A federal jury needed just six hours last April to convict a Houston school district official and his contractor accomplice on all 33 counts in a nine-year bribery scheme. It was one of roughly 90 fraud cases totaling approximately $225 million that a new review of federal education watchdog reports found buried in public school budgets over the past six years.
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The State Financial Officers Foundation and Open the Books documented approximately 90 confirmed cases across 24 states and Puerto Rico: fake invoices, inflated enrollment, no-bid contracts, kickbacks, and outright theft. Approximately $67 million in restitution has been ordered; how much has been collected is unclear.
Houston wasn’t the worst dollar-for-dollar. Indiana recorded the largest single loss: Officials at Indiana Virtual School and Indiana Virtual Pathways Academy inflated enrollment figures between 2016 and 2018, collecting $44 million more than they were owed. When an employee tried to alert state officials, they were fired. The schools closed in 2019, and four people weren’t charged until 2024.
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Florida and Illinois led in case volume with 11 each, costing $24.7 million and $14.5 million, respectively. Puerto Rico logged 10 cases totaling $39.6 million, including a $24 million tutoring fraud in which a company billed for federally funded sessions that never took place and fabricated attendance records to cover the scheme.
In Houston, a federal jury convicted former Houston Independent School District (ISD) Chief Operating Officer Brian Busby and contractor Anthony Hutchison on all 33 counts (conspiracy, bribery, false tax returns, and witness tampering) in a nine-year scheme that cost the district more than $6 million. Busby directed construction and maintenance contracts to Hutchison in exchange for cash bribes and home renovations. Hutchison’s landscaping company overbilled for years, charging more than twice what it paid for supplies before adding a 20 percent markup. Five other district officials, including a former school board president, pleaded guilty to conspiracy charges.
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In an email to RedState, Houston ISD Superintendent Mike Miles said the district has changed course since Gov. Greg Abbott (R) and the Texas Education Agency intervened in 2023.
“Bureaucratic bloat, insider dealing, and poor oversight prompted Governor Abbott and the Texas Education Agency to intervene in HISD and appoint new leadership. School funding was being squandered and the majority of students’ education was being neglected. Since June 2023, every decision we make is focused on closing student achievement gaps and supporting teachers.”
Smaller districts took the hardest per-student hits. A California charter school head stole $3 million ($9,090 per student) for Disney vacations, personal travel, and private school tuition for her own kids. A Magnolia School District fiscal director embezzled $16.7 million and bought a BMW, a luxury home, and 57 designer bags. A West Virginia maintenance director falsified records for custodial supplies never delivered, costing his district $3.4 million ($1,096 per student).
Nicole Neily, president of Defending Education, said in an email statement:
“This report is a good reminder that America doesn’t necessarily need more laws — we need to enforce the existing ones. Every dollar siphoned out of the education system by self-interested grifters is a dollar that’s not furthering a child’s education. We don’t need more money in education. We need more accountability so that finite funds get into classrooms.”
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Chicago Public Schools was forced to return $1 million in federal grants earmarked for Native American students after investigators found more than 1,000 students listed as Native American whose records pointed to South Asian ancestry. District officials couldn’t explain the discrepancy covering seven years of enrollment data.
The report called for stronger auditing, transparent contracting, and swift prosecution, while supporting a shift of education spending authority back to state and local governments. OJ Oleka, CEO of the State Financial Officers Foundation, said to RedState that the findings underscore why that shift matters.
“All fraud is harmful, but defrauding education dollars meant to help kids learn and succeed is especially hideous. The findings in this report should alarm every family, teacher, and civic leader. The state financial officers courageously tracking every school dollar abused have had a bloated federal education bureaucracy only make their job harder. SFOF is thankful for the Trump administration’s efforts to reform the Department of Education and restore more control to the local level where taxpayer money can be more closely protected by elected watchdogs.”
The money meant for classrooms went instead to bribes, fake students, luxury handbags, home renovations, and products that never arrived. Washington had six years of inspector general reports telling this story. The question now is whether anyone in charge was actually paying attention, and whether they will be held to account.
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