School Administrators Have Stolen Hundreds of Millions by Defrauding Taxpayers, Damning New Report Finds
School administrators and contractors have conspired to steal hundreds of millions of taxpayer dollars in recent years, according to a damning new report from two watchdog groups that identified at least 90 cases of fraud perpetrated through the Department of Education since 2019.
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The , which was produced by the organizations Open the Books and State Financial Officers Foundation (SFOF), relies on data from the Department of Education’s Office of Inspector General to expose rampant embezzlement, the use of fake invoices, enrollment inflation, and other forms of fraud.
“Reports such as these really call to action the necessary procedures that need to be in place to ensure taxpayer dollars are used wisely,” Kimberly Yee, Arizona State Treasurer and member of the State Financial Officers Foundation, said in an interview.
The Trump administration has made waste, fraud, and abuse a top priority in 2026, placing a particular emphasis on entitlement fraud. The White House Task Force to Eliminate Fraud, created through executive order to orchestrate anti-fraud efforts across multiple government agencies, has thus far largely focused on fighting fraud in the health-care sector, but this new report may open a new front in the administration’s campaign against the theft of public dollars.
SFOF and Open the Books emphasized that such fraud erodes public trust in government institutions. Even after fraud and abuse are discovered, correcting issues of fraud can take a long time.
In one case in Chicago, the Office of the Inspector General found discrepancies in demographic data for funds allocated for Native American students in 2021. Auditors flagged many students with South Asian last names that had been labeled “Native American,” the result of an employee’s efforts to falsify a grant application and obtain extra funds.
District officials said they would ensure full compliance in the future, and agreed to return $1 million in funds in 2024. But Yee suggested that they were let off too easily.
“I do believe there needs to be stricter requirements for districts who do violate the law and are found to be in non-compliance,” Yee said.
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In Houston’s Independent School District, two administrators led a $6 million fraud scheme in 2021.
The school district’s chief operating officer conspired with contractor Anthony Hutchison in a bid-rigging scheme. Rather than open a fair process for bids, the officer ensured that taxpayer dollars would be sent to Hutchison’s construction and maintenance business at an increased price. Five other school officials also plead guilty to participating in the scheme.
SFOF and Open the Books’ report found that the worst offending states were Florida and Illinois, which each had eleven cases of fraud.
Indiana topped the board in total amount of taxpayer funds wasted. Two online schools received $44 million more than they should have through inflating enrollment numbers. Funds were funneled to fraudulent companies controlled by the founder of these schools.
Improved management of funds could look like greater coordination between state lawmakers, auditors, and treasurers. With the recent cuts to the Department of Education’s workforce and programs, Yee emphasized that transparency and auditing systems at other levels of government are necessary.
“It’s more important than ever for the states’ departments of education to have in place those systems,” Yee said.
The authors of the report called on more oversight to safeguard taxpayer funds.
“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 concluded.
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