‘Schooled by Schemers’: Report finds $225 million in education fraud across 24 states

A bombshell report published Wednesday found $225 million in alleged public K-12 education fraud spanning 24 states over the last six years.

Schooled by Schemers: Fraud, Waste and the Money That NEVER Reached Kids, a report by the State Financial Officers Foundation and Open the Books, found about “90 instances of confirmed and prosecuted fraud and abuse” involving federal funds between Oct. 1, 2019, and March 31, 2026.

The fraud included everything from school district officials embezzling funds and submitting fake invoices for services to bid-rigging, inflated enrollment numbers and various kickback schemes.

The report criticized education fraud as “uniquely damaging to America’s future and position in the global economy” because it hurts students.

“Across every sector, defrauding public programs leaves tax dollars unavailable for critical objectives and the Americans who truly need assistance,” the report said. “But (this) crisis hits public schools and potentially harms student outcomes.”

The U.S. Department of Education’s Office of Inspector General ordered restitution in some of the cases, with potential repayments totaling about $67 million. But the report says the cases are “most likely just the tip of another very large iceberg,” and says the fraud cost in smaller districts is “unacceptably high.”

Among the largest cases were two Indiana virtual charter schools that bilked the government out of a combined $44 million in unauthorized payments. The schools closed in 2019, and charges were filed in 2024 against the individuals involved.

Broward County Public Schools in Florida lost $17 million when its chief information officer steered contracts to friends and his own company.

In a case covered by Heartlander News, Houston Independent School District lost $6 million in a fraud scheme that led to multiple indictments and guilty pleas.

“The findings in this report should alarm every family, teacher, and civic leader, especially since they only scratch the surface of the problem,” OJ Oleka, CEO of the State Financial Officers Foundation, told Fox News Digital.

Oleka called education fraud “especially hideous” and said the “bloated federal education bureaucracy” makes it harder for state financial officers to uncover fraud.

The findings come amid a federal crackdown on fraud in government programs such as child care, Medicaid and services for autistic children. Vice President JD Vance heads a task force charged with exposing and correcting fraud in various states.

Comparing school choice fraud

The report also serves as a counterweight to allegations of fraud in private school choice programs. School choice exists in 35 states through tax credit scholarships and Education Savings Accounts, which parents use to pay for their child’s education, including tuition, educational services and materials.

Research has found fraud is low or nonexistent in these programs, but mainstream media reports tend to amplify any instance of misspending, giving opponents grounds to call for the programs’ elimination or burdensome new restrictions.

This week, Arizona’s Democrat attorney general withdrew a policy requiring families using the state’s school choice program to document every purchase made for “general educational supplemental materials.”

As part of a legal settlement, the Arizona Department of Education agreed to other safeguards surrounding ESA spending, such as requiring families to certify that purchased materials are for the student’s education and allowing the state to request further documentation if needed.

Advocates favor this approach, as well as risk-based audits similar to those used in most government programs, rather than rigid scrutiny of every expense, including pencils and textbooks.

States shouldn’t “limit school choice through a thousand cuts,” EdChoice President Robert Enlow told Heartlander News last year, or legislate because they’re afraid of a bad report about misspending.

Corey DeAngelis, a research fellow at the Heritage Foundation and a leading school choice advocate, told Heartlander News the “fake news media obsess over any minuscule amount of school choice fraud while turning a blind eye to the enormous waste in the government school system.”

He cited an Arizona news station that “acted like the sky is falling whenever school choice is involved – without ever comparing the tiny 0.3% rate to the significantly higher misspending and fraud rates in food stamps (9.3%), Medicaid (7.4%), and unemployment insurance (14.4%).”

“Private schools that waste money quickly deteriorate in quality and shut down through competition. Parents simply stop choosing them,” he said in a message. “Government schools enjoy a near-monopoly with captive funding and no real accountability to families, which makes them far more susceptible to fraudulent and wasteful spending.

“The best solution is to empower parents with real choice so bad actors face consequences the way they do in every other sector of the economy.”