A coalition of state financial officers has uncovered approximately $225 million in alleged fraud across America's schools over the past six years, identifying nearly 90 cases involving embezzlement, fake invoices, inflated enrollment, bid-rigging, and kickbacks.
The State Financial Officers Foundation and Open the Books analyzed every Education Department Office of Inspector General Semiannual Report to Congress issued between October 1, 2019, and March 31, 2026, revealing alleged fraud across 24 states and Puerto Rico.
The report's findings are a stark reminder that state oversight has "never mattered more," according to State Financial Officers Foundation CEO OJ Oleka. The report should alarm every family, teacher, and civic leader, especially since it only scratches the surface of the problem.
About $67 million was ordered to be repaid through court rulings or settlements, though it's unclear how much has actually been recovered. The report highlights potential gaps in federal oversight, with only three of the nation's 20 largest federally funded school districts appearing in Office of Inspector General records.
Stronger oversight of federal education dollars is more than a bureaucratic exercise – it's an economic and moral imperative, according to the report. Families deserve assurance that the public institutions meant to serve their children are not being looted by the very officials entrusted to lead them.
The report's largest cases included allegations that two now-closed Indiana online charter schools received $44 million in excess funding by inflating enrollment and that a Puerto Rico tutoring company obtained $24 million by billing for services never provided.
In Florida, a Broward County Public Schools information officer allegedly steered $17 million in contracts to a friend's business, bypassing competitive bidding while personally profiting from the deals. In Texas, former Houston Independent School District Chief Operating Officer Brian Busby and contractor Anthony Hutchison allegedly orchestrated a fraud scheme of more than $6 million, involving school construction and grounds maintenance contracts in exchange for cash bribes and hundreds of thousands of dollars in home renovations.
The report argues that the alleged fraud carried a direct cost for students in smaller school districts and that the true cost is likely even higher because not all fraud is detected, investigated, or prosecuted. California accounted for two of the report's most costly cases, with students at the now-closed Community Preparatory Academy charter school losing about $9,090 per student after the school's head used $3 million in taxpayer funds for personal travel, restaurants, online shopping, and private school tuition for her children.
The report also cited Chicago Public Schools, which agreed to return about $1 million in federal grant funding after an Office of Inspector General review found the district could not adequately verify student eligibility for an Indian Education grant program.
The report concluded that "every step must be taken to unwind the enormous bureaucracy and spending" by returning education to the state and local level. Not only is that in keeping with the founders' vision for a limited Executive Branch, but state and local officials are much better equipped to understand the needs of their communities, find efficiencies, innovate for better student outcomes, and keep foxes out of the proverbial henhouse.
