How Well Are Our Public Schools Run?

A common attack on any kind of choice school not owned and operated by the local school board is that such schools are not accountable to the public, and thus must be strictly regulated to prevent possible misuse of public funds.

Choice advocates contend accountability comes from the marketplace, where schools must satisfy parents as consumers. Choice critics, however, insist any school that accepts publicly funded students must be subject to the same rules and regulations that–they contend–ensure the accountability of traditionally operated public schools.

But how effective are those myriad rules and regulations in ensuring that the system’s #1 priority is educating children in a safe environment, and that public funds are not spent inappropriately, wastefully, or fraudulently?

Case Study: San Francisco

To ensure accountability, the San Francisco School Board is demanding that the Edison Academy Charter School provide it with 35 different operational and financial reports.

Yet the same school district is being investigated by the FBI to determine whether its own mishandling of millions of tax dollars was criminal or “just” bad management. Here’s what an audit revealed:

• $27 million of voter-approved school improvement funds was spent on administrative salaries and overhead–without board approval.

• Another $14.6 million in construction funds is unaccounted for.

• The district purchased three properties with no demonstrated need for them.

• Contracts were awarded through verbal agreements.

According to an investigation by the San Francisco Chronicle, since 1989 the school district has spent $60 million intended for school construction on employee salaries and benefits.

Some of the schools in the San Francisco district are cited in a lawsuit filed against the State of California last year by the American Civil Liberties Union. The suit describes deplorable conditions in 18 school districts across the state, where students have to contend with rats–and rat feces–in classrooms; rain dripping on students’ heads; broken windows left unrepaired for two years; and some 2,000 female students forced to share four toilet stalls.

A review of recent news reports makes it clear that regulations aren’t sufficient to prevent corruption in the handling of taxpayer dollars, or incompetence in the provision of a safe learning environment. Examples can be found at all levels of government, from the school board–where hundreds, thousands, and sometimes millions of tax dollars are involved–to the U.S. Department of Education, where fraud and mismanagement affect billions of tax dollars.

U.S. Department of Education

Incoming Education Secretary Rod Paige has pledged to address waste and fraud problems in his department. Some examples:

• $450 million in misused funds over the past three years, including 21 cases where $250 million in duplicate grant checks were issued to school boards and state districts who did not return the money until asked to do so;

• a $6 billion discrepancy between what the department says it spends vs. what the U.S. Treasury says it spends. Part of that difference may be related to what a 1999 audit revealed: $2.7 billion in collected funds that the department should have returned to Treasury but didn’t, in violation of the Credit Reform Act.

• In May, 11 people were charged with defrauding the department of more than $300,000 in property and more than $700,000 in false overtime claims.

State Departments of Education

Although closer to the people than remote public officials in Washington, DC, state education officials often appear to operate with little oversight from the people’s elected representatives:

• While serving as Kentucky’s deputy education commissioner, Randy Kimbrough was able to embezzle more than a half-million dollars from the state Department of Education because the department violated state law by using unspent money as “grants” to various entities, instead of returning the money to state coffers.

• In March, a state audit reported that the Minnesota Department of Children, Families filed a false report in 1998 to avoid having to return $90,000 to a private foundation, using the money instead for employee expense reimbursement. The audit also questioned year-end spending of $310,000 that would otherwise have been returned to the state’s General Fund.

• Also in March, a state audit of the Massachusetts Department of Education concluded that consultants to the agency’s technology division had spent millions of dollars on questionable expenses, including parties and trips, and that the department overall may have wasted as much as $9 million.

Local School Boards

They may be closest to the people, but local school officials don’t always act in the best interest of taxpayers and parents.

• Even before his April election to the Haysville school board in Kansas, 18-year-old Seth Konkel took more interest in oversight than did incumbent board members, finding an $11,000 bill from then-Superintendent Lynn Stevens for a single month of credit card charges. According to an Education Week account, Konkel then discovered additional questionable charges, including office supplies, hotel rooms, and meals. Stevens will retire July 1 and has said he will reimburse the district for any inappropriate expenditures.

• State lawmakers in Florida announced in April that they will appoint an oversight board for any future land purchases by the Miami-Dade County Public Schools. A state audit this spring revealed the district overpaid for land in 11 out of 14 cases, for a total overpayment of $7 million.

• In January, Paul Blanchette, former business manager of the Bay Path Regional Vocational High School in Charlton, Massachusetts, pleaded guilty to embezzling $5.4 million from the school’s fund accounts over a seven-year period, using the money to acquire a stable of 40 racehorses.

• In May, Richard H. Davis, former business administrator for the Wycoff school district in Bergen County, New Jersey, pleaded guilty to helping embezzle $1.7 million from the district, preparing false invoices and issuing checks to six fictitious companies.

• While still facing payment of an $11.1 million judgement for its role in a milk-contract bribery scandal several years ago, the Detroit public school system is undergoing audits of all its 267 schools. To date, audits of about 50 schools have found nearly $1.5 million missing or misspent. At least two school officials have been convicted of criminal wrongdoing.

• A bid-rigging scandal is emerging in the East Detroit Public Schools, where former finance director David Scothorn in January admitted accepting $20,000 to say nothing about an inflated $91,000 bid. In May, the manager of a Detroit repair shop was charged with collecting money from the school district for work done on the private cars and trucks of East Detroit schools officials, including a 1997 Chevrolet Blazer owned by former school board president Joseph Crofts.

George A. Clowes

George Clowes is former Heartland senior fellow addressing education policy. He served as founding managing editor of School Reform News between November 1996 and January 2005.