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BATTLING CORRUPTION IN AMERICA'S PUBLIC SCHOOLS

Northeastern University Press

Chapter One

Most people do not think of schools as corrupt or wasteful. In fact, scholars note that wrongdoing should be less likely in organizations that are devoted to helping society than in organizations that are not. However, the tale of public school corruption is one rich in ironies, unexpected juxtapositions, and disconnects between hope and reality. The lofty idealism that inspired early advocates of public education, for example, contrasts with the opportunism that motivated many to seek jobs in public schools. The optimistic utopianism of reformers to guarantee integrity and efficiency through central school bureaucracies belies the dishonesty and waste these structures actually generated. The ultimate irony is that today conscientious employees sometimes need to break the rules simply to do their jobs well.

Charity was the original impetus behind many urban school districts. In the early 1800s rich families donated huge sums of money to start free public schools to help immigrants and the poor. Advocates of public education during the 18oos trusted in the basic goodness of public schools with crusader like zeal and held an almost evangelical belief that these institutions would civilize and secure Christian values and democracy in America.

Yet by the late 1800s, public schools had become a trove of power, political patronage, and profit for a number of people with less-exalted motives. In those days large city school systems were often divided into local wards or regions, each run by an elected school board of trustees with broad power over school personnel and funds. Whenever trustees were voted out of office, large numbers of teachers, principals, and even school janitors could expect to be fired to make room for new staff loyal to the incoming trustees.

In some large eastern cities such as New York and Chicago, allegations of local board members selling jobs and promotions were common. In 1864, for instance, an entire ward school board in New York City was suspended together with some principals for colluding to extort payments from prospective teachers and contractors. Indeed, one of the more colorful figures of the day, William Marcy Tweed, later the famed "Boss Tweed" of Tammany Hall, launched his political career from a ward school board. By the time he rose to the mayoralty some years later, he was all too familiar with the reservoir of patronage and contracts that the school system offered. Longing to get his hands on them, he convinced the legislature to abolish the independent lay school board at the top, which New York, like most public school systems, used to separate schools from partisan politics, and to replace it with a Department of Public Instruction that answered to him.

In Chicago in the early 1920s, a former Board of Education chairman, vice chairman, board members, board attorney, and forty political cronies were indicted for school graft. Board officials would tip off their friends about land that the school board wanted to buy so that they could quickly buy it and resell it to the board at inflated prices. Some school officials would order unnecessary equipment from favored vendors and award lucrative contracts to shell companies. They would extort kickbacks from school engineers seeking promotions.

Other paradoxes emerged in public schools as the twentieth century unfolded. In the first half of the 1900s, progressive reformers embarked on a mission to stamp out waste and dishonesty from public schools with as much moral fervor as public school advocates had pursued in establishing public schools in the previous century. With avid confidence in the new "scientific management" theories of the day-that centralized bureaucracies and professional expertise would ensure better education and more integrity-progressive reformers set about redesigning schools to make them perfect. They pushed power up from the local school boards into central bureaucracies, professionalized staff, and established top-down accountability mechanisms designed to enforce compliance with rules and regulations.

But scandals continued to erupt in the 1900s. In some cities it seemed that the more inoculations against corruption a school district received, the more resistance it built up.

THE DIMENSIONS OF URBAN PUBLIC SCHOOLS

To begin to understand all this and grasp what is at stake, it is helpful to put the sheer magnitude and complexity of urban public schools in perspective. School corruption and waste are not about a missing box of staples. Even before they grew to today's massive proportions, public schools in America's great cities had long been a big business, with large sums of money at stake and considerable opportunities for power and patronage.

Urban schools in particular grew especially rapidly starting in the a 193os, when people began flooding into cities from the countryside and the little rural schoolhouses that peppered the nation. Today, 31 percent of U.S. students attend school districts with at least 25,000 pupils) America's 100 largest school districts each have at least 45,ooo students; 25 of these districts have over 100,000 students each.

The dimensions of America's three largest school districts-New York City, Los Angeles, and Chicago-are particularly staggering. As William Ouchi's and my forthcoming book, Making Schools Work, notes, New York City, the largest school system in the country, has over 1.1 million students, a budget of over $13 billion, over 1,200 schools, and 140,000 employees. Los Angeles is the second largest, with three-quarters of a million pupils, a $7-billion budget, 900 schools, and 80,000 employees. Chicago, the third largest, has half a million students, a $3.5-billion budget, 600 schools, and 45,000 employees.

The operating budgets of the New York City and Chicago school districts are each bigger than the entire amount most states spend on education. Their capital budgets are in the billions (see table 1). The size of the New York City school operating budget alone would rank seventh in the nation if it were a state. This system owns more square footage than any agency in the nation after the U.S. Department of Defense and the U.S. Post Office. It receives 45,000 work orders a year that range from requests to "build a new floor" to requests to "fix the toilet." With 74 percent of its students eligible for free or reduced lunches under federal law, it is the second-largest food provider in the country after the U.S. Army. It delivers over 850,000 meals a day during the school year and 300,000 a day in the summer at a cost of over $250 million a year.

Individual schools in urban districts also tend to be large today. Elementary and secondary schools in America's one hundred largest districts have an average of 708 students each. Eleven of these one hundred districts have schools with an average enrollment of 1,000 students.

Urban high schools, which came into existence as unique, colossal enterprises in the early a 1900s, now seat thousands of pupils and cost tens of millions of dollars to operate. The average public high school in Los Angeles enrolls 3,239 students; in Chicago, 1,370; in New York City, 1,683. As one veteran principal described it, running a high school today is "like running a medium sized corporation." His school, Edward R. Murrow High School in Brooklyn, part of the New York City system, has 3,600 pupils, 450 staff, and an $18.7-million operating budget. And that is still smaller than some other high schools, such as Brooklyn Technical High School, with 4,079 students and an operating budget of $20 million. These costs, moreover, do not include items such as electricity, gas, heat, employee pensions, and litigation costs that are paid by the city or the central school system.

THE VARIETY AND COMPLEXITY OF SCHOOL DISTRICT SERVICES

The sheer variety of tasks and categories of people involved in running a school district also gives perspective on the breadth of the terrain potentially affected by abuse. As society's expectations of schools and court mandates multiplied in the last century, schools became, as one former president of New York City's central school board noted, "a one-stop shop where parents drop kids off and ask the school to raise them."

Social workers, nurses, dentists, neighborhood workers, substance abuse prevention specialists, and truancy officers tend to students' mental, physical, and social health. Psychiatrists, physical therapists, and other specialists care for special education children. Bus drivers, bus "matrons," bus inspectors, and other specialists work on transportation. Procurement officers screen vendors, negotiate prices, draw up contracts, and oversee purchasing procedures. Lawyers with different specialties draw up, review, and negotiate collective bargaining agreements and defend schools in employee grievances and arbitration proceedings. Lunchroom workers, nutritionists, and food buyers purchase, evaluate, store, and deliver lunches and breakfasts to children below the federal poverty line. Education experts must constantly develop and administer tests to personnel such as lab technicians, lab specialists, and secretaries, whose jobs regularly require updated licenses. Experts in construction, architecture, engineering, leasing, hazardous waste removal, and real estate law tend to school buildings, many with complex heating and air conditioning systems, elevators, and swimming pools. Because of violence and vandalism, school systems must provide security and navigate often tricky relationships with city police.

The largest school districts may even need demographers to help them plan school construction. Building planners in the New York City school system, for example, hire demographers to help them anticipate how the city's ever-changing vibrant neighborhoods will respond to what is happening around the globe. A hurricane in Haiti usually translates into an enrollment surge in District 17; a political shakeup in Eastern Europe means more students in Districts 21 and 22. Why? Because today Haitian immigrants tend to flock to Brooklyn's District 17; Eastern Europeans, to Brooklyn's Districts 21 and 22. Similarly they need to know that Asian immigrants today tend to congregate in District 25 in Flushing, Queens, now known as the "new Chinatown," and Poles in District 14.

Last, as some of the most political local institutions, urban school districts, particularly in tensely multiethnic cities such as New York, Los Angeles, and Chicago, need public relations personnel and lobbyists. In New York City, at least before Mayor Michael Bloomberg took over in the summer of 2002, the top executive had a fleet of assistants and spokespeople to help manage his relationship with the central school board, the mayor, and other city and state politicians.

Schools also need staff to manage the fiercely competitive interests of local constituents. School leaders in overcrowded cities need assistance in handling demands by different groups for new schools and seats. Even a proposition as seemingly simple as moving pupils from overcrowded neighborhoods to areas with plenty of room can be fraught with political peril if not skillfully handled. In New York City, for example, executives would likely need assistance to manage the demands of districts like District 28 in Queens. The upscale end of that oblong district, Rego Park, is mostly white and 120 percent utilized. But the other end, Jamaica, is mostly poor and black and 30 percent empty. As chancellors have found, busing children from rego park to Jamaica or vice versa, no matter how logical, is simply not politically feasible.

THE FINANCIAL VALUE OF PUBLIC SCHOOL CONTRACTS AND JOBS

With all their responsibilities and requirements, large school districts offer many opportunities for lucre and power. Consider the size of contracts at stake. The Los Angeles Unified School District (LAUSD) pays about $80 million a year to just six bus companies to transport pupils. In the late 1990s it poured $160 million into a single high school, the Belmont Learning Center-and that was just to complete part of it. The New York City school system spends $2 billion a year on supplies, over $60 million on textbooks, $40 million on leases, $300 million on private preschool vendors, and, in 2000, $18 million to train parent-led school leadership teams. A contract to remove asbestos at a single school easily goes for half a million dollars. News articles suggest that one New York construction contractor raked in nearly $ 1 billion in school construction contracts from 1959 through the early 1990s. The Facilities Division pays one architectural firm $4 million to survey and rate the condition of every school building it owns once a year simply to enable it to prioritize renovation projects.

With so much money flowing through the schools, the amount they can potentially lose to fraud or questionable billing is significant. In New York City, the FBI charged that the construction company had submitted $4.5 million in inflated school construction bills over five years. In the LAUSD, investigators charged that a single vendor hired to provide special education services had billed nearly $1.5 million in questionable costs. In Chicago, a single private provider of off-site special education instruction allegedly received $115,000 by falsifying attendance records.

Cost overruns due to racketeering and mismanagement can also be enormous. Change orders to build a single school, Fiorello H. La Guardia High School near Lincoln Center in Manhattan, which prosecutors found to be ensnared in a web of corruption and mismanagement, came to over $50 million.

Simple, honest mistakes can be dear, as well, particularly if a district is mismanaged. In what was apparently an oversight, for instance, the LAUSD paid one company $14.3 million for a three-year telephone contract for nothing. Officials paid the money without having a contract in place. In the Chicago public schools before Chief Executive Officer Paul Vallas and his team started cleaning up that system in 1996-97, auditors found that the Bureau of Payroll Services had mistakenly overpaid employees $348,000 in 1991 alone. The Benefits Program, meanwhile, was allegedly paying 3,000 ineligible dependents, some of whom had been dead for years.

Although the vast majority of people who work in and with schools are dedicated and honest, those who are unscrupulous stand to rake in thousands of dollars. Some undercover operations have shown vendors kicking back between 10 to 15 percent on procurement, construction, and repair contracts in New York City. On a $750,000 contract, that comes to $75,000 to $112,500.

Continues...

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Excerpted from BATTLING CORRUPTION IN AMERICA'S PUBLIC SCHOOLS by Lydia G. Segal Copyright © 2004 by Lydia G. Segal. Excerpted by permission.
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