Our intrepid State Auditor of Accounts, Tom Salmon, has made another big splashy announcement. He’s released a list of embezzlements from Vermont public schools totaling $415,000 since the year 2000. And he is shocked. Shocked!

“For a small state, the frequency of incidents involving fraud, embezzlement or theft in our schools is alarming,” Salmon said in a news release.

…Salmon expressed concern that the state Department of Education “has no policy for schools to report such incidents.”

(From the Burlington Free Press website)

Wow. Sounds like we have an epidemic of light-fingered school employees (probably unionized, n’est-ce pas?) stealing money out of the taxpayers’ pockets. Good going, Tom! Whatever would we do without our Auditor?

Unfortunately for Mr. Salmon, he made the mistake of issuing a full report with all the data and posting it online. And the full report makes him look like an alarmist out to score cheap political points at the expense of our public schools and citizens’ trust in them.

After the jump: Eight kinds of nonsense.  

First of all, let’s look at the relative scope of the problem. Even if you assume that it’s $415,000 in school system cash — which it is NOT, see below — that’s a drop in the bucket compared to the total amount of money in public education. Salmon’s own press release says “Each year, approximately $1.5 billion flows through the state education system.” Okay, $1.5 billion times twelve years equals $18 billion.

Now, my math skills are pretty rusty, but that looks like a theft rate of about four-one-thousandths of a percent. That’s 0.004%. That’s pretty damn impressive in my book. Our schools must have very good financial controls in place. We don’t have an epidemic of fraud; we have a dearth.

Second, these aren’t newly-discovered incidents. The vast majority were made public at the time. The only thing Salmon did was send a questionnaire to all the districts and Supervisory Unions in the state, and tot up the responses.

Third, in virtually every case, authorities were contacted, the guilty party was found, was fired, and either pled guilty or was convicted.

Fourth, in most cases, restitution was made or is in progress. So the actual losses are substantially less than the reported $415,000. So my 0.004% rate is actually too high. In terms of funds actually lost, it’s probably less than 0.002%.  

Fifth, Salmon’s list is greatly padded in a number of ways: cases where the theft was discovered before any funds were paid*; cases involving petty amounts of money**; cases where student or parent money was taken, not school funds***; and a couple of cases of electronic fraud committed by hackers outside the school system. Several equipment thefts were on the list, and one case where a principal’s keys were stolen, resulting in a $1,000 charge to change the locks. If a district lost a camera or a laptop, it made the list.

Sixth, the total is dramatically inflated by a handful of major cases. Three incidents account for almost three-quarters of the $415,000 total.

Seventh, in every case where it made sense to do so, policies and procedures were tightened up to prevent further thefts.

Eighth, Salmon makes a big stink over the lack of reporting to the Education Department or the Auditor. He implies some sort of negligence or looseness in the system. However, the districts are not required to report such cases, so there is no negligence involved. Virtually all incidents were reported to relevant authorities, and the others were too small to bother with.

My conclusion, after carefully reviewing Salmon’s report, is that our school districts have an excellent handle on their money, that there’s no real need for changes in policy or law, and that Tom Salmon is engaging in shameless political grandstanding.

*Example: An employee changed the salary figure in her contract, inflating her pay by $3,000. It was detected before she ever drew a check, and she lost her job.

***Example: A PTO officer wrote checks totaling $13,000 from the PTO account. There was an arrest, a guilty plea, and full restitution was made.