$100 Million Fraud in Miami-Dade Schools
By Lisa Snell

Corruption and mismanagement have cost taxpayers more than $100 million, according to a forensic audit of the Miami-Dade County (Florida) School Board conducted at the request of a state oversight board.

Independent auditors from Lewis B. Freeman & Partners, who produced the report, recommended the appointment of a special prosecutor and statewide grand jury to investigate the Miami-Dade school district's multibillion-dollar Facilities Construction Department, alleging massive disorganization and waste as well as "probable malfeasance, misfeasance, and potential for fraud."

District officials dispute the April 28 Forensic Audit Report and argue the auditors provided no evidence to substantiate their claims. The Freeman auditors respond that the district has refused to cooperate and has not provided a complete set of records that document how and where construction funds were distributed. The auditors found the district's reporting systems could not even provide definitive answers to such basic questions as "How many schools do you have?" and "How many students do you have?"

Report Charges Mismanagement, Fraud

The initial report from Freeman & Partners found many indications of severe mismanagement and fraud:

Grand Jury Recommended

The auditors recommend the State of Florida assign a state-level grand jury and appoint a special prosecutor to organize a new investigation with an Independent Private Sector Inspector General (IPSIG) to fully and completely review and investigate the Facilities Construction Department. The goal of the special prosecutor and the IPSIG, according to the audit report, would be to investigate and prosecute individuals and/or entities responsible for the "obvious fraud and malfeasance" that has resulted in the wasting of millions of public dollars.

The report also calls for the state to take immediate control of the Miami-Dade facilities program.

"The oversight board (M-DAB) should petition the State to immediately take over planning, construction, renovations and capital maintenance of all educational facilities currently overseen by the Miami-Dade County School District," the Freeman auditors write.

The oversight panel for the district's construction programs--the Miami-Dade School District Land Advisory and Facilities Maintenance Operations Board--was appointed by the State of Florida in 2001, following revelations by then-Surfside Mayor Paul Novack of severe fire safety hazards in district schools that had been reported for years but remained uncorrected. The school board at first ignored Novack's findings, then denied there were any problems, and subsequently attempted to conceal their seriousness. (See "Children Forced to Attend Dangerous Schools," School Reform News, October 2000.)

The Miami-Dade district's maintenance operations last year were the subject of an award-winning series of articles on "Crumbling Schools, Crowded Classrooms" in the Miami Herald. In addition, reporter Jilda Unruh and "The Investigators" of Miami's Channel 10 News have over several years unearthed unflattering examples of excessive payments by the district for land acquisition and development. (See "A Merry-Go-Round of Irresponsibility," School Reform News, April 2003.)

The district and school board have demanded proof of the allegations from the Freeman auditors, apparently unaware that Florida newspapers during the past year have created a climate of expectation in the state that organizations receiving public dollars must be able to show those dollars are being spent for their intended public purpose. For example, the State of Florida recently demanded that nonprofit organizations providing private tax credit scholarships must show proof of how they are spending the charitable contributions and where private scholarships are going.

A similar demand would force the Miami-Dade school district to provide adequate records that document how school construction dollars have been spent over the past decade. That may not be possible because of the district's mismanagement, according to the Miami Herald.

"The broader concern raised by the auditors is that proof of fraud or corruption may be impossible to pluck from the construction department's morass of mismanagement, which is mired in chaotic accounting, lost and misfiled paperwork and isolated, incompetent employees," noted the newspaper.

The district currently has more than $1 billion in pending construction projects.