Arizona's Auditor General recently released a report detailing how the Maricopa County Community College District (MCCCD) fraudulently put employees of three non-profits on the district's payroll: the Arizona Community College Association; the Arizona Business and Education Coalition; and the East Valley Partnership.
Here's how the scam worked: The non-profit boards would make a high-level hire. That board would then inform MCCCD of the hire date and pay rate and the new non-profit employee would be added to the payroll. All direct costs to MCCCD would be invoiced to the non-profits, which then eventually reimbursed MCCCD. These "employees" never reported to MCCCD supervisors, who supposedly had authority over them.
This sweetheart deal allowed employees of these groups to receive state-funded employee benefits. And because all of these groups aggressively pursue taxpayer money for higher education institutions, in effect, the arrangement had taxpayers subsidizing efforts to send more taxpayer money to community colleges. The Auditor's office points out that by paying the employees and waiting for reimbursement, the MCCCD essentially gave short-term, interest-free loans to the non-profits, too.
Sometimes, corrupt practices become so common that they are no longer considered corrupt. The reply to the report by the MCCCD chancellor makes clear that he doesn't see the big deal, claiming "the conclusions in the Report are the result of 'incomplete and erroneous' information."
Once again, the need for greater transparency in government spending is evidenced. If taxpayers had easy access to MCCCD's payroll data--even if it were only a list of employees--this misuse of public resources could have been discovered and stopped sooner.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.