SACRAMENTO, CA - Last week the Third District Court of Appeals here issued a little noticed and poorly reported ruling that updated a chronicle of waste and corruption in California's Department of Education (CDE). The CDE, which administers more than 40 percent of California's budget, maintains some curious practices on the issue of accountability.

When veteran employees uncover massive waste of taxpayer money and blatant fraud, the CDE does not reward the courageous whistleblowers. It prefers to fire, demote and harass them, and then destroys the evidence by wiping out files on their computers and shredding documents.

Those are among the many details in the Third Circuit's 76-page report, which should be mandatory reading for legislators. The court's ruling upholds the liability of Delaine Eastin, California's former Superintendent of Public Instruction, and CDE administrator Joan Polster. Unfortunately, it reduced compensatory damages for whistleblower James Lindberg. He was one of the officials in charge of certifying that various community-based organizations (CBOs) were qualified to receive federal funds slated for English-language instruction.

Many CBOs that received funds were not qualified. As auditors discovered, some were for-profit enterprises, and others turned out to be empty fields or houses. Many used false documents, and even the FBI became involved in tracking down the fraud. As the court document notes, CDE officials such as Deputy Superintendent Gabe Cortina made sure one corrupt CBO got millions of dollars. The total tab comes to more than $20 million. Where it all went remains unclear, but it did not go for English-language instruction for needy immigrants. They are the losers, along with all California taxpayers.

Hermandad Mexicana Nacional, formerly headed by Bert Corona, got more money than any other CBO. Mr. Corona, a longtime left-wing militant who threatened state auditors, took many of the secrets of the CDE money's whereabouts to his grave in 2000.

Prosecutions in the case have been mainly directed against the smaller players. Bigger players got away with it, and key officials at the CDE got away with the cover-up.

Joan Polster, the CDE administrator who directed employees to shred incriminating documents and harassed whistleblowers, is now an Associate Superintendent in the Sacramento City Unified School District. Former state superintendent Delaine Eastin, on whose watch this occurred, is now Distinguished Visiting Professor of Educational Leadership at Mills College, where she also teaches in the public policy department. Gabe Cortina is comfortably retired.

The CDE has spent more energy and money defending itself in cases brought by persecuted whistleblowers than it has in taking action against those who enabled massive misappropriation of funds and a coverup. This is not an agency with a strong commitment to accountability. The governor and legislators should read the court report carefully, ask some hard questions and demand answers.

How much taxpayer money is the CDE spending to defend these cases? Why were those who sabotaged computers allowed to keep their jobs when whistleblowers lost theirs? What measures has the CDE taken to prevent further acts of waste and fraud?

California's K-12 system exists to educate children, not to serve as a vast system of patronage for corrupt officials. Parents, students and taxpayers have a right to expect honesty and accountability.

The Third District Court of Appeals ruling is not the end of this story. In January, the case of CDE whistleblower Robert Cervantes comes to trial in federal court in Fresno.

K. Lloyd Billingsley is editorial director at the Pacific Research Institute. He can be reached via email at klbillingsley@pacificresearch.org.