The court system will have to determine whether Nancy New is a crook or just a victim of some very shoddy bookkeeping.
It certainly doesn’t look good for the Greenwood native who built over the past two decades a highly praised network of schools and educational programs designed to help the poor and the learning disabled as well as those students for whom the traditional school model doesn’t work.
This past week’s federal indictment does not deliver the same shock as a year ago, when New and her son, Zachary New, were indicted for allegedly participating in a massive scheme to defraud the state’s welfare agency. At that time, it was reported that there were concerns the Mississippi Department of Education, the other main government source of money for Nancy New’s enterprises, might have been ripped off, too.
The federal indictment says it was, to the tune of more than $2 million. It accuses the News of filing claims for reimbursement at their flagship private school, New Summit in Jackson, for teachers who no longer worked there or never did; for employees who were listed as teachers but were not; and for students who did not still attend the school or never did. There’s also the allegation that the News fabricated some of the certification credentials of teachers so as to receive a higher rate of reimbursement. (The school’s Greenwood offshoot, North New Summit, is not named in the 12-page indictment.)
In order to secure a conviction, prosecutors will have to prove first that these overpayments did occur, and then that they were the result not of record-keeping errors but rather an orchestrated scheme by the News to finance their school or benefit themselves personally.
Previously, state prosecutors and State Auditor Shad White have claimed the News did both with millions of dollars of welfare funds they are accused of either embezzling or misspending.
Nancy New capitalized on two decades-old movements in this country — welfare reform and privatization — and a longstanding tradition in Mississippi of rewarding those who are well-connected to the politically powerful.
In the 1990s, a bipartisan consensus formed that the nation’s welfare system, while well-intended, was creating as many problems as it was solving Although malnutrition and extreme poverty were eliminated, direct cash assistance to the poor and other handouts were fostering a multigenerational dependence on government assistance.
The idea was to wean the poor from this dependence by replacing welfare checks with block grants to the states so they could set up educational and training programs that would help the poor acquire desirable job skills, manage their money and their households, and move toward self-sufficiency.
Rather than set up a massive government bureaucracy to run these programs, though, the states were allowed to outsource the work to private entities, such as those operated by the News.
To a lesser extent, the same has been going on in education. Special education programs that once were the sole province of the public schools were partially outsourced to private entities, either because the public schools had performed the job poorly or because parents of modest or little means wanted some of the same choices that better-off families had.
The theory sounded wonderful. Government is notoriously slow and wasteful. Private operators are more likely to innovate and be more efficient. If the poor could be moved closer to the middle class, and if students could be helped to overcome their learning disabilities, it would be great for the beneficiaries and reduce the cost of social programs significantly over the long haul.
The theory, though, was based on a assumption: that the government conduits of the money would be honest and careful. The scandal involving Nancy New and her son illustrates how flawed that assumption was.
Authorities say that the squandered or pilfered welfare money was enabled by a corrupt bureaucrat, John Davis, the former state Department of Human Services executive director who directed tens of millions of dollars to Nancy New’s organization.
The federal indictment does not say how the News allegedly bamboozled the Mississippi Department of Education, but obviously someone at MDE or the private company it used to process the reimbursements wasn’t checking behind the data that was being submitted.
Nancy New had also ingratiated herself with Republican power brokers. Former Gov. Phil Bryant regularly sang her praises. His successor, Tate Reeves, used one of her schools for the backdrop of a campaign commercial. Her companies spent hundreds of thousands of dollars on lobbyists, including a former GOP senator, to help keep the money flowing.
If the criminal indictments, the government audits and the investigative reporting have the story right, Nancy New had a good cover but a corrupt and greedy underbelly.
It’s enough to sour a person on welfare reform and privatization.
nContact Tim Kalich at 581-7243 or tkalich@gwcommonwealth.com.
