1) I understand that a revision of your work on Stopping School Corruption:Manual for Taxpayers has been revised.What brought this about?

Although the original publication, Stopping School Corruption:A Manual for Taxpayers is still available as a free download from yankeeinstitute.org, the new publication has been expanded and given a new title:Ending Corruption and Waste in Your Public School, but its purpose remains the same and that is to provide taxpayers with 10 questions to ask of any school board to determine whether corruption has taken place, is taking place, or could take place. To put it in more politically correct terms it helps taxpayers (even boards of education) know How to Protect School Resources (human, physical and financial) from Loss, Abuse and Misuse.

Since the original publication new and important information has surfaced that provides further documentation to support my belief that corruption to some degree can be found in every school district.However, to find it you have to know how to look for it and be willing to look for it.

For example, the first question has to do with whether or not a school district has an asset management program—a current list of assets that have been verified against original purchase orders, and then physically and independently audited to determine whether the assets still exist. At the time, I had no documentation that it was a major problem except my own knowledge as a former school superintendent and reading about corruption stories where assets were stolen. I never thought that such information about missing assets would ever be revealed by any school official.

To my surprise, a few months after the first publication, a study was released by Quality Education Data, a marketing firm, which was commissioned to survey schools across American to determine the value of assets they lose each year.If I had been asked, I would have said that no school would release such information even if they had it. Their study surveyed over 479 schools in 48 states and found that the average loss reported by non-urban districts by school officials was $250,000 each and every year in assets, and in urban districts, the total was $l.4 million each and every year. Since the study also revealed that school officials admitted that they kept shoddy records, the average figures have to be on the low side. This means that taxpayers have to replace the missing assets every year.

New auditing standards have also been adopted and implemented by the Certified Public Accountants Association (Standard #99) and the Governmental Accounting Standards Board #34. Although the new standards were developed primarily for the corporate world because of the numerous scandals that erupted, they are applicable to schools. In fact some states such as New York and Texas now require all school districts to follow Standard #99.

The new manual also provides references that were not provided in the first publication; and more corruption stories have taken place, and will continue to take place, because boards simply will not face the fact that corruption is an institutionalized problem, and pass policies and improve practices and procedures that can end corruption. The sad part of all this is that what needs to be done would have no impact on school budgets.

Another new study available as a free download was released last year entitled: Corrupt Schools, Corrupt Universities: What Can Be Done? It is an international study of 159 countries, including the U.S., and among its many findings they found: education is not perceived by people as a major domain for corruption, there is poor governance and supervision, and that corruption in education has been carefully ignored for several decades (and remains so).

Probably the most significant report of all was the release of a special grand jury report in Suffolk County, Li, NY, that took two years of investigation in which over 500 witnesses were called and numerous records were subpoenaed. The 318 page report included all 70 districts in Suffolk County and confirmed my belief that if you look for corruption and know where to look, you will find it in some degree "festering" in every school district. Unfortunately, corruption is allowed to "fester" in school districts because the opportunities that exist to reduce the children's resources through loss, abuse and misuse are not identified and addressed by prevention procedures and practices, effective oversight, and comprehensive school board policies. Some quotes from the report follow:

"Suffolk County (LI) public school districts have recently been plagued by a series of financial scandals unprecedented in their number and diversity. Although these crimes and misdeeds have ranged in nature from credit card abuse by administrators to the disappearance of grant monies received from the federal and state governments to outright theft, they have also had much in common. Each episode involved malfeasance by lone individuals or small groups…

"The Grand Jury finds that many of the school district administrators entrusted with safeguarding these millions of dollars have been lax in taking adequate steps to prevent theft, fraud and other malfeasance."

"And most significantly, each episode arose out of an environment where strong internal controls in school business offices had come to be viewed as optional luxuries and the only consistent, independent watchdogs of school monies were determined private citizens.

2) What do you see as the main issues that taxpayers need to be aware of in terms of school corruption?

Taxpayers don't know the questions to ask, and they don't know how to review and analyze the most important financial document that, if forensically analyzed, could identify embezzlement schemes.The document may be given a different title by some districts, but it is the "check register. "This is similar to a personal checkbook—it's how the bills are paid and who receives the payment.The 11.2 million dollar embezzlement that occurred in Roslyn, LI, NY, was done primarily through falsified invoices.Eight years of audits never picked up the problem. The regular budget does not show such information and, therefore, the check register is the key document to analyze. The reality is that board members do not know how to analyze the document; if they did, the embezzlements could not occur. One way to prevent the problem is simply to verify the authenticity of every vendor, but there are still other ways to get money out of the budget illegally.

Most important, taxpayers do not know how to organize to be more effective. The way it must be done is to organize as community based, Independent Forensic Auditing Committees (InFAC), but they would need education and training to be effective. Such auditing committees are now required in every district in New York state.

In addition, the educational establishment will do everything in its power to thwart such efforts. Let me give you an example:In Connecticut where I live, a school board has authorized the establishment of an Infar that will be educated and trained by me. Would you believe that the Connecticut Association of School Boards and the Connecticut Association of Public School Superintendents wrote a letter to every school district attacking me with outrageous statements in order to stop me from assisting the committee because they are livid about seeing the establishment of an InFAC. In all my years in education, I have never seen such a blatant and unprofessional attempt to interfere with the wishes of a school board.

The reforms that were instituted in New York after the scandals that erupted in the state is another example of the educational establishment trying to block the reforms that were ultimately legislated.

The new manual has a section on how to form an audit committee and, although school support would be ideal, such a committee can function without their support.

3) Are the people who handle the money not to be trusted, or do they need to be monitored, or do they need to be better supervised?

A recent episode of CSI Miami had a terrific answer—"trust, but verify. "What is happening is that school districts make it so easy for corruption to occur because they do not monitor effectively and monitoring requires review, analysis, tight internal controls, and comprehensive supervision. School boards simply do not practice enough due diligence in monitoring the performance of the school system because they are not trained and educated in the process required.

For example, the question that goes unasked about embezzlement is where is the money hidden in the budget? The bills are all being paid, so where is the excess hidden? Where did Roslyn hide over $11,000,000 of embezzled funds in the various budget line items? Then the next question is how is the money taken out of the budget without anyone becoming suspicious? Many of these schemes have gone on for years.  Audits are not intended to uncover such corruption even though that is a common belief among administrators and board members—it simply is not true and the auditors will confirm this.

4) What are the top three areas in which there is some concern about "corruption"?How do you define "corruption"?

The first area is the management, or better still, the lack of effective management of school assets. The asset management survey indicated that school officials know it is happening, but seem helpless to do anything about it. The solution is ever so simple.Do an inventory of all school non-consumable assets (anything over $50.00), match the list against the asset purchase orders of the past five-seven years, and the lists will not match even after taking into consideration any adjustments because of trade-ins, damaged assets, etc. There is only one reason left and that is the assets had help in walking out the door, even grand pianos have disappeared.

To put a stop to the "disappearances" a yearly inventory must be made which means that it must be done independently of the school officials and a physical inspection must be conducted to verify the existence of what appears on the inventory list. Who can conduct such a physical and independent inspection? Either an audit firm that will be costly, or a solution that is cost free and would solve numerous problems concerning loss, abuse and misuse of school resources—a community based, volunteer group organized as a forensic audit committee.

The second area is payroll fraud—ghost employees, ghost courses, false overtime reports, inappropriate placement on the salary scale, double billing of reimbursement requests, and employee reimbursements that are inflated and expenses that are not legitimate such as after dinner drinks.

The third is payment of invoices—false invoices (this is how most major embezzlements are perpetrated), kickback schemes, short deliveries of supplies and equipment, and the most abused invoice payment--school credit cards.As an example of how easy it is to put a stop to credit card abuse is simple:pass a one sentence policy—No school credits cards will be issued.Credit cards are not needed, but it has become a ripe source of "shopping sprees."

I would add a fourth because it is a critical issue—so called "fixed costs. "This is the category where the most savings can occur if it is done right with forensic eyes and analysis.For example, staffing costs and benefits comprises about 75-80 percent of the budget. Therefore, any excess or unnecessary staff is costly. However, schools are reluctant to admit that they have unnecessary or excess staff; if anything, they claim that they never have enough staff. It takes forensic analysis of staff allocation and assignments to determine misuse.One urban district in Connecticut has 500 more staff than similar school districts (size and demographics). When I was a superintendent, I proved to the board that only two teachers were needed to cover the subjects the principals said they needed covered. But each principal wanted to have their own teacher and not share with other buildings. However, the board gave them the extra teacher that they did not need. Needless to say, it is now considered a "fixed cost."

The definition of school corruption can vary, but I start with a corruption definition from the 21^st Century Thesaurus: "breach of trust, bribery, crime, crookedness, deceit, deception, dishonesty, exploitation, evil, extortion, fraud, graft, malfeasance, nepotism, payoff, profiteering, tainted, unethical, untrustworthy and unscrupulousness."

I then found it necessary in my book, School Corruption: Betrayal of Children and the Public Trust to categorize the incidents as follows: Cheating and deceitful practices, waste and mismanagement, and fraud and stealing.

5) Are we more aware of corruption than say, ten or twenty years ago?

Absolutely! The Internet has exposed and publicized more of the incidents along with good investigative reporters, and more openness of board records to public scrutiny.

The problem that remains as the biggest obstacle is that whistle-blowers, regardless of any protective laws, are retaliated against repeatedly. I have had numerous incidents sent to me of what has happened to whistle-blowers. Until they are really protected and the retaliators are punished, much will remain hidden because honest people have no protection against "being honest."

6) I understand that you recently spoke to a group in Connecticut.What transpired at that meeting and what did you discuss and what was the response?

It turned out to be a very memorable event for me.I had a PowerPoint presentation to show a standing room only crowd of taxpayers including the superintendent, the board chairman and town council members, etc.I had everything prepared, made sure everything was working and when I was introduced and started the computer, it froze. There I was, with no props, no notes, and no presentation. However, because I know my subject matter, I spoke for over two hours and the reaction of the group was they were glad that I did not use the PowerPoint presentation. I think it was because I was able to look them in the eye and they liked that and it gave me great credibility.

The group was very responsive and appreciative of what I had to say about protecting school resources from loss, abuse and misuse. Some action that I have suggested will be discussed at their next meeting.

7) How can interested people get a copy of your revised report?

It is available as a free download at yankeeinstitute.org

8) What question have I neglected to ask ?

Mike, The question you neglected to ask is, "Why is there so much resistance and even anger from the educational establishment about preventing the loss, abuse and misuse of school resources?"

It has taken me awhile to figure it out.I was told repeatedly that the use of the word "corruption" gives them a stiff backbone of denial. I do understand that, but how else can you identify the problem? For example, is there another word to describe "terrorism?" Avoiding the term denies what the problem is, but that is not the real issue. The real issue is that the educational establishment—professional associations primarily—have been derelict in their responsibilities to protect their own clients from "harm's way" by not informing them of what they need to do to protect school resources from loss, abuse, and misuse. They are not even informed of how to protect themselves from personal liability suits. Board members may think they have immunity, but they do not have full immunity and they are not told how to protect themselves.

For example, do board members know about, Section 1983 of the Civil Rights Act of 1871 that allows citizens to sue governmental officials, including board members, personally if they have not performed due diligence responsibilities in monitoring federal school dollars? I doubt it because it took me three years of research to finally identify the full text and meaning of the law that has been upheld by the U.S. Supreme Court.

Are boards of education informed and trained in How to Review and Analyze a School Budget, How to Review and Analyze a Check Register, How to Protect School Resources (human, financial and physical) from Loss, Abuse and Misuse, and How to Maximize Resources to mention a few fundamental topics? Do board members even have a manual or handbook prepared by their own associations to help them know what their job is, etc.? Only a handful of states require school board members to undergo some formal training; board members are expected to learn their jobs by some form of osmosis.I  think of what it would be like to have a bomb disposal squad of volunteers who receive no training or even a manual, and when they are asked to dismantle a bomb, they are told "you learn on the job. "It would be ridiculous, but that's what happens to board members.

So anyone who starts to point out such failures on the part of their professional associations and organizations, who are paid to represent them and inform them of what they need to know, the resistance is incredible. And when they don't like the message, they attack the messenger.

That is the experience I am having and thank God, I can't be fired from retirement. I offer free workshops to any school board in Connecticut and to any taxpayer groups.The taxpayer manuals are free of charge, I am not soliciting for any job or political office and, therefore, the educational establishment is baffled by what motivates me. My motivation is very simple:the children and the public deserve better and I am guided by a very simple quote from a famous peacemaker:

"I shall pass through this world but once. Any good therefore that I can do or any kindness that I can show to any human being, let me do it now. Let me not defer or neglect it, for I shall not pass this way again."

Mahatma Gandhi

Published January 7, 2008