School & District Management

New Orleans Schools Focus Of Fraud Probe

By Karla Scoon Reid — October 22, 2003 3 min read
  • Save to favorites
  • Print

The New Orleans public schools have issued paychecks to more than 1,600 people who should not have been paid, according to a consultant’s report.

And roughly 2,000 people were enrolled in the district’s insurance plans who should not have been, the report presented to school board members this month found.

The findings shed more light on a federal investigation into allegations of fraud, mismanagement, and other wrongdoing that could cost the 68,000-student district millions.

As part of that investigation, a former manager of the district’s insurance department, Carl Coleman, has reportedly agreed to testify that he was paid by local contractors to steer business their way. Carter Guice, the assistant U.S. attorney leading the probe, declined to comment.

Mr. Coleman also has been implicated in a kickback scheme that allegedly netted him $400,000 in exchange for contracts totaling $4 million to repair fire damage at schools, according to local news reports.

Mr. Coleman’s lawyer, Herbert Larson, declined to comment last week.

Insurance Records

Compensation and Benefits Consulting Services, of King of Prussia, Pa., has been reviewing the district’s insurance and payroll programs for the school board since last year. The firm, which will be paid a total of $2 million for its work, is examining records going back to 1999.

Stuart Piltch, the company’s managing director, described some of the New Orleans district’s problems as “honest mistakes.”

The payroll computer system was disconnected from the benefits computer system, Mr. Piltch said, meaning that when people left the district, they weren’t removed from the benefits programs.

Still, he added: “Nobody came screaming when we shut down payment to the people who were getting the checks.”

Mr. Piltch said his firm started uncovering irregularities during a review of the district’s property and casualty insurance. The firm found a work order to repair fire damage that was filed several days before the date of a fire at a school.

“Either someone was clairvoyant or ... ,” Mr. Piltch said.

The consultants are now addressing problems with the district’s workers’ compensation, managed-care, health, life, dental, and student insurance, Mr. Piltch said.

Anthony S. Amato, who has served as superintendent since last spring, estimated that the district has lost “tens of millions” and said it would sue to recover money from individuals who cashed payroll checks.

“This is pretty over-the-top,” he said. “This is one of the biggest challenges I’ve ever faced on the operations side.”

The district will save about $30 million this year by correcting its insurance inefficiencies and overpayments, Mr. Amato estimated. The district spends roughly $65 million annually on insurance, Mr. Piltch said.

The superintendent said he has fired several employees and instituted a system of checks and balances to prevent further losseswhich he likened to plugging a huge leak in an oil tanker.

The allegations are a blow to the New Orleans district, which is coping with budget cuts while trying to pay for school improvement efforts to boost lagging student test scores.

Teachers may end up paying for some materials out of their own pockets to support new programs, such as the Success for All reading approach, said Wilson Boveland, the director of member rights for United Teachers of New Orleans.

The 5,000-member affiliate of the American Federation of Teachers is pleased that the district is “actively trying to resolve” the payroll and insurance problems, Mr. Boveland said. Payroll mistakes that left some employees receiving checks for cents instead of dollars finally are being addressed, he added.

Using New Orleans as a cautionary tale, Mr. Piltch said districts nationwide must ensure that proper financial controls are in place. He argued that districts need compliance departments with wide-ranging authority that report directly to school board members and the superintendent.

Related Tags:

Events

Budget & Finance Webinar Creative Approaches to K-12 Budget Realities
What are districts prioritizing in 2026? New survey data reveals emerging K-12 budgeting trends.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
College & Workforce Readiness Webinar
From Coursework to Careers: Expanding Work-Based Learning and Industry Credentials in CTE
Expand work-based learning and industry credentials in CTE to connect classroom learning with real careers and prepare students for future success.
Content provided by Project Lead The Way
College & Workforce Readiness Webinar Data-Driven and District-Ready: What EdWeek Research Tells Us About the CTE Market
Discover how to sharpen your positioning in a fast-moving market of CTE with actionable strategies grounded in EdWeek Research Center data.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School & District Management Opinion The 3 Predicable Struggles That Thwart Education Leadership Teams
Even highly capable leadership teams can struggle to translate their strengths into school impact.
4 min read
Screenshot 2026 06 08 at 7.13.09 AM
Canva
School & District Management Education Week Wins National Award for Reporting on School Integration
Alyson Klein and Education Week's visuals team won an explanatory journalism award from the Education Writers Association.
2 min read
Susie Richard, a teacher at Columbia Elementary School, working with students during class in Columbia, La., on April 11, 2025.
Susie Richard, a teacher at Columbia Elementary School, working with students during class in Columbia, La., on April 11, 2025. The story of how three Louisiana schools were "paired" to produce a more integrated student body in Louisiana won an award for explanatory journalism in the Education Writers Association's annual contest.
L. Kasimu Harris for Education Week
School & District Management More Kids Are Riding E-Bikes, Causing Headaches for Schools and Hospital Visits
Districts develop new policies as students' e-bike use spikes—alongside crashes and traffic problems.
5 min read
HERMOSA BEACH, CA-NOVEMBER 10, 2023, 2023: People ride an e-bike on the Strand in Hermosa Beach. In Hermosa Beach, it's against city code to use electric power on the Strand, but many e-bike riders do so anyway.
People ride an e-bike in Hermosa Beach, Calif. School districts are developing new policies as students' use of e-bikes rise, as do related crashes and traffic problems.
Mel Melcon/Los Angeles Times via Getty Images
School & District Management Q&A Why Principals Are Key to Solving Schools’ Biggest Problems
Improving school leaders can improve schools. Why aren’t states making the connection?
6 min read
MINNEAPOLIS, MN, January 22, 2026: Students move through the halls at Washburn High School in Minneapolis, MN.
Students move through the halls at a high school in Minneapolis, Minn., on Jan. 22, 2026. Principals play a central role in shaping school environment, from staff support to overall school culture.
Caroline Yang for Education Week