidence of Hayward Unified School District’s administrative incompetence isn’t found in budget spreadsheets or consultant reports. It’s right there in the board meeting agendas: over $9 million in annual contractor agreements for services that every competent school district should provide internally.
While HUSD claims budget constraints force painful cuts to student programs, there’s apparently unlimited money for expensive contractors who profit from the district’s systematic inability to perform basic functions. This isn’t temporary emergency response — it’s become HUSD’s permanent business model, enriching outside companies while taxpayers fund both contractor fees and the bloated administrative apparatus that can’t do the job.
The Special Education Contractor Goldmine
HUSD’s June 2025 board meeting revealed the staggering scope of contractor dependency in special education alone:
Top Special Education Contractor Costs (2025-2026):
- Rising Star SPED Academy: $2,220,000 (19 students = $117,000 per student)
- Lincoln Families: $1,840,000 (behavior intervention services)
- The Stepping Stones Group: $870,000 (staffing for vacancies)
- Blazerworks: $860,000 (staffing support due to shortages)
- Ed Sped Solutions: $800,000 (assessments and tutoring)
- Seneca Family of Agencies: $625,000 (mental health and counseling)
- RoHealth: $600,600 (evaluations and speech services)
- Sped Consulting: $600,000 (independent evaluations)
Total Special Education Contractor Spending: $9,090,600
These aren’t specialized services requiring unique expertise. They’re basic functions like paraprofessional support, speech therapy, and psychological assessments that every competent school district provides with internal staff.
The Admission of Systematic Failure
HUSD’s own contract documents repeatedly admit the cause of this contractor dependency: “due to staffing shortages,” “vacancies in special education teacher positions,” and “light of staffing shortages during the 2024-2025 school year.”
Let that sink in. The district is openly admitting it cannot attract, hire, or retain qualified staff for basic positions. While other school districts successfully employ speech pathologists, special education teachers, and paraprofessionals, HUSD has given up and outsourced everything to expensive contractors.
The Facilities Contractor Carousel
Beyond special education, HUSD outsources routine facilities maintenance that any competent district handles internally:
Annual Facilities Contractor Agreements:
- RQI, Inc.: $74,000 (door and frame maintenance)
- CAPS Electric: $74,000 (electrical services)
- Pump Pros: $60,000 (pump and lift station maintenance)
- Vision & Viewpoint Glass: $150,000 annually (5-year contract totaling $750,000)
- Diablo Boiler & Steam: $78,610 (boiler maintenance and repairs)
These contracts total over $400,000 annually for basic building maintenance. Meanwhile, HUSD employs expensive facilities administrators who apparently can’t manage the work internally.
The No-Bid Contract Scandal
Perhaps most revealing is HUSD’s admission that contractors won’t even bid on their projects. The CalSHAPE Ventilation Program required a $721,560 no-bid contract with Mesa Energy Systems because “no bids were received for a public project after a formal bidding process.”
Think about that: HUSD’s reputation for mismanagement is so well-known in the construction industry that contractors refuse to bid on their projects. The district was forced to negotiate directly, eliminating competitive pricing and accountability.
The Professional Services Money Pit
HUSD outsources basic administrative functions that other districts handle with existing staff:
Professional Services Contractor Spending:
- Document Tracking Services: $7,975 (LCAP and SARC templates)
- Renaissance Learning: $240,523 (data management systems)
- Syntex Global: $50,000 (interpreting services)
- Various legal firms: $200,000+ (routine legal matters)
- Ascendancy Solutions: $17,000 (compliance monitoring)
Each contract represents HUSD’s admission that highly-paid internal staff lack basic competencies.
The Non-Public School Shuffle
HUSD’s contractor dependency extends to student placements, with $3,955,000 in non-public school contracts:
Most Expensive Per-Student Placements:
- Creative Learning Center: $200,000 for one student
- Morgan Autism Center: $155,000 for one student
- Second Start-Pine Hill: $170,000 for one student
- Achieve Kids: $200,000 for one student
These astronomical per-student costs often result from HUSD’s inability to provide appropriate services internally, forcing expensive external placements.
The Consultant Industrial Complex
Rather than developing internal expertise, HUSD feeds a thriving consultant ecosystem:
Recent Consulting Agreements:
- Placeworks: $18,034 (environmental consulting for one property)
- United Inspections: $6,000 (DSA inspector services)
- Multiple pre-qualified moving services (project-based contracts)
- Technology and curriculum consultants: $100,000+
Each consultant contract represents another function that competent districts handle internally.
The Procurement Failure Pattern
HUSD’s contractor dependency is enabled by systematic procurement failures:
Procurement Problems:
- Inability to attract competitive bids
- Reliance on “continuing service” justifications
- Sole-source contracts without competition
- “Unique provider” claims for routine services
- Emergency contracts for predictable needs
These practices eliminate cost competition and accountability while enriching favored contractors.
The Vendor Relationship Web
My investigation reveals concerning patterns in HUSD’s vendor relationships:
Red Flags in Contractor Selection:
- Same companies receiving multiple contracts year after year
- Limited competition for routine services
- Vague performance metrics and accountability measures
- Contracts structured to avoid competitive bidding thresholds
- “Pre-qualified” lists that limit competition
Comparative Analysis: What Other Districts Do
Nearby school districts with similar demographics provide these services internally:
Dublin Unified School District:
- Internal special education staffing for most services
- Facilities maintenance performed by district employees
- Competitive procurement with multiple bidders
- Limited contractor dependency for specialized needs only
San Lorenzo Unified School District:
- Successful recruitment and retention of special education staff
- Internal capacity for routine maintenance and operations
- Transparent bidding processes with public accountability
- Strategic use of contractors for genuine specialization
The Real Cost of Contractor Dependency
HUSD’s outsourcing model costs significantly more than internal service delivery:
Cost Comparison Analysis:
- Internal special education teacher (with benefits): ~$150,000 annually
- Contractor equivalent: $200,000-$300,000 annually
- Internal facilities maintenance: $80,000 per position
- Contractor equivalent: $120,000-$150,000 per position
The premium for contractor services ranges from 30-100% above internal costs, yet HUSD claims budget constraints prevent competitive internal salaries.
The Accountability Black Hole
HUSD’s contractor agreements lack meaningful performance metrics:
Missing Accountability Measures:
- Student outcome improvements from contractor services
- Cost-effectiveness comparisons with internal alternatives
- Service quality metrics and standards
- Penalty clauses for poor performance
- Regular competitive re-bidding requirements
The Union Enablement Factor
HUSD’s contractor dependency is partly enabled by union contracts that make it difficult to hire, manage, or terminate ineffective employees:
Union Contract Barriers:
- Complex hiring processes that discourage applications
- Grievance procedures that protect poor performers
- Salary schedules that aren’t competitive with contractors
- Work rules that limit flexibility and efficiency
Rather than reforming these barriers, HUSD takes the expensive path of outsourcing.
The Technology Contractor Excuse
HUSD justifies extensive technology contracting by claiming specialized expertise requirements:
Technology Contractor Spending:
- Renaissance Learning: $240,523 (data management)
- Various IT support contractors: $100,000+
- Software licensing and support: $200,000+
- Hardware maintenance agreements: $150,000+
Yet many districts successfully manage these functions internally with properly trained staff.
The Emergency Contract Abuse
HUSD regularly uses “emergency” contract procedures to avoid competitive bidding:
Emergency Contract Pattern:
- Predictable needs claimed as emergencies
- Sole-source justifications for routine services
- Urgent timelines that prevent competitive bidding
- “Continuing service” extensions without re-competition
What Taxpayers Should Demand
Before approving more contractor agreements, taxpayers should require:
- Complete audit of all contractor spending vs. internal alternatives
- Competitive bidding for all contracts over $25,000
- Performance metrics with penalties for poor service
- Annual re-competition for all service contracts
- Internal capacity building to reduce contractor dependency
- Public reporting of contractor performance and costs
The Bottom Line
HUSD’s $9+ million contractor dependency represents the ultimate admission of administrative failure. While claiming budget constraints force cuts to student services, the district maintains an expensive outsourcing model that enriches contractors while delivering declining performance.
Superintendent Wu-Fernandez and her administrative team have created a system where internal incompetence is rewarded with job security while contractors profit from district dysfunction. This isn’t strategic outsourcing — it’s systematic abdication of basic management responsibilities.
The contrast with successful districts couldn’t be starker. While other districts hire, train, and retain qualified staff for essential functions, HUSD has given up and outsourced everything to expensive contractors who have no long-term investment in student success.
Until HUSD rebuilds internal capacity and ends its contractor addiction, taxpayers will continue funding a system that prioritizes vendor profits over student outcomes. The $9 million contractor scam must end before it completely bankrupts the district’s ability to provide quality education.
