A coalition of state financial officers reported discovering approximately $225 million in alleged fraud within K-12 education across the United States over the past six years. The report, compiled by the State Financial Officers Foundation (SFOF) and Open the Books, analyzed Education Department Office of Inspector General (OIG) Semiannual Reports from October 1, 2019, to March 31, 2026, and identified nearly 90 cases of fraud, including embezzlement, fake invoices, inflated enrollment figures, bid-rigging, and kickbacks across 24 states and Puerto Rico.
SFOF CEO OJ Oleka stated that fraud in education is particularly damaging, as it diverts funds meant for student success. The report highlights that about $67 million has been ordered to be repaid through court rulings or settlements, although the actual recovery amount remains unclear. It also notes that only three of the 20 largest federally funded school districts were mentioned in OIG records, suggesting potential gaps in federal oversight.
The report details significant cases of fraud, including two now-closed online charter schools in Indiana that allegedly received $44 million in excess funding by inflating enrollment numbers, and a Puerto Rican tutoring company that billed for services not rendered, totaling $24 million. In Florida, a Broward County Public Schools information officer reportedly directed $17 million in contracts to a personal acquaintance's business.
In Texas, former officials were found guilty of orchestrating a fraud scheme exceeding $6 million related to school contracts. The report emphasizes the need for stronger oversight of federal education funding, stating that the true cost of fraud may be higher due to undetected cases. It also highlights specific instances of fraud in California and West Virginia, where students lost significant amounts per capita due to fraudulent activities.
The report concludes with a call for reducing bureaucratic spending and returning control of education to state and local levels to better address community needs and improve student outcomes.