When Budget Cuts Loom

By Charles K. Trainor

With a sluggish economy, reduced tax receipts, state payment reductions, and ballooning operating costs, school districts across the nation are under severe financial stress. Even core educational programs are experiencing cutbacks in some districts. Board members must take a hard look at all expenditures, including non-classroom-related costs such as staff travel and other expense account items.

Research has demonstrated that employee claims for reimbursement of fictitious or inflated business expenses are a significant problem. Alarmingly, these crimes may be perpetrated for as long as 24 months before being detected by authorities.

Last December, a technology employee of Washington, D.C.’s public schools was charged with filing fraudulent reimbursements totaling more than $11,300. The city’s attorney general charged the man with filing 17 reimbursement requests for personal meals, adult entertainment, and alcoholic beverages.

Auditors for New York City’s public schools discovered more than $87,000 in inadequately documented expenses, including payments for 30 employees to attend a two-day conference. Only 18 actually attended. In addition, unexplained stays at an airport hotel totaled $33,000. The policy authorizing meal expense allowances was simply ignored.

Not surprisingly, school expense account abuse is an international problem. In June, the Canadian Education Minister investigated a publicly funded parochial school. Explanations were requested for unusually high board member expense accounts. No dollar amount was placed on the questionable expenses, but they included Caribbean vacations, cell phone bills, cable bills, and hair salon charges. Clearly, these are not the type of expenses associated with educational programs.

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