Stopping Theft Before It Happens
Embezzlement has struck many school districts, but it doesn't have to.
"It happens a lot more frequently than we are willing to admit," says Don I. Tharpe, the executive director of the 6,000-member Association of School Business Officials International, based in Reston, Va. He could not estimate how much money is at stake, because the association does not track cases alleging theft of district funds.
In Detroit, audits last fall revealed that more than $860,000 was misspent in 29 high schools. In some cases, money from athletic events was not accounted for; in others, it was improperly spent on flowers, fraternity dues, and employee lunches, the audits found. Two principals have been placed on leave, one of whom is accused of reimbursing himself $95,000 for personal trips and expenses. Six secretary-bookkeepers have been fired, and two have been found guilty of misusing school money. The investigation continues.
In Charlton, Mass., an assistant superintendent who managed the finances for a vocational school pleaded guilty this month to charges that he embezzled nearly $5.5 million over seven years. He used the money, in part, to buy a stable where he raised thoroughbred racing horses, prosecutors said. They have recommended that he serve four years and nine months in prison.
Dozens of other, smaller cases are being investigated across the country, news accounts show. Most involve allegations that volunteers or educators dipped into booster club accounts or fund-raising proceeds.
Tharpe suggests several steps that can prevent theft of school funds:
- Money should be put away safely—immediately. Proceeds from selling class rings, candy and fruit, gift wrap, and other fund-raisers should be documented and deposited in a central bank account. Otherwise, it's too easy to raid the till. "You fix that before it happens," Tharpe says.
- District administrators and employees should be trained in proper accounting methods. Tharpe recommends hiring a certified public accountant as chief financial officer, not merely a veteran educator who wants the job. His association offers workshops and certificates in school finance for district employees.
- School boards should oversee finances. Regular conversations on fiscal matters can provide board members with the knowledge to monitor the budget. Qualified auditors also can help.
- Secrets should not be kept. Financial clerks should have broad power to question decisions and ask for documentation, even if it means that they must report directly to the superintendent. "Then the official knows he has clerks that could turn him in," Tharpe says of potential embezzlers.
Superintendent Bill Cason, who helped uncover the misuse of funds by employees in Sumter School District 17 in South Carolina, also has some ideas from experience.
Smaller districts should make sure financial duties are divided up, so that no one person has too much control. The person who writes the checks, for example, shouldn't also balance the books.
Routine checks of vendors should be performed, Cason says. Companies might accidentally overcharge or bill for unperformed work. In the case of his district, bills were paid to companies that didn't exist.
Most of all, Cason says, administrators should learn more about school finances, ask questions when they don't understand something, and allow anyone to express concerns openly.
After all, he says, it's the public's money.
Vol. 20, Issue 20, Page 31Published in Print: January 31, 2001, as Stopping Theft Before It Happens