Research Notes: Targeting Waste and Fraud in the K-12 System

In an effort to boost academic efficiency and cut fiscal waste, the Trump Administration has prioritized policies aimed at reducing federal education spending. A recent study by James Bridgeforth and Amanda Pickett at the University of Delaware and Amanda Lu at Georgetown University offers a conceptual framework for identifying sources of financial fraud and waste within the U.S. K-12 education system.

The researchers begin with a literature review documenting key shifts in the U.S. education landscape, including greater school choice for families, a diminished role for traditional public school systems in the delivery of K-12 education, and market-based accountability. The authors caution that the trends can undermine equity and financial responsibility by shifting focus away from government oversight, collective benefits, and the democratic management of public funds.

The study outlines three conditions that enable fraud and waste: (1) available capital, (2) failure of government, and (3) failure of school actors. The authors point to the growth of school-choice policies as an example of how these conditions can intersect. Such programs create opportunities for public dollars to flow to private service providers, often with limited transparency or oversight. When state and local governments lack clear policy goals or robust regulatory frameworks, they risk enabling bad actors to misuse funds, or for well-intentioned actors to mismanage public resources.

To illustrate their framework, the researchers examine the case of the Bradley Academy of Excellence (BAE), a now-defunct charter school in Arizona that fraudulently enrolled hundreds of fake students to avoid losing state funding. Despite being aware of BAE’s financial struggles, the Arizona State Board for Charter Schools re-authorized the charter in 2017. A random audit the following year uncovered approximately $2 million in fraud and led to the school’s midyear closure. The case exemplifies how per-pupil funding (available capital) and lax oversight (government failure) allowed bad actors to exploit the system.

The researchers encouraged policymakers, civic actors, and other scholars to use their framework to understand how policies increase or decrease the potential for fraud and waste in the U.S. K-12 education system.