The Texas Education Agency charged that a charter school in Houston misspent $5.3 million in federal funds on cruises, first-class air tickets, and other personal expenses for the owners and managers.
“The report found rampant conflicts of interest and numerous questionable expenses involving Varnett superintendent Annette Cluff and her husband, Alsie Cluff Jr. He’s the school facilities and operations manager and serves on the governing board. The News first wrote about the Cluffs and their charter school in 2010.
“The report found the school reimbursed the Cluffs for $1.5 million worth of questionable charges on their personal credit cards. Among the charges: $132,177 on hotels, cruises and travel packages. First-class and business airline tickets worth $22,544. More than $3,000 on tickets to Broadway, Las Vegas and Disney on Ice shows. And $743 for spa services from a luxury hotel called Mandarin Oriental.
“Beyond their six-figure salaries, the Cluffs made money doing business with the nonprofit school they ran, the report found. The Cluffs own a real-estate company that leases space to one Varnett campus for $1 million a year. The Cluffs own a bus company that provides student transportation, at a cost of $980,000 in 2010. That works out to $12.37 per mile driven — far more than what other charter schools paid, the state report found.”
The school enrolls 1,600 students. It was a private school that converted to charter status in 1998. This year, the legislature passed a law barring nepotism in charter schools but the Cluffs were grandfathered in and unaffected.
It is not clear whether any legal action will be taken.
Diane Ravitch's blog 
We’ve had many such incidences in California. It’s just a matter of time before state legislatures put a stop to this. How it was ever allowed in the first place is beyond me.
Something stinks here. For how many years was this going on? The Cluffs ran the school on tax payer money since 1998 according to the article. Is this the first audit?
This just makes me want to scream. And still charters will be touted as all that keeps the USA from falling off a cliff, and public schools and teachers will be vilified.
So tragic! In the end, it’s our society that pays the price. Shameful.
More of this will be exposed because no one is holding charters responsible. That’s our public money going to waste. What will the government do about it. Nothing. Maybe replace the operator and continue the charter.
There is a group of charters in Houston that claims Title One funds and makes the teachers purchase all of their own supplies…not sure where the funds are going.
How do you steal 5 million dollars and NOT have criminal charges pursued? If this is legalized theft, then this state needs to take a real strong look at its law regarding accounting for school funding.
I can’t imagine any other walk of life where you could say that 5 million dollars was demonstrably wasted and wrongly reimbursed from the school on top of such a huge salary, and the people who gave over the initial seed money would say “oh we’ll explore our options”.
It’s clear there’s malfeasance – there should be repercussions. If there aren’t any, then why shouldn’t they do again? Why shouldn’t the entire charter sector just blow money for students on their administrators living the life style of the ultra rich.
Why are “school operators” allowed ANY expense accounts in the millions in the first place? Schools should never operate on corporate financial levels, but given the position of the influential citizens who own the law-makers, they are.
This news needs to be sent out far and wide. So many people have NO CLUE that these kinds of shady dealings are going on with the people’s money.
It’s about time those who speak the truth control the message and not those who hold the most power, money, and influence.
LG:
Look, what happened in this case is disgraceful and the book should be thrown at the owners if they embezzled funds or cheated on their taxes. But it is exceedingly naïve to assume that this is some how tied to the fact that these are Charter Schools or for profit organizations. It took me 15 seconds to find countless hits on Google with the search term Public School embezzlement. Any multi-million dollar enterprise has to guard against fraud and embezzlement. If you have to prepare audited financials for a bank loan, your accountants will demand that you have standard anti-embezzlement procedures in place. Not that they are likely to be tremendously effective but they ensure that actual theft is deliberate and planned. Public Schools, School Districts and Unions are just as prone to this behavior. For example, see
http://www.districtadministration.com/article/fighting-fraud-schools-0
Teachers get ZERO travel expenses for attending workshops and conferences in my district, but admins get them for their obviously “more important” district work.
I know there are instances of waste in public schools. Every time my district hires or promotes an admin at the board office level, the powers-that-be put new carpet and furnishings in the admin’s office all on the public’s dime when they could be repairing the damage in schools that was done by the lowest bidding contractors they are so fond of hiring.
But Broadway? Trips to Las Vegas? Disney on Ice? Spa packages? These amenities are nothing akin to new carpeting. They have no bearing on running a school unless there is a specific workshop connected to these events, and even so, one does not and should not expect the district to pay for entertainment and side-trip attractions. There is a set budget for travel expenses. Anything beyond that should come out of the attendee’s pocket including time away from work. Give a professional day for the workshop and related travel time, but do not pay for someone’s vacation. This is where your audit comes into play. These types of expenses are prevalent in the business world. Before I met my husband, I dated a man who worked as a “consultant” for various corporations. He told of one night where he was “entertained” by the corporation that hired him. Expenses for that one evening for a party of four people? $10,000+ and all TAX DEDUCTIBLE. THIS is the attitude of excess that does not belong in schools.
Your bit about unions is not germane to the argument. Public funding does not go toward ANY union expenses…period. I am so tired of the rhetoric that directly connects public funding to unions. That message is wrong, and its correction needs to be addressed by membership.
LG:
I was not talking about tax payer funds or teachers or unions, I was talking about the proclivity of most human beings who have control over $$s to embezzle and commit fraud. What these folks did is totally wrong and could and should have been caught by any normal audit. Both the owners of these schools and the Texas Education Agency need to be held accountable.
Keeping control of money flows in a business or a school district is not easy. I was the chief financial person for my business that involved lots of travel. We had 40 employees. We had good overall financial controls, we had annual financial audits required by our Bank and even the IRS found us squeaky clean. Despite these controls and procedures, I had to fire one person for cheating on their travel expenses and another for abusing their sick time. Ironically, we needed to be constantly vigilant that folks did not abuse the significant amount of discretion we gave them on how they flew and where they stayed: Air miles and hotel rewards were a constant source of petty embezzlement. I hated them since I believe they induced bad buying decisions: I saw them as a disguised form of kick-back. Constructively addressing this type of issue is difficult and gets very personal. Folks can get very defensive especially when they know they have pushed the limits.
“I was not talking about tax payer funds or teachers or unions, I was talking about the proclivity of most human beings who have control over $$s to embezzle and commit fraud.”
I actually was talking about tax payer funds since federal funds were mentioned in the original post. You countered that public schools and unions also face the scourges of embezzlement. I do agree that people can and will take advantage of a situation if allowed to. My contention is that the type of lavish expense accounts mentioned in the original post have no business in public school systems. Despite what privatizers and other reformers believe, public education is not a corporation, and the corporate lifestyle of pampering oneself on the company’s dime does not translate to the public education profession. It’s a disgraceful waste of public funding to give privileges to higher ups when that money should be appropriated as necessary for the education of the public.
“What these folks did is totally wrong and could and should have been caught by any normal audit. Both the owners of these schools and the Texas Education Agency need to be held accountable.”
Yes.
“Keeping control of money flows in a business or a school district is not easy.”
Neither is teaching, but public school teachers are constantly barraged with “methods” to prove their accountability by people who know next to nothing about teaching in the first place. Why should anyone who engages in the afore-mentioned acts of personal self-indulgence get away with not answering for them? I don’t care how difficult it is to control–you take my money, you answer to me. Isn’t that the message the reformers are trying to sell to the public to justify their “campaign of teacher accountability?”
LG:
I am at a loss to understand where we disagree. I am not excusing any of this behavior. Who would? My only point is that this corrupt behavior has little to do with charter schools per se. Simply do a Google search on “School superintendent embezzlement 2013”.
Charter schools vary, but those that take public funds to educate the public and then limit enrollment to only a portion of the public have no business taking public funds for ANY purpose. Charter schools that syphon funding from the public only to close after a very short time waste the public’s money, disrupt the lives of the community’s families and segregate their populations.
Due to the very nature of humankind and the governmental “hands off” approach to running charter school businesses, the corruption is built into the system especially when you operate with a corporate mind-set on the public’s dime. So yes, there are instances of mis-use of funds even in true publicly-run institutions, but the whole corporate-construct of “the charter-sector” is bad for the public. The horrid abuse of the public’s money described in the original post mirrors the out-of-control “expense account” culture in a large portion of the corporate private sector. I’d be willing to bet that this scenario is more commonplace among charters than we know, but I do not have the resources to investigate.
You are absolutely correct that we agree on the abomination in Texas. I applaud you for your honesty in your position as financial officer for the corporation in which you worked. Sadly, Corporate America would not exist if some people were not allowed to take advantage of others. We know there are regulations, but for every rule there are ten loopholes that protect the haves from helping the have-nots get a secure piece of the pie.
For example: Compensation through company shares. While that may seem like an incentive for the employees to work harder so the company succeeds, there is no guarantee that the work of one employee can counter-act all the other factors that may contribute to a company’s failure. Corporate powers ought to pay people for doing their jobs and stop using the compensation owed their employees for the work they do as poker chips for the corporate heads to make more.
When Corporate America proves it can respect all people and their communities, it might have some place at the education table. The very nature of operating on a “getting ahead” mindset goes against the principles of educating a populace. Keep the privateers out of the public’s institutions and pockets.
¿Dónde está José cuando las fuerzas de las escuelas charteras lo necesitan?
And the stories go on and on. It’s the wealthy giving money to the wealthy. Why should they be concerned. The politicians are probably on the cruises and going to the shows with them.
Do you have any evidence whatsoever to support your assertions? Why should not these folks, if the charges are proved, simply be venal, corrupt and greedy people who betrayed the trust of their students, parents and taxpayers?
It is a loud secret Energyzed for Excellence in Houston, TX hires unlicensed ^teachers* or high school graduates to keep an eye on the students all day during school hrs. This practice allows the school owners to save a lot of $$$ in real teacher.