Friday, January 17, 2003


It’s not just ludicrous that the State of Nebraska doesn’t carefully audit state aid to education. It’s downright stupefying that we don’t, especially with our gigantic state budget deficit, fed-up tax climate, iffy economy and nasty drought.

These are the times when we should be measuring and moderating the money flow from state tax coffers out to the public schools. But instead, it’s as if we’ve left the Hoover Dam gushing out money on its own for years . . . and now it’s about to break.

The amount of waste and fraud in K-12 education that proper audits are uncovering in other states is enormous. The mismanagement and lack of accountability those audits are disclosing should be red flags to Nebraskans that it is time to find out if the same sorts of things are going on here.

Ah, but Nebraskans are so honest, you say. True enough. But think about it: Nebraska’s K-12 schools are spending $1.9 billion altogether this school year, and nearly one-third of that was funded by state tax dollars -- $662 million in state aid this school year. You can’t say, with a straight face, that not a dime of waste, fraud or mismanagement was involved in all that spending.

But how would we know for sure? We don’t audit all that money. We can’t. We need a change in state law to do that.


Ah, but districts already do their own audits, you say. No, they don’t. They do pro-forma checks. Their “audits” just check that they spent what they said they spent. They don’t get in there and dig and spot the inconsistencies. They don’t follow the money trail and report on its twists and turns – they just confirm to the people who are spending all the money that the money trail is there.

Well, we need a whole new road crew of inspectors, that’s for sure. We need much more businesslike accounting methods for our K-12 school districts and state education bureaucracies, and much more accountable financial reporting to the public about how our tax dollars are being spent. What’d we buy them all that technology for, if not to keep better track of where the money’s going?

Shed the light of day on their spending, and poof! Watch a lot of the stupid stuff disappear.

And here’s how it could be done:

State Auditor Kate Witek is already totally up to speed with the need for performance audits for state spending. Her office is where the power to audit state aid ought to be placed – never with the state education commissioner or state board of education. This is a management oversight function, not a political football. State ed officials have already demonstrated with excruciating clarity that fiscal accountability to the public is not their “thing.”

But how to pay for the additional staffing such an audit system would create? Easy. Stop giving away bonehead fluff grants through the State Lottery Fund -- $84.7 million of absolute waste since the lottery began nearly 10 years ago frittered away through the Education Innovation Fund, as you can see on the Nebraska Lottery Website -- and devote that money to a K-12 accountability fund controlled by the State Auditor.

State lottery grants to K-12 schools are supposed to be for “innovative” programs. Hah. Instead, lottery grants have funded many of the dumbest “school deforms” in Nebraska, all across the state. Most of it has gone for Goals 2000 social engineering and political correctness programs that have damaged and destroyed many of the solid, traditional academic programs that kids need and parents want the most.

But here’s what’s worse: lottery grants are one-year grants. It’s bad enough that the bonehead stuff can get funded for one year, through lottery proceeds. What has happened, almost without exception, though, is that after the lottery grant runs out and the money dries up and is gone, the local school district has just stepped in and picked up the tab and added it to their budgets and kept the newly-hired staff on board and kept the bonehead new fluff program going even though it hasn’t added a particle of quality to the educational in-baskets of the kids.

So lottery funds have actually DAMAGED educational quality and INCREASED educational budgets. That doesn’t do a LOT for me. Does it you?

Much, much better to spend our “vigorish” from the lottery on finding out how districts and the state ed department are spending our dough.

They wouldn’t have to audit every district every year. A spot-check basis will do. They wouldn’t have to audit every dollar spent in every department of the targeted district. They would just look for those “Colombo Clues” that suggest that something is not quite right.

If you are skeptical that auditors of the nearly $2 billion in K-12 school spending in Nebraska would never find a thing amiss and that everything is hunky dory, just glance down the attached list of what audits in OTHER places is turning up.

We oughta audit, people. We really oughta.



The following six examples are from the Chicago-based Heartland Institute in a July/August 2001 article entitled “Accountability, Fraud and Mismanagement”:

-- A 1999 audit revealed that there was a $6 billion discrepancy between what the U.S. Department of Education said it spent, compared to what the U.S. Treasury said it spent. This was in the wake of charges against 11 federal education employees accusing them of defrauding the DOE of more than $300,000 in property and more than $700,000 in false overtime.

-- The FBI is investigating the San Francisco School District after an audit revealed that $27 million of “school improvement funds” was spent on administrative salaries and overhead without school board approval, another $14.6 million of construction funds is unaccounted for, and the district bought three properties with no demonstrated use for them.

-- A former deputy education commissioner for the State of Kentucky was alleged to have embezzled more than a half-million dollars in state education funds because of shoddy accounting practices within the state education department.

-- A state audit of the Massachusetts Department of Education revealed that the technology division may have wasted as much as $9 million on questionable expenses, including parties and trips.

-- The Miami-Dade County Public Schools overpaid for land in 11 out of 14 cases for a total overpayment of $7 million, according to an audit.

-- The former business manager of the Bay Path Regional Vocational High School in Charlton, Mass., pleaded guilty to embezzling $5.4 million from school accounts to build a stable of 40 racehorses.

There are many more examples:

- From Education Intelligence Agency: an FBI investigation triggered by an audit showed well in excess of $2 million has been diverted from the District of Columbia teachers’ union by union officials. While health-care premiums, pensions, rent and utilities went unpaid, union staff apparently purchased for themselves art, jewelry, furs, custom-made clothing and shoes, $150,000 in purchases from Neiman Marcus, $25,000 in dry cleaning, $57,000 in Tiffany silverware, a 50-inch, $13,000 plasma TV, and other goods.

-- From Education Week: An FBI investigation in the Dallas Public Schools produced 15 convictions, including one for the former superintendent, as district employees illegally collected millions of dollars in phony overtime, the superintendent spent $9,440 in district money to buy herself bedroom furniture, and a roofing contractor was shown to have improperly billed the district for $380,000 (Dec. 12, 2001) . . . and one of the largest school embezzlement schemes ever prosecuted took place in Sumter, S.C., resulting in 15 people convicted, including a popular state-champion football coach and the assistant superintendent for fiscal affairs in a case involving at least $3.5 million misdirected into New Orleans call girls, 80 gambling junkets to Atlantic City and other places, phony student travel vouchers, phony post-office boxes and so forth (Jan. 31, 2001).

-- "Grand Theft Education: Wasteful Education Spending in California” by Lance Izumi, Pacific Research Institute, November 2002.

-- A jury in California last month delivered a multi-million dollar judgment against the former state superintendent of public instruction and her department for persecuting and demoting a whistleblower who uncovered misappropriation and disappearance of federal funds from 1995 to 2000; that official allowed her own audits division to conduct no on-site audits of any school district for four years (Orange County Register, Jan. 13, 2003)

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