Fraud in American public school districts is predominantly an internal issue, with 97% of cases involving trusted staff or volunteers rather than external hackers.  The most common method is cash theft (62% of cases), often skimmed from activity fees and fundraisers before records are created, while less frequent digital payment fraud accounts for the majority of total financial losses.

Common fraud schemes exploit weaknesses in procurement, payroll, and enrollment verification:

• Asset Misappropriation: Includes “ghost employees” on payroll, time theft, and embezzlement via fraudulent expense reports or personal use of district credit cards.
• Procurement Fraud: Involves bid rigging, shell companies invoicing for non-existent goods, and kickbacks where vendors pay officials to secure inflated contracts.
• Enrollment Manipulation: Districts or individuals inflate student counts with “phantom enrollments” or falsify residency addresses to illegally secure higher state per-pupil funding.

Detection and consequences rely on annual independent audits and the separation of duties, yet significant gaps remain at the individual school level where oversight is often lax. Recent investigations highlight the scale of the problem, such as a 2025 NYC report identifying $2 million in fraud across 150 substantiated cases and the $400 million phantom enrollment scandal involving California charter schools. Beyond direct financial loss, fraud drains resources through costly external audits, staff replacements, and the erosion of community trust.

Education watchdog warns schools to watch for fraud as new year approaches

InvestigateTV — With the school year fast approaching, the U.S. Department of Education’s watchdog agency is issuing a warning: fraud in schools is real, costly, and often targets the nation’s most vulnerable students.

Assistant Inspector General of Investigations Jason Williams with the U.S. Department of Education’s Office of Inspector General (OIG) said federal education funds—intended for more than 100,000 schools across the country—are at risk of being misused or outright stolen.

“If they have access to funds, if there’s no separation of duties—people get greedy,” Williams said. “And then that’s when we find fraud.”

Williams said in many cases, the losses amount to millions of taxpayer dollars, often earmarked for children.

“These are elementary school kids. These are children with disabilities. These are our vocational rehab programs,” he said. “You’re taking that money away from them and they can’t use it for their education.”

He explained that oversight of federal funds varies among school districts.

“When you look at the controls that are in place, sometimes they’re lax,” he explained. “In some districts, you know, you have one person that’s also doing the purchasing but they’re also paying the credit card bill—and that’s what we call separation of duties. When these things aren’t in play, these things happen.”

Williams said warning signs can include duplicate invoices, missing equipment, lack of receipts or other documentation, and unusual vendor or purchasing activity.

Of the many fraud cases his office has investigated, Williams often recalls one particular case out of California.

“This particular district, 61 percent of their student population was eligible for Title 1, so it’s a very low-income district,” he shared. “He stole 16 million dollars over a number of years. He just pled guilty and he’s on his way to prison.”

Anyone that suspects fraud or theft in their school district should contact the OIG.

People can report fraud, waste or abuse to their hotline.

Average U.S. public school spending per pupil in elementary and secondary schools rose 8.9% to $15,633 in fiscal year (FY) 2022 from the previous year, according to the U.S. Census Bureau’s most recent Annual Survey of School System Finances data.

All nine states in the Northeast region ranked in the top 14 for current per pupil spending and seven were in the top 10.

While statistics are not adjusted for inflation or cost-of-living differences, this change marks the largest year-to-year percentage increase in over two decades.

States with the highest per pupil spending:

• • New York ($29,873).
  • District of Columbia ($27,425).
  • New Jersey ($25,099).
  • Vermont ($24,608).
  • Connecticut ($24,453).

States with the lowest per pupil spending:

• • Utah ($9,552)
  • Idaho ($9,670).
  • Arizona ($10,315).
  • Oklahoma ($10,890).
  • Mississippi ($10,984).

All nine states in the Northeast region ranked in the top 14 for current per pupil spending and seven were in the top 10.

Sixteen of the 20 states with the lowest per pupil spending were in the South or West. Iowa, Missouri, Indiana and South Dakota were the remaining four states.

Among the nation’s 100 largest school systems by enrollment, the New York City School District in New York ($35,914) spent the most per pupil in FY 2022, followed by Washington Schools in the District of Columbia ($27,425); San Francisco Unified in California ($23,654); Atlanta School District in Georgia ($22,882); Los Angeles Unified in California ($21,940); and Detroit School District in Michigan ($21,771).

Federal Revenue Increased Significantly From FY 2021 to FY 2022

The New York City School District ($38.5 billion) and Los Angeles Unified ($12.5 billion) — both among the highest-spending districts — received the most combined federal, state and local revenue of the 100 largest school systems by enrollment.

New York City School District received 6.6% of its FY 2022 revenue­ from federal sources; 29.8% from state sources; and 63.6% from local sources. In contrast, Los Angeles Unified received 19.2% of its FY 2022 revenue from federal sources; 54.5% from state sources; and 26.3% from local sources.

The national average of revenue received from federal sources was 13.6%; 43.7% from state sources, and 42.7% from local sources. (Figure 1)

(This screenshot is part of a larger dashboard to be published April 25th at: How Did COVID-19 Affect School Finances? (census.gov))

Federal revenue increased 39.6% from FY 2021 to FY 2022 and 47.6% from FY 2020 to FY 2021. These increases were largely the result of the legislative response to COVID-19, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act; Coronavirus Response and Relief Supplemental Appropriations Act 2021 (CRRSA); and the American Rescue Plan (ARP) Act.

Food Services and Transportation Expenses Rebound

While Instructional Salaries ($266.4 billion) continued to account for the largest category in current spending nationwide, there was a significant increase from FY 2021 to FY 2022 in both Food Services and Transportation expenditures as schools returned to in-person learning.

The decrease in FY 2020 and FY 2021 from prior years was a direct cause of distance learning prompted by the COVID-19 pandemic (Figure 2).

This screenshot is part of a larger dashboard to be published April 25th at: How Did COVID-19 Affect School Finances? (census.gov))

AUTHOR

Kaylee Anesta

Kaylee Anesta is a survey statistician in the Census Bureau’s Education Finance Branch in the Economic Reimbursable Surveys Division.

The Bottom Line

he average cost of public education in the United States varies by metric and year, with recent data indicating significant spending per student.

National Averages

Per Pupil Spending: According to the U.S. Census Bureau, public school spending per student averaged $15,633 in fiscal year 2022, an 8.9% increase from the previous year.

Total Expenditures: The National Center for Education Statistics (NCES) reported that total expenditures for public elementary and secondary schools were $927 billion in 2020–21, amounting to an average of $18,614per pupil.

Current Expenditures: Of the total per-pupil cost, $16,280 (87%) is allocated to current expenditures such as salaries, benefits, and supplies, while the remainder covers capital outlay and debt interest.

Variation by District Spending varies drastically between districts, with the highest-spending districts costing significantly more than the national average.

Rank	District	Spending Per Pupil
1	New York City Public Schools	$28,828
2	Boston School District	$27,793
3	Rochester City School District	$24,832
4	New Rochelle City School District	$24,542
5	Newburgh City School District	$24,257

In contrast, some of the largest districts by enrollment, such as Miami-Dade County and Clark County, spend approximately $8,000 to $9,000 per student, though total budget figures often include non-instructional costs not directly attributable to per-pupil calculations.

Is it time to call for an audit of your school district?

©2026 Dr. Richard M. Swier, Ed.D., LTC U.S. Army (Ret.). All rights reserved.