Now that some investigations are underway by the Jindal Administration into John White and his Department of Education and how they allocated and spent funds on PARCC test and Common Core promotion and training I thought it would be a good idea to advise folks about some ongoing and perpetual financial mismanagement and malfeasance in office on the part of John White and LDOE. I have been gathering tips and reports for months from numerous current and former employees about vast amount of intentional mismanagement (although it was termed fraud and theft by those reporting it to me) of a wide variety of programs and functions maintained and performed by the LDOE. I was even told there are reports available that document part of the story and I was pointed to the Legislative Auditor’s site for some public reports that may not have been fully understood by the public and properly investigated when they were released. I was also given some of the backstory on a few of them – details that did not make it into the published reports but which Daryl Purpera (who heads the Legislative Auditor’s Office) and Steven Street at the OIG should probably consider investigating on their own.

So let’s just get into the nitty gritty. . .

Payroll Fraud – Type 1:Employees, mostly from John White’s executive team at LDOE, are not showing up for work, but are documenting that they are. Some live in New Orleans or outside of Baton Rouge. Some of them have offices at both LDOE and in the New Orleans RSD headquarters and are not at either location, not visiting schools, and claim to be working from home. As you might imagine happens, the real LDOE employees check up on these folks that waltz into the department making outrageous salaries with little experience and produce nothing tangible but padding to apply to their resume’s. These employees are not actually doing any work from home and are unreachable to regular department staff most of the week, most weeks. This has been going on for years, since John White took over at LDOE. John White cycles through employees that produce nothing for Louisiana, but which he then is able to send to other departments of education and charter organizations throughout the country equipped with fancy titles, fat salary histories and glowing recommendations from him and his lackeys. This has been reported by numerous employees and confirmed by numerous time and attendance keepers across the department who are frustrated at covering for these people.

Payroll Fraud – Type 2: John White has been misallocating federal funds dedicated to specific programs for years since he came to power. The federal government provides specific funding allocations for specific programs like IDEA (Special Education.) The funds provided by the Federal government come with strings attached. These funds are required to be spent on employees performing a specific role for a specific federal program. To attempt to circumvent these rules John White and his staff started having staff across the department (code) allocate a portion of their salaries to these federal programs they had nothing to do with. When reporting to the federal government how we are spending their funds we tally up these percentages to equivalent FTE’s, (Full Time Equivalent) employees. I heard this became a widespread practice shortly after I left. To provide some cover for this scheme John White also secretly reorganized the Department of Education, without first getting any legislative approval as is required (by laws he doesn’t follow.) When the legislative auditor’s office went in to audit the department they found 22% of the employees from a random sample were “miscoded” to federal programs. What the auditor’s office did not realize was this was not an accident, this was intentional. Moreover, the auditor’s office found that 100% of recent changes to coding (when they just examined recent changes) were incorrect.

For the second consecutive year, DOE did not properly allocate federal payroll expenditures to the correct federal programs in accordance with the completed employee certifications. This resulted in $96,183 in overcharges to the programs which may have to be returned to the federal government. In a test of payroll certifications for 36 employees, the cost distribution report for eight (22%) did not agree to the federal program and percentage charged per the certifications, resulting in overcharges to the programs totaling $96,183. The Title I Grants to Local

Educational Agencies (CFDA 84.010) and Special Education – Preschool Grants (CFDA 84.173) programs and the Elementary and Secondary Education Act (ESEA) Consolidated Administrative Funds (various ESEA programs) were charged $23,436; $227; and $72,520, respectively, for payroll expenditures that did not match the employees’ documented work effort. Also, in a test of 19 employees with system coding changes during the year, DOE did not maintain a properly completed payroll coding change form to support the cost distribution changes made for any of the 19 (100%) employees tested.

That is not a typo. Every single payroll coding “change” they looked at was wrong. The department made the excuse that this was because of a “reorganization” they undertook. (This was done so secretly, illegally, and without permission, but forget all that and don’t hold us accountable for breaking the law. . .  even though it is a direct result of breaking a different law. ) Below is LDOE’s response to these findings:

During the time period of the audit, the Department was undergoing a re-organization in an effort to better align the work of Department staff with the needs of teachers, students, and parents across the state. The reorganization of the Department resulted in some confusion as to how time and effort was going to be coded for individuals whose job location or job function and duties was shifting.

However this was not innocent incompetence. Employees advised their supervisors they had no duties to the programs they were told to code their timesheet with (to draw down federal funds.) This was done intentionally, possibly to free up funding for the voucher program or for Common Core materials and PARCC testing cost defraying. What is more, LDOE is reorganizing the Department . . . again.

Only a small portion of that annual billion dollar piece of federal pie was audited related to certifications (of which 1/5^th were incorrectly accounted for). This 5 billion dollar annually baked pie is why so many outside groups invested millions in our BESE races last election cycle.

This decision has led to a vast information vacuum in the districts which relied on State employees to provide guidance on federal laws and programs.  I’ve heard numerous reports of how districts are not following federal law in regards to disabled children. This is not a victimless crime, it is impacted disabled children and their families. I imagine this is impacting other federal programs that have had their funding rerouted to John White’s general funding coffers.

Testing Fraud: One of the changes LDOE is planning to undertake is to have Kim Nesmith’s team (data collections) and Laura Boudreaux’s team (Data Analysis) report to Jessica Baghian who they recently moved over Accountability and Assessment. As some of you may have recently heard, these sections had some whistleblower(s) recently come forward and accuse John White of asking them to directly alter test scores to make RSD and charter schools look better and traditional public schools look worse. What you may not have known is that Jessica was moved down to make sure these sorts of “leaks” don’t happen again. Did you also know almost the entire Assessment team is employed and run by folks who are not US citizens and who are here on work Visas that are conditional they work for the Louisiana Department of Education? If they are terminated or quit, they have to return to their home countries. 2 weeks after the story broke two such employees did leave; one very suddenly and without warning. One employee returned to Canada. One went to China, without any notification or fanfare and came as a surprise to many in the department. This is an interesting development, no? I believe the feds may have lost their chance to discover how John White tried to falsify data to promote his agenda (but then again John White’s agenda seems to mirror that of President Barak Obama so maybe this was not an oversight on their part?)

Grant Manipulation Fraud: I verified this recent story (by Tom Aswell) about grant manipulation within the LDOE with some of my sources and it checked out.

The Louisiana Department of Education (LDOE) for at least three years manipulated qualification requirements for several New Orleans charter schools so that they would qualify for millions of dollars in federal grants, according to a former LDOE employee who now works for a parish school district and who asked that his name not be revealed.

The employee told LouisianaVoice that the practice started under former Superintendent of Education Paul Pastorek and continued at least in John White’s first year as superintendent.

My sources listed grants by name that they were involved in (Obviously I cannot reveal those without tipping off who these employees were) that recently returned Paul Pastorek and John White (and their affiliates) overruled grant criteria and selected winners based on favoritism or for political reasons. Some grants were posted that the winners had already been selected, but the Department under both John White and Paul Pastorek made their staff go through the motions of reviewing grants and interviewing applicants so individual superintendents and legislators would not be upset when their districts and constituents did not receive these grants.

Voucher Fraud: Whether you agree in using vouchers to send public students to private schools or not, no one (except fraudsters) should approve of public funds being used or paid out fraudulently to private school operators. According to the last audit of how these funds are being handled, 97% of schools are mishandling their funds, with John White’s blessing.

We found that the while the Scholarship Program is expanding, LDOE does not have adequate criteria in place to determine if participating schools are academically acceptable and have the capacity needed to serve the number of Scholarship students they request. In addition, LDOE should develop internal procedures with more specific criteria for removing a participating school from the program based on academic performance. Specifically, we found the following:

Program Expansion and Implementation

• Student participation increased 269% (by 4,937 students) from academic year 2011-12 to 2013-14, while school participation increased 282% (by 93 schools) during the same time frame. Funding for the program increased from $8.9 million in fiscal year 2011-12 to a budget of $44.6 million in fiscal year 2013-14.
• State law requires public schools that participate in the Scholarship Program to have a letter grade of “A” or “B.” However, there are no legal requirements in place to ensure nonpublic schools that participate in the program are academically acceptable.
• LDOE’s review process lacks formal criteria to ensure that schools have both the academic and physical capacity to serve the number of Scholarship students they requested.
• During academic year 2012-13, the number of Scholarship students in participating schools ranged from one to 336. The enrollment percentages at participating schools ranged from 0.1% to 86.8%.

Program Accountability

• A Scholarship Cohort Index will be used to measure academic performance of participating schools. It will be calculated “substantially similar” to the school performance scores.
• Overall, the proficiency rating for schools participating in the Scholarship Program is 41%. This rating is based on the percent of students who scored basic and above on standardized tests during academic year 2012-13.
• The proficiency rating of the 33 schools that participated in the Scholarship Program for at least two years is 41.8%. LDOE restricted admission for new Scholarship students at seven (21%) of these 33 schools for academic year 2013-14 based on poor academic performance.
• LDOE has not set standards or measures in the accountability system for removing a participating school from the program for academic performance.

Program Cost and Funding

• Independent auditors found that LDOE overpaid or underpaid 48 (41%) of the 118 participating schools in academic year 2012-13.
• Independent auditors were unable to perform all procedures related to the use of funding for 115 (97%) of the 118 schools because these schools did not separately account for the Scholarship funds.
• The source of funding for the program changed from MFP to State General Fund because of a May 2013 ruling by the Louisiana Supreme Court.

In a perversely ironic move, John White removed one of the only schools that segregated their funds enough to be audited. Living New Word in Ruston Louisiana was not removed from the program for poor academic performance, for teaching kids on DVD’s, for not having certified teachers or for not even having a building to house the children they requested to “educate”. They were removed for charging the state too much based on the financial information they provided; that 97% of the other schools in the voucher program did not provide and were not chided or sanctioned for by the department. In response to the report that 97% of this voucher schools were unaccountable and that 1/3^rd of the audited schools had to be shut down immediately for engaging in egregious mismanagement of state dollars, John White had this to say:

“These findings are evidence that the oversight process is working and that there will be zero tolerance for fiscal mismanagement of taxpayer dollars, said State Superintendent John White.”

The findings I am disclosing are evidence that the oversight process of John White and LDOE is not working and that currently there is a high tolerance on BESE and within Governor Jindal’s office for fiscal mismanagement of taxpayer dollars. I hope these disclosures lead to more oversight and investigations before John White leaves for greener pastures. With so much emphasis on district, school and teacher accountability, it would be nice if we finally held some of our education “leaders” accountable for their actions and inactions, and not simply reward them with a fat severance and pat on the head for a job so poorly done.