O’Scanlon Calls on AG, State Auditor to Investigate Salem City School District

August 13, 2024

In a letter sent last week to Attorney General Platkin and State Auditor Kaschak, Senator Declan O’Scanlon (R-13) requested an official investigation into the Salem City School District to address the district’s potential misuse of taxpayer funds.

As of today, Sen. O’Scanlon has not heard back from the Attorney General or State Auditor.

The full letter text is below or you can click here to view a copy.

Dear Attorney General and State Auditor:

I was sickened to recently read a State audit with shocking findings concerning the Salem City School District, which has received a 50% increase in State taxpayer funding over the past seven years, with a 20% increase this year alone.  For the reasons listed below, I believe the findings warrant an investigation by the Division of Criminal Justice, and respectfully request that you support one.  Furthermore, I believe the State should dedicate more resources towards State audits of school districts so that we can avoid this kind of grotesque waste in the future.

The audit’s findings show financial abuses that go far beyond ordinary waste and inefficiencies and appear worthy of a criminal investigation for two reasons.  First, the audit suggests that taxpayer funds may have been used for self-enrichment or enrichment of certain well-connected family members of students and officers of the district.  This extravagant—and potentially unlawful—spending includes:

•   $37,000 for overnight football trips;
•   $45,300 for championship rings and jackets for individuals including board members;
•   $75,000 for five all-expenses-paid international trips, which covered the airfare of several adults who were not needed as chaperones and did not participate in daily activities;
•   $103,000 paid to students to sit for an exam prep course; and
•   $115,650 for former students’ college tuition, fees, room, and board.

Second, there is a significant pattern of procurement abuses where competition seems to have been deliberately and willfully limited to the point where something other than mere incompetence was fueling the lawlessness and waste.  The audit report notes that the district did not properly bid for 57 percent of purchases above the threshold, including an annual contract with a college admissions counselor for $187,000, construction projects totaling $450,000, and goods such as laptops and sports apparel totaling more than $650,000.

Sadly, the State Auditor’s review of school districts is limited, with only a few school audits conducted each year.  For many years, as State aid was relatively flat or grew modestly for all districts, this was perhaps appropriate.  However, times have changed, and now there are select districts that have received enormous State aid increases in the past seven years—sometimes exceeding 50% in a single year—as was the case with the Salem City School District.  Other districts’ increases have been even more staggering.  Certain school districts received up to a 500% increase over seven years, and Newark received a $500 million increase—with Newark’s increase alone including more State tax dollars than many departments of State government.  Massive “free” aid increases over time poses temptations and tests internal controls.  More auditing resources need to be redirected accordingly, because Salem City is almost certainly not alone in wasting their largesse.

In fact, another recent State audit report highlights some gross inefficiencies in spending by the Plainfield Public School District, which has enjoyed a 130% increase in State taxpayer funding over the past several years.  The report highlights a slew of wasteful spending such as:

•   $34,356 spent on laptops that were not properly safeguarded by the district;
•   $199,625 in overpayments to certain employees resulting from a miscalculation of their overtime;
•   $884,969 in payments to private providers of preschool education for services that could have been provided as part of their original contracts; and
•   $6.4 million in health benefits in FY 2023 that the school district could have saved by participating in the School Employees’ Health Benefits Program.

Notably, the report also mentions that the Plainfield Public School District potentially engaged in its own procurement abuses by (1) failing to consistently comply with applicable purchasing policies and regulations, (2) circumventing the procurement regulations for landscaping services averaging $271,435 a year, and (3) conducting business with multiple companies owned by the same individual.

It is difficult to express my level of outrage and frustration.  As the Senate Republican Budget Officer, I am disturbed by the wasteful and reckless spending by certain districts that have seen significant increases in State aid over the past several years, while aid for many other districts has been unreasonably and irrationally slashed during the same period.  I believe this wasteful spending can be avoided with more frequent audits and, as appropriate, criminal investigations.

I offer my unqualified support, if needed, for additional funds for the State Auditor’s Office to expand its school district audit capacity.  This funding will pay for itself and will hopefully result in the shifting of resources away from places that waste the largesse they have received, and towards other districts in the State that have been starved for years.  In addition, I sincerely hope that that the Division of Criminal Justice can work closely with the State Auditor and follow-up when, as in the case of the Salem City School District audit, there are obvious red flags that suggest worse than incompetence is driving a disgusting level of waste.

Sincerely, 

Declan J. O’Scanlon, Jr.

c     Kevin Dehmer, Commissioner of Education