Since 2019, school districts in 24 states and Puerto Rico have reported a loss of $225 million to fraud, according to a semiannual report from the U.S. Department of Education inspector general. Only $67 million of that amount has been recovered.
Investigations have identified 74 documented fraud incidents, with each case averaging more than $3 million. Many additional cases remain unprosecuted or undetected.
Florida and Illinois lead the list, each reporting 11 separate fraud cases. Indiana recorded the largest single loss of $44 million, tied to inflated attendance figures that increased state funding to two schools.
In the Indiana case, the schools’ founder allegedly routed the extra funds to companies he owned before the schools closed in 2019. Four individuals connected to the scheme were charged in 2024.
Broward County Public Schools in Florida faced allegations that an information officer used district money to purchase $17 million worth of supplies from a friend’s business, bypassing competitive bidding. The friend reportedly hired the officer and his son for a security position and sold them a house at a discount.
Chicago Public Schools received $1 million in federal grants earmarked for Native American students, but the application listed more than 1,000 South Asian students. The district could not verify enrollment and agreed to repay the money.
Smaller districts are disproportionately affected, as illustrated by a California school where a former administrator stole $3 million over five years, representing a third of the school’s state and federal funding. The individual used the stolen money for personal expenses and was sentenced to home detention and repayment.
These cases underscore the broader issue of widespread fraud in education funding, with significant financial losses that ultimately divert resources from students’ learning environments.
