New Jersey Vocational-Education Probe Focuses on Clubs

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A continuing investigation of alleged corruption in the vocational division of the New Jersey Education Department has focused attention on the fiscal management of several student vocational clubs, according to a recent newspaper report.

A top department official confirmed last week that auditors are preparing to take a closer look at the financial records of three student organizations mentioned in a recent article in The Newark Star-Ledger.

The article cited internal department documents that it said raised questions about expenditures by chapters of the Vocational Industrial Clubs of America, Distributive Education Clubs of America, and Health Occupations Students of America.

Expenditures Queried

According to the Star-Ledger, the documents challenge the propriety of thousands of dollars in travel, hotel, and other expense payments to officials responsible for supervising the clubs' activities.

For the last three years, the clubs' financial accounts have been handled by Albert Sternberg, a professor at Rider College. Under a federal grant, Mr. Sternberg receives $40,000 a year for his work with the clubs, according to Assistant Commissioner Richard DiPatri.

Each of the three organizations is also supervised by a management "team" of local educators and community leaders, who are overseen by Mr. Sternberg.

Mr. DiPatri said the payments in question involve the use of dues and fees collected from club members, and income generated by conferences and other club activities.

The three clubs also receive federal funds administered by the department's vocational-education division and channeled through local school districts. "There was a bookkeeping division between the grant money and the clubs' own revenues," Mr. DiPatri explained. "The student funds were not really accounted for as part of the grants, and there was some confusion there."

The state vocational division itself is the target of department investigators and the state attorney general's office. A number of top division officials have already been fired for allegedly seeking to steer training contracts worth nearly $500,000 to selected companies. (See Education Week, Jan. 20, 1988.)

Funds Said Diverted

According to the state audits, members of the clubs' management teams have deposited some $50,000 of student funds in their personal checking accounts. Auditors also said that such funds were used to cover shortages discovered by local officials who reviewed the clubs' use of federal grant funds.

In one three-month period in 1985, the audits show, the vica chapter spent more than $57,000 on travel expenses. State auditors were unable to document about $31,000 of those expenditures.

Mr. Sternberg, the clubs' coordinator, denied all allegations of improprieties in the management of their funds. He said he had submitted written explanations for all the questions raised by the state audits, but had never received a response from the department. "I asked them to send the auditors in more than a year ago," he said. "I even let them take the books back with them. And that's the last I heard about it until I saw my name in the papers."

Mr. Sternberg also denied any connection with the questionable training contracts that are the primary focus of the ongoing investigations.

The Star-Ledger, however, cited an internal memorandum from within the vocational division that discussed using the three clubs to channel $675,000 in grant funds to a Delaware corporation that has figured prominently in the probes.

Grant Funds at Issue

Several New Jersey colleges and other institutions awarded major contracts to the company, Encore Management, using grant funds provided by the vocational division. The firm conducted training classes in a management technique called "Modelnetics."

According to the Star-Ledger, officials in the vocational division explored the possibility of awarding grants to vica and the other two clubs to provide Modelnetics training to vocational students.

But Mr. DiPatri said he knew nothing about any such scheme. Mr. Sternberg also claimed to have no knowledge of the proposal. "That's ridiculous," he said. "Modelnetics is for managers, not students."

At the same time, several of the colleges involved in the scandal have announced they will return $120,000 in Modelnetics funding to the state. The schools claimed the grants were forced on them by officials in the vocational division.

At Rutgers University, however, officials said they were worried that they may be liable for a $500,000 grant awarded to the university's Vocational Education Resource Center. The center has already paid for the contracts funded through the grant, even though the money was never disbursed by the state.

State officials have since frozen all grant payments to the center, which may leave Rutgers with the debt. A spokesman said university officials were seeking advice on the issue from the university's lawyers.

Vol. 07, Issue 21

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