How AmeriCorps Led to Obama's First Scandal

How a cash voucher for city teaching students hurt the President

Interviews that the Voice conducted with a dozen current and past fellows back up Walpin's conclusion: The AmeriCorps money is viewed as a nice bonus, but most didn't know about it before they enrolled, and each said they would have signed on to teach even without the education grant.

As an added wrinkle, the grants are often not even being used to offset the educational expenses—they're being cashed out and turned into a bonus paycheck.

Because NYCTF pays universities directly for the cost of its fellows' master's degrees, the program's participants don't have any tuition bills. (Recent fellows contribute $6,600 through paycheck deductions, but in the program's early years, the degree was fully subsidized and participants paid nothing.) But AmeriCorps' education award vouchers can only be redeemed by a university—so what many fellows do, with the schools' blessing, is submit the voucher to their university and have it issue a refund check for the full balance.

"You'd apply for the money to get sent to your grad school—mine was Fordham—and then Fordham would cut you a check for the amount since your balance would be [negative]," says one fellow from the 2006 class, who asked that her name not be used. "Everyone in my Fordham cohort did this. I guess it's possible that people used it to repay past loans, but no one I knew did that."

Not everyone cashes out: Half the fellows the Voice spoke with say they used their education awards for student loans, continuing education, or additional graduate degrees. But others confirm that NYCTF's partner universities were happy to accept AmeriCorps vouchers and hand back cash.

Mercy College "just passed the money along," reports a 2006 fellow who went there. "The fellows were then allowed to use it for anything they wanted, educational or not."

For students without loans, "that AmeriCorps money goes right into your pocket," says another past participant, a 2005 fellow who teaches English.

The NYCTF program is the largest, but it's not the only one taking advantage of AmeriCorps' largesse. Boston, Phoenix, Milwaukee, Denver, Philadelphia, and other cities run similar initiatives that receive the AmeriCorps support and subsidies. Collectively, the education programs take a significant bite out of the agency's budget, which is slated to top $1 billion next year.

Tipped off by the New York findings, Walpin's office had decided to audit several similar programs next year. In the wake of his firing, it's unclear if those plans will move forward. "It's still under consideration, along with many other things," says William Hillburg, spokesman for AmeriCorps' Office of Inspector General.

Walpin's former bosses disagreed vehemently with his audit findings. In a terse reply to the report, AmeriCorps' acting CEO, Nicola Goren, rejected Walpin's analysis and said her agency would not act on his recommendation to reclaim grant money spent on New York's Teaching Fellows program. AmeriCorps' board "stands behind its belief that the program was and is eligible for AmeriCorps funding because it expands and strengthens a professional corps program addressing an unmet need," she wrote. (AmeriCorps officials did not respond to Voice queries.)

Walpin's strident Teaching Fellows audit came on the heels of another controversial probe. The investigation of California's St. Hope Academy led to sharp sanctions against Sacramento mayor and former NBA star Kevin Johnson, the academy's longtime CEO, but Walpin publicly criticized his agency for not going further to recoup the funds it lost. Taken together, Walpin believes the two audits cost him his job. On June 10, the White House gave him an ultimatum: Resign or be terminated. When Walpin refused to step down, he was immediately suspended from his duties.

A 2008 law that then-Senator Obama co-sponsored to strengthen the independence of Inspectors General requires the President to notify Congress in writing at least 30 days before removing an IG. President Obama's apparent flouting of that law drew demands from even Senate Democrats that the White House justify its rash move. Six days after giving Walpin the boot, the White House sent Congress a letter saying that he had become "unduly disruptive to agency operations" and had lost the confidence of AmeriCorps' board and the President.

Walpin isn't going quietly. Earlier this month, he filed a lawsuit alleging that his firing was "politically driven" and procedurally lacking, and seeking his reinstatement as AmeriCorps' Inspector General.

"I feel that I was fired for just doing my job," Walpin says of his attempts to get across his concerns about AmeriCorps' Teaching Fellows subsidies. "I kept saying that the [Teaching Fellows] program itself was an excellent program, one that had succeeded in getting large numbers of capable teachers to come in. But it had already met the unmet need. I could never get them to discuss that fact."

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