F.B.I. Agent Fills New Chicago Post To Probe Waste, Fraud

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A veteran Federal Bureau of Investigation agent with extensive experience probing public corruption has been appointed to the new post of inspector general of the Chicago public schools.

Kenneth K. Holt, an F.B.I. special agent for the past 25 years, is scheduled to assume his new duties next week. He will be responsible for investigating charges of "waste, fraud, and financial mismanagement'' involving the Chicago board of education, its employees, and contractors.

The Illinois legislature mandated the position last fall as part of a complex package of laws that kept Chicago's schools from financial collapse. Backers of the post argued that the corruption that allegedly has plagued the school district must be rooted out before the state considers a new funding source for the system.

In recent years, the system has been accused of buying inadequate packaged meals for students, paying for computers without competitive bidding, and failing to account for thousands of dollars in student-activity funds that have disappeared from schools.

Mr. Holt was selected last month by the five-member School Finance Authority, which oversees the system's $3 billion budget.

The post will be similar in some respects to the New York City schools' special commissioner of investigation, who in recent years has conducted wide-ranging probes of illegal and unethical activity. (See Education Week, Sept. 29, 1993.)

Mr. Holt's authority will be more limited, however, since he will focus on financial issues, while the New York official also can look into such matters as allegations of child sexual abuse and teacher misconduct.

Moreover, Mr. Holt will begin work with one investigator and one auditor. Edward F. Stancik, the New York City commissioner, has a staff of 42 investigators and nine lawyers.

'Significant Savings' Seen

Creation of the Chicago post had partisan overtones, since it was pushed on the heavily Democratic city by Republican lawmakers.

In addition, skeptics have questioned whether the office will be a wise use of resources.

The Chicago board of education has criticized the position, arguing that its costs will further drain the district's hard-pressed budget.

Mr. Holt will be paid $78,000 a year for a four-year term. He and his staff will be housed in the finance authority's office.

But supporters of the inspector's office say it will pay for itself by eliminating wasteful spending.

For example, noted Barbara Holt, the finance authority's executive director, the school system was rocked by an audit last year that found that building contractors had been overpaid by $7 million.

"We know that there's substantial money to be recouped for the system by dealing with waste, fraud, and mismanagement,'' said Ms. Holt, who is not related to the new inspector general. "I think it's difficult to make a case against this kind of action.''

Mr. Holt's investigations will "lead to significant savings for the board of education that can then be directed to good purposes,'' predicted Martin J. Koldyke, the chairman of the finance authority.

Clarence Davis, who founded a citizens'-watchdog group to keep track of allegations of wrongdoing in the schools, said the new position will remedy a shortcoming in the current system.

"They don't have a very fine system set up for checks and balances,'' Mr. Davis said. "We came to the conclusion that the schools are more like a political organization than a school. There's a lot of money to be made.''

'Uncommon Integrity'

The inspector general is expected to set up a telephone hot line to field tips. Mr. Koldyke said school facilities and food services were prime areas for investigation.

The new official, who will have subpoena power, will be required to notify law-enforcement authorities of any evidence that criminal acts have been committed.

As a federal special agent, Mr. Holt will not be available for interviews or photographs until he assumes his new job. But observers described him as well equipped for the tasks before him.

The new inspector general is "a person of uncommon integrity who clearly can get the job done,'' Mr. Koldyke said.

"He's the type of person who is very serious about what he does and is not going to go in there and try to make a splash for the purpose of making a splash and generating publicity,'' said David Stetler, a former assistant U.S. attorney who worked with Mr. Holt on a sensitive probe of the Cook County sheriff's office.

"He's a real substantive guy,'' Mr. Stetler said. "They really do have problems and he really will address them.''

Vol. 13, Issue 31

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