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

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
Assessment Webinar
Improving Outcomes on State Assessments with Data-Driven Strategies
State testing is around the corner! Join us as we discuss how teachers can use formative data to drive improved outcomes on state assessments.
Content provided by Instructure
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
Equity & Diversity Webinar
Classroom Strategies for Building Equity and Student Confidence
Shape equity, confidence, and success for your middle school students. Join the discussion and Q&A for proven strategies.
Content provided by Project Lead The Way
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
Professional Development Webinar
Disrupting PD Day in Schools with Continuous Professional Learning Experiences
Hear how this NC School District achieved district-wide change by shifting from traditional PD days to year-long professional learning cycles
Content provided by BetterLesson

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 Q&A How One High School Became a Model for Intergenerational Learning
School and community leaders say “there’s no down side.”
5 min read
Swampscott High School students and Senior Center members hold a quilt they made together for Black History Month at Swampscott High School, which is collocated and shares space with the senior center in Swampscott, Mass., on March 8, 2023.
Students and senior center members display a quilt they made together for Black History Month at Swampscott High School, in Swampscott, Mass, on March 8, 2023. The high school and senior center were designed and built to be part of the same complex, providing opportunities for teenagers and senior community members to collaborate and learn from one another.
Sophie Park for Education Week
School & District Management Did Principal Turnover Increase During the Pandemic? Here's What We Know
The data are still scant, but what’s emerging shows a drop in 2020-21 and an increase the following year.
6 min read
Black and white male and female figures walking in different directions on a light blue textured background. One male figure is walking out of an open door.
Anton Vierietin/Getty
School & District Management MAP: Where School Employees Can and Can't Strike
See which states do and don't allow public school employees to go on strike.
2 min read
Amy Chapman and her daughter, first grader Corinne Anderson, pose for a photo while they support teachers on strike outside Whetstone High School in Columbus, Ohio, on Wednesday, Aug. 24, 2022.
Amy Chapman and her daughter, 1st grader Corinne Anderson, show support for teachers on strike outside Whetstone High School in Columbus, Ohio, on Aug. 24, 2022.
Samantha Hendrickson/AP
School & District Management Opinion How to Build a More Effective School Board
Board members are well-intentioned, but they've been mis-trained into focusing on adult inputs rather than student needs.
5 min read
Image shows a multi-tailed arrow hitting the bullseye of a target.
DigitalVision Vectors/Getty