Audit Reveals Systemic, Widespread Problems In Louisiana’s School Voucher Program

Two weeks ago, late on a Friday afternoon, John White, Louisiana’s Superintendent of Education, announced that- as a result of the findings of an independent audit- the New Living Word School in Ruston was being kicked out of the state’s controversial school voucher program. White attempted to put the best possible spin on the story, suggesting that the school’s removal was proof that the Department of Education was committed to accountability. “These findings are evidence that the oversight process is working,” he said, “and that there will be zero tolerance for fiscal mismanagement of taxpayer dollars.”

Superintendent White had an advantage on the media: The audits total 475 pages, and considering that New Living Word had already generated national attention, he likely knew that would be the story. So, the narrative he “muddied up” was simple: If only one of the 117 schools was being forced out of the program for fraud, then that meant the remaining 116 schools were all in compliance. The Times-Picayune actually fell for the trap, writing (bold mine):

New audits released on Friday have found that out of the 117 schools participating in the state’s student voucher program, officially the Louisiana Scholarship Program, only one violated rules for using taxpayer money. New Living Word School in Ruston was overcharging tuition for voucher students, auditors said.

On Sunday, James Varney of The Times-Picayune published a spirited defense of the voucher program, framing the issue as if New Living Word School was simply one bad apple. Quoting (bold mine):

A recent headline on NOLA.com was one to warm taxpayers’ hearts. It read: “Most Louisiana voucher schools in compliance with using taxpayer dollars, auditors find.”

Digging past the headline, one learned the actual figure was 116 out of 117 schools were in compliance. Yes, that certainly is “most.” Talk about damning with faint praise. That’s a spectacular stat. If all government programs approached that .99145299 compliance rate with their spending the United States would truly be a land of milk and honey.

Mr. Varney obviously didn’t bother to read the audits. It was far easier for him to take Superintendent White’s word for it, shine up some fuzzy math, and recite a litany of conservative talking points on “school choice” than it was for him to actually do his homework. After reading the audits and then reading Mr. Varney’s column, I couldn’t help but feel embarrassed for the guy. As he discloses in the very first sentence, the reason that he’s ignorant is because he receives his news from The Times-Picayune. (Sorry, I couldn’t help myself).

Read the audits. Here and here.

The simple and devastating truth is:

1) Of the 117 schools participating in the school voucher program, only fifty-two (52) were scrutinized by the independent auditor in the report implicating New Living Word School. One of the schools audited was a public school and not subject to additional review.

2) Of those fifty-one (51) private schools, only two (2) maintained a separate checking account with which they handled voucher money. And in fairness to The Times-Picayune, it’s worth noting that columnist Bob Mann picked up on this in his terrific editorial last Sunday, writing:

The audits were conducted to ensure that, “Scholarship funds shall be spent only on ‘educational purposes,’ as defined in the most recently approved Minimum Foundation Program formula. Any expenditure of scholarship funds constituting gross irresponsibility or gross individual enrichment is prohibited.”

In fact, the audits revealed that the afore-mentioned standard “could not be completed for forty-nine of the fifty-one private schools reviewed.” One audit is littered with the following statement, concerning the records of dozens of voucher schools: “We were unable to perform the procedures because the school did not have a separate checking account or other procedures to account for scholarship expenditures separate from other expenditures.”

3) The irony is: The only reason that New Living Word School got “caught” misappropriating funds is because it was one of the two schools that actually used a separate account for its voucher money. Quoting from the report:

Of the total Scholarship Program expenditures (for New Living Word School) as of February 28, 2013 of $345,662.58, P&N selected  $98,146.40 or 28% for testing. The sample for testing was selected from among the direct scholarship costs, which includes bus driver salaries, transportation expenses, accounting costs, and facility rental and maintenance. Allocated or indirect costs which includes legal and professional, supplies, insurance, non-bus driver salaries, and others, and were not subjected to our procedures. Of the $98,146.40 of direct scholarship costs tested; expenditures totaling $40,235 lacked sufficient supporting documentation. These expenditures were for facilities costs and bus rentals paid to the School’s sponsoring church.

Not surprisingly, New Living Word School used taxpayer dollars to prop up its “sponsoring church.” It is worth noting, however, that although Superintendent White has asserted that New Living Word School may have misappropriated hundreds of thousands of dollars, the auditor was only able to identify $40,235 of expenditures that “lacked sufficient supporting documentation” and only selected 28% of the school’s voucher money for testing.

4) The second audit report scrutinizes approximately sixty-six (66) schools (including many of the same schools listed in the first report) and, of those, only one (1) appears to comply with the policy of maintaining segregated accounts.

5) Put another way, the Department of Education’s independent auditor was able to “test” the voucher expenditures of only three (3) of the 117 schools participating in the program. The refusal (or the negligence) of the vast majority of participating schools to properly account for the expenditure of tax dollars raises other significant constitutional and legal questions. Again, the only reason we now know that New Living Word School was using tax dollars to fund or “reimburse” its “sponsoring church” is because they actually complied with the policy of maintaining separate accounts.

6) The problems with Louisiana’s voucher program are widespread and systemic. The report notes:

Using a questionnaire developed by LDE, each school provided answers to the questions pertaining to accounting and financial policies, procedures and internal controls. The responses indicate these predominant characteristics:
 No separate checking account
 No separate accounting or recordation of scholarship transactions
 Lack of current written policies and procedure
 Lack of segregation of incompatible duties
 Budgeting practices that do not include procedures for submitting the scholarship budget to the LDE

In the event that you don’t feel like pouring over 475 pages worth of documents, this should give you a good idea of what the report looks like:

7) The first audit also revealed that 13 of the 51 private schools were charging more for voucher students than for other students. Once again, this directly contradicts Superintendent White’s implication that New Living Word School was the only school in the entire program that overcharged the State. Quoting:

P&N noted that for thirteen (13) out of fifty-one (51) private schools tested, tuition and fees received for certain students through the Scholarship Program exceeded tuition and fees charged to students not participating in the Scholarship Program.

It’s worth mentioning that many of the participating schools charge less in tuition for students that are members of the school’s sponsoring church, and many of them reserve the right to reject students on the basis of their religion.

8) Melinda Deslatte of the Associated Press actually did her homework and combined the numbers from the two reports. Quoting (bold mine):

A closer look at the audits shows that auditors said they couldn’t track how 107 of the private schools spent their voucher money to determine if they complied with a requirement that voucher money be spent only on educational purposes.

Interestingly, Ms. Deslatte’s report implies that as many as ten voucher schools weren’t audited, which is actually not too surprising. Indeed, several of the schools listed in the two audits refused to provide any substantive information at all.

9) Ms. Deslatte’s analysis also underscores another important point. While James Varney and The Times-Picayune claim that 99.1% of schools are “complying” with the program’s requirements, the truth is: at the very least, 91.4% are not complying.

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On Tuesday, May 7, 2013, the Louisiana Supreme Court held in a 6-1 decision that it was improper and unconstitutional for the voucher program to rely on Minimum Foundation Program funds that were statutorily and specifically designed to provide state dollars to struggling and predominately inner-city public schools. Until then, Superintendent White and Governor Bobby Jindal had hoped to fund the program by carving away funds that had been specifically and statutorily mandated for public schools. Governor Jindal, Superintendent White, and a small but influential cabal of nationally-funded lobbyists were selling this vision: Public schools, so the argument goes, are too tethered to unions; their overhead costs are bloated, and the voucher program, they argued, was a sure-fire way of eliminating waste, fraud, and abuse all while ensuring students had access to higher-quality private education, at a savings for the state.

Just in the last day, Scott McKay of The Hayride has taken up this talking point with defiant earnestness, comparing New Living Word to its analog public school- Ruston Elementary, which, according to McKay spends $3,000 per pupil per year more than New Living Word. The real story, he’d like to convince us, is about “the market.” This, also, is where anyone with a scintilla of knowledge on public schools can quickly discredit and dethrone Mr. McKay and his like-minded colleagues for their abjectly unsophisticated, deceptive, and intellectually dishonest arguments. A few things: When voucher proponents attempt to spin the money these schools receive as tuition, as if the tuition stipend represents the entirety of public funds provided to these schools, they are neglecting to also account for the millions the government already provides to these schools via ancillary programs, like busing and reduced lunches. Moreover, because private schools have little to no obligation ensuring that physically and mentally disabled students are provided the rights they have under Section 504, the ADA, and the IDEA Act, those costs are also passed onto the State, and in private schools, for the most part, those students don’t receive those critical services.

Put simply, New Living Word School and several other schools are doing less with less; their test scores are plummeting. And only a fool or a charlatan would look at the numbers, in their entire context, and still suggest that this is all about saving money.

Because, what money? What money have we saved?  How much have we been overcharged?

We may never know, but one thing is clear: The good people of Louisiana deserve better, and Superintendent White should end the program and resign.

On a final note: Again, stay tuned.