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Wednesday, March 17, 2010
Hawaii DoE: Cost of waste, fraud, and corruption between $191M and $431M per year
By Andrew Walden @ 7:18 PM :: 16097 Views :: Education K-12, Ethics

by Andrew Walden

Hawai`i Free Press and others have, over the past few months, identified millions of dollars of waste, fraud, and corruption in the DoE budget.  $50M for software when equivalents are available free of charge.  Up to $75M of federal funds lost to Hawaii schools because the HSTA, DoE, and BoE sabotaged Hawaii’s Race to the Top funding application.  Between $42M and $57M burned on wasteful personnel practices.  A Hawaii State audit identified $21M in waste on one DoE contract alone, as well as $1.1m burned on crony contracting and $2.8M diverted from classroom salaries to fund more crony contracting.  (see references below)

Add it all up.  The total is between $191.9M and $206.9M.  And these are minimum figures. 

The DoE procurement audit sampled only a small portion of total DoE procurement contracts in order to illustrate how business is done.  Thus, the total could easily be ten times what the audit found—adding another $224.1M in annual DoE waste, fraud, and corruption.

This produces a grand total of $416M to $431M in annual DoE waste, fraud, and corruption out of a total budget of $2.1 Billion dollars.  The DoE procurement budget is about $800M.

Instead of turning up the heat on the criminals responsible for destroying public education in Hawaii in order to line their own pockets, the legislature, the BoE/DoE/HSTA, and their enablers in Hawaii's so-called media have shifted public debate to a kind of hostage negotiation.  Politicians and union bosses argue over over how much more money should be thrown at the DoE in order to ransom the children--and how many hostage-days must be released in exchange for the ransom payment.

The reality is that the DoE has every penny it needs to not only eliminate furlough Fridays.  The DoE also has more than enough to make itself into a world class school system.  Lack of money is not the problem.  The problem is that the DoE is swimming in so much money that hordes of white collar thieves are getting a piece of the action.

The Legislature can begin to solve this problem by allowing the public to vote on a constitutional amendment to abolish the BoE and place the DoE superintendant under the direct supervision of the next Governor.

Failing that, Hawaii needs a Federal RICO investigation leading to the arrest, prosecution, and imprisonment the criminals among the upper echelons of the DoE, DoE contractors, the leadership of the HSTA, the BoE, lobbyists, and legislature.

It is up to the Legislature to determine which of these two solutions is preferable.   


DoE spends $50M for free software

The DoE is paying millions of dollars to contractors for software when equal or superior alternatives are available elsewhere at lower cost--often free of charge. This wasteful spending is the direct result of the cozy, revolving door relationship between the contractors and the DoE officials who direct business their way.

read more

HSTA WINS ROUND ONE! Hawaii denied “Race to the Top” funds, reform, accountability blocked (up to $75M RTTT funds lost)

PRECISELY AS PREDICTED:  In order to shield themselves from the accountability that comes wth RTTT, the HSTA, DoE, and BoE have successfully sabotaged Hawaii's application for RTTT funds.  Their methods: Furloughs, and the continuing cap on start-up charter schools. 

read more 

DoE Procurement audit: Millions wasted by "fraudulent unethical behavior"

Here are three simple ideas to save between $42M-$57M

  • ...By (eliminating controllable teacher absences required to attend meetings, conferences, and training days) cutting the use of substitute teachers in half, we could save $11 million dollars a year or two furlough days. In addition, students would have that many more days with their trained, certified teachers in their classrooms rather than substitutes….
  • A second reduction in DOE expense could be achieved by furloughing principals, vice principals (and even Complex Area superintendents) during the summer….This amounts to $6 million a year in additional DOE expenditures.
  • A third way in which to reallocate funds is to stop gorging on testing.......the Board of Education has estimated that the HSA tests alone cost $25 million to $40 million a year.

Another part of the answer comes in the form of Hawai`i State Auditor Marion Higa's February, 2009 Procurement Audit of the Department of Education. The audit report identifies at least $21M in waste from just one $160M project….

Why are the unions and their legislators silent on these abuses while rank and file teachers are made to pay the price with furlough days?  The answer can be found by poking thorough the corrupt entrails of some individual contracts. 

Procurement Audits are usually a dry subject, but some readers may remember a "fling" between former DoE Superintendent Paul LeMahieu and Kaniu Kinimaka-Stocksdale which caused LeMahieu to resign his job in late 2001 and gave DoE "procurement" a whole new meaning.  (Stocksdale has more recently become a perennial losing candidate from Hawai`i County Council District 5--Puna.) 

The Star-Bulletin October 21, 2001 reports:   

LeMahieu used extraordinary powers granted by the federal court to award a $2.3 million contract to Pacific Resources for Education and Learning. Those powers included bypassing procurement laws that were barriers to complying with the consent decree in the granting contracts.

The PREL contract resulted in Na Laukoa receiving a $600,000 subcontract. LeMahieu at the time sat on PREL's board but he resigned from the board earlier this year.

This method of shell-game-delivery of DoE money to Stocksdale's "Social & Human Services Organization and Modeling Agency", Na Laukoa, is one which emerges again and again in the most recent DoE audit--and many individual high-seniority union members may be involved. (The report goes on to detail $1.1M in fraudulent spending directed towards DoE cronies.)

read more

Audit: DoE instructor salaries diverted to "operating expenditure, supplies, and capital items" ($2.8M taken out of classrooms)

According to the report, $2.8 million allocated to hire instructors and teachers aides under the kupuna program was "instead primarily spent on operating expenditure, supplies, and capital items."

And now the very same DoE claims budget cuts require furlough days.

read more



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