A coalition of state financial officers says it uncovered roughly $225 million in alleged fraud in American schools over the past six years, identifying nearly 90 cases involving embezzlement, fake invoices, inflated enrollment, bid-rigging, and kickbacks.
As reflected in the new report from the State Financial Officers Foundation and Open the Books, investigators reviewed every Education Department Office of Inspector General semiannual report to Congress issued between Oct. 1, 2019, and March 31, 2026, which helped them identify alleged fraud cases in at least 24 states and Puerto Rico.
“All fraud is harmful, but defrauding education dollars meant to help kids learn and succeed is especially hideous,” OJ Oleka, CEO of the State Financial Officers Foundation, said.
Oleka, who co-authored the report, said that the “findings in this report should alarm every family, teacher, and civic leader, especially since they only scratch the surface of the problem.”
“The state financial officers courageously tracking every school dollar abused historically have had a bloated federal education bureaucracy only make their job harder,” he added.
Oleka said the findings highlight the importance of state-level oversight.
“With that in mind, stronger oversight of federal education dollars is more than some bureaucratic exercise—it is an economic and moral imperative,” the report said. “Families deserve assurance that the public institutions meant to serve their children are not being looted by the very officials entrusted to lead them.”
John Hart, CEO of Open the Books, a watchdog organization that tracks government spending, added that “these schemes within public schools arguably hit us where it hurts most: America’s future leaders.”
“Every dollar wasted on fraud never makes it to the classroom where it’s urgently needed,” Hart continued. “Student outcomes will continue to suffer until we clean up both fraud and administrative overhead. In one instance, the per-student fraud rate was enough to fund a semester at a charter school.”
Nicole Neily, president of Defending Education, added, “Every dollar siphoned out of the education system by self-interested grifters is a dollar that’s not furthering a child’s education at a time when student achievement and proficiency are at a frighteningly low point. We don’t need more money in education—we need more accountability so that finite funds get into classrooms.”
Tip of the Iceberg
At the top of the total amount allegedly stolen, the report noted that two now-closed Indiana online charter schools received $44 million in excess funding by inflating enrollment. In Puerto Rico, a tutoring company allegedly collected $24 million by billing for services that were never provided.
In Florida, a former Broward County Public Schools information technology official allegedly steered $17 million in contracts to a friend’s company while bypassing competitive bidding requirements and personally profiting from the arrangement.
The report also highlighted a Texas scheme involving former Houston Independent School District Chief Operating Officer Brian Busby and contractor Anthony Hutchison. Federal prosecutors alleged the pair orchestrated a fraud scheme exceeding $6 million involving construction and maintenance contracts in exchange for cash bribes and home renovations.
A federal jury convicted Busby and Hutchison of conspiracy, bribery, filing false tax returns, and witness tampering. Hutchison was also convicted on multiple counts of wire fraud.
The report argues that students often bear the direct cost of fraud, particularly in smaller school districts.
California accounted for two of the most costly examples.
At the now-closed Community Preparatory Academy charter school, students lost roughly $9,090 per pupil after the school’s leader allegedly used $3 million in taxpayer funds for personal expenses, including travel, restaurants, online shopping, and private-school tuition for her children.
In Magnolia School District, students lost about $3,553 per pupil after a former fiscal services director allegedly embezzled nearly $16.7 million to purchase a luxury home, luxury vehicles, and designer goods.
The report also cited Boone County Schools in West Virginia, where a former maintenance director allegedly stole $3.4 million through fraudulent invoices for janitorial and custodial supplies that were never delivered.
Chicago Public Schools was also identified in the report. The district agreed to return about $1 million in federal grant funding after an inspector general review found it could not adequately verify student eligibility for an American Indian education grant program.
Alleigh Marré, executive director of the American Parents Coalition, said the findings underscore concerns many parents already have about government accountability.
“This is why parents need to have a seat at the table to ensure their children are receiving the best education possible and schools are not wasting taxpayer dollars on noneducation-based materials,” Marré said.
The report concluded that education decisions and funding should increasingly be returned to state and local authorities, arguing local officials are better positioned to understand community needs, identify efficiencies, and improve student outcomes.
Trump Admin Welcomes the Report
The report comes as President Donald Trump’s administration has intensified efforts to combat government waste and fraud, including Vice President JD Vance’s “War on Fraud” initiative.
The administration welcomed the report, telling Fox News Digital that targeting waste, fraud, and abuse remains a priority for the administration.
“Secretary [Linda] McMahon is proud to serve on the vice president’s Task Force to Eliminate Fraud and remains committed to delivering lasting results for American students and taxpayers—including nearly $2 billion in taxpayer savings to date,” Education Department spokesperson Ellen Keast said. “Misuse of taxpayer funds became widespread under the previous administration, which is why addressing it is a top priority.”