How AmeriCorps Led to Obama's First Scandal

How a cash voucher for city teaching students hurt the President

When President Obama's abrupt dismissal of AmeriCorps Inspector General Gerald Walpin briefly made headlines last month, most of the resulting firestorm focused on the political side of the scandal. With no notice and a flimsy excuse, Obama had tossed out an independent government watchdog, irking senators on both sides of the aisle. But the findings uncovered by Walpin before his firing raise a larger question: Is AmeriCorps, set up by President Clinton to boost volunteerism, improperly shoveling millions of dollars to rookie New York City teachers?

One week before he was fired, Walpin's office issued a damning audit of one of AmeriCorps' largest initiatives, the New York City Teaching Fellows program. Until the Walpin scandal broke out, few people even realized NYCTF was an AmeriCorps project. Launched in 2000, when the city faced a dire teachers shortage in its neediest classrooms, Teaching Fellows recruited those looking for a career change to undergo two months of crash training and then step into an entry-level teaching job. From an initial pilot class of 300, NYCTF has now expanded to become the largest alternative-certification program in the country. More than 10 percent of New York City's current public school teachers come from its ranks.

The Teaching Fellows program lures candidates through inspirational subway ads that appeal to a sense of civic duty. But it's not community service in the traditional sense—participants draw the same salary as other rookie NYC teachers, currently $45,530, and receive a heavy subsidy from the city toward the master's degree in education that they're required to complete. For the past eight years, they've also received another incentive: membership in AmeriCorps, which makes them eligible for nearly $10,000 in federal funding for educational assistance.

In the audit that, he says, helped torpedo his job, Walpin took aim at that funding, saying the government should demand all $45 million of it to be paid back.

Walpin's argument hinges on a small technicality with giant ramifications. By law, AmeriCorps' grants are intended to support programs that fulfill "unmet needs." When the program subsidizes professionals like doctors, police officers, or teachers, it can only do so "in communities with an inadequate number of such professionals."

Back in 2001, when the fledgling NYCTF program landed its first AmeriCorps grant, it met that definition—it recruited non-traditional candidates for teaching jobs because the Department of Education (DOE) couldn't fill Bronx special education classrooms any other way. But the program quickly became a success: By 2004—the first program year covered in Walpin's audit—it had more than 17,000 applicants for around 2,000 spots. This year, supply so vastly exceed demand that NYCTF ran out of classroom positions for even those candidates it had already accepted. The DOE cancelled its mid-year program, and the 775 fellows who began training in June have no guarantee that they will land teaching jobs this fall. The statistics say that New York City no longer has a teacher shortage.

More problematically, the fellows told Walpin's auditors that the AmeriCorps grants played no role in getting them into the city's classrooms. "That raised a giant red flag," Walpin tells the Voice. "It was a touchy thing we hit, because this is the largest AmeriCorps program. The amount of money that goes to it and the number of members involved really add to the ability of the Corporation to look like it's growing and successful."

The Teaching Fellows initiative has never looked like a classic AmeriCorps program. Created in 1993 to bring together a hodgepodge of national service programs, AmeriCorps was intended as a domestic Peace Corps, sending minimally compensated volunteers off to work in underserved areas. "You will work on boats to reclaim the Chesapeake Bay and work on new housing to rebuild parts of Roxbury," President Clinton told AmeriCorps' first wave of recruits at the program's inaugural swearing-in ceremony. "For our nation, the moments of service that will follow will change our lives for many seasons to come."

Full-time AmeriCorps members spend 1,700 hours working on community projects, and, in return, receive a subsistence-level salary and basic benefits. The main financial lure comes at the end: After a year of service, graduates qualify for an education award of $4,725 (twice that for those serving two years) that they can use to pay off a student loan or put toward future educational expenses.

When it created AmeriCorps, Congress authorized the inclusion of "professional corps" programs like the Teaching Fellows. Professional members don't get a federal salary, but they're still eligible for education awards. For NYCTF, those awards have cost the federal government more than $40 million so far. Awards for the June 2009 fellows cohort would put AmeriCorps on the hook for another $7.3 million.

That would be fine if the program was doing what Congress intended: luring candidates to fill pressing community needs that would otherwise go unmet. For most AmeriCorps programs, that's what the educational subsidy does. In a 2007 survey, AmeriCorps' parent organization, the Corporation for National and Community Service, found that 71 percent of the Corps' recruits called the education money a "moderate" or "large" factor in their decision to join up.

But in Walpin's audit of active fellows, none of those polled said AmeriCorps and the education award it offers were incentives to join the program. Most said they were unaware of AmeriCorps' involvement when they enrolled—and every single one said they would have applied to be a teaching fellow even if the program didn't offer AmeriCorps education grants.

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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