SACRAMENTO, CA - Last month the California Department of Education (CDE) settled out of court in a longstanding case that involves massive misuse of federal funds. The CDE settlement came without publicity, but the case still holds key lessons for legislators, educators and taxpayers alike.

CDE official Robert Cervantes, who was demoted for blowing the whistle on corruption, was restored to his previous position and will receive $250,000 from which he will pay his attorneys' fees. The settlement pales in comparison to the millions in federal funds the CDE kept flowing to ineligible recipients.

From 1994 to 2002, the CDE received approximately $331 million in federal funding for adult education programs, including English instruction. Forty-nine percent of this money went to so-called community-based organizations or CBOs. Assistant superintendent Cervantes was charged with verifying that the CBOs were qualified to receive these funds. Many were not, including the one that received the most money, Hermandad Mexicana Nacional, headed by Humberto "Bert" Corona, a politically well-connected left-wing militant of considerable ferocity.

The INS once allowed Hermandad to conduct citizenship interviews but stopped that practice in the wake of a voter-fraud scandal surrounding the narrow defeat of Republican Robert Dornan by Loretta Sanchez in 1996. Hermandad registered 721 people who were not American citizens, and 442 of them voted illegally. By that time Hermandad was $8 million in debt despite receiving a staggering $35 million in grants during the previous decade.

Through the California Department of Education, Hermandad received 23 grants, from $428,000 in 1994-95 to $3,500,000 in 1997-98. The department continued the funding even though Robert Cervantes described the lack of accountability as the worst he had seen. Mr. Corona did not like Cervantes snooping around, and when threats of violence failed to scare him off, Corona prevailed on his political connections. They, in turn, leaned on CDE boss Delaine Eastin. She demoted Cervantes, claiming it was for reasons other than his exposure of corrupt CBOs. Eastin's CDE dutifully kept the money flowing to ineligible recipients. They used it not for English instruction but for jewelry, Mercedes-Benz automobiles, and houses in Washington.

California's state auditor confirmed Cervantes' findings in a 1999 report that got little ink in Sacramento. In 2002, the CDE agreed to re-pay the federal government up to $3.3 million, a practical acknowledgment that the department improperly disbursed funds. (See "The Corruption Inherent in the System," Capital Ideas, September 25, 2002). The CDE statement said the agency "is not admitting any wrongdoing and, in fact, believes it acted appropriately." It didn't act appropriately -- and this case also exposes a failure of justice.

The law-enforcement authorities enjoyed a target-rich environment, backed by the work of Cervantes and other whistleblowers, but took years to make some minor busts. The big fish got away, particularly Corona, who died in 2001 but has a charter school named after him.

Robert Cervantes pursued his case through the courts. The CDE fought a war of attrition, hoping he would go away. He didn't. In settling with Mr. Cervantes, CDE deputy counsel Joanne Lowe explains, the department admits no wrongdoing. Only a culture of denial could make such a statement after the state auditor's report, CDE repayment of funds, and the reinstatement of Mr. Cervantes to his former position (itself a tacit admission that his demotion was not for other reasons).

Deputy counsel Lowe also said, "We don't believe this could happen again."

Californians would be foolish to accept that claim from a department with a troubled history. Before Delaine Eastin's disastrous reign, state superintendent Bill Honig was convicted of felony conflict-of-interest charges. The CDE is now under the management of Jack O'Connell, and operates from a new building. But some of the same people involved in the obstruction of Mr. Cervantes are still on the job. And the quiet settlement with him, out of the public eye, confirms that the culture of denial remains.

Legislators should respond with more scrutiny of the CDE, not less. To paraphrase Milan Kundera, the triumph of accountability over corruption is the triumph of memory over forgetting.

K. Lloyd Billingsley is Editorial Director at the Pacific Research Institute. He can be reached via email at
lbillingsley@pacificresearch.org.