This article examines one of the most perplexing problems in public administration today--how to reform chronically corrupt agencies. It highlights the roadblocks that can derail traditional control and redress devices through a case study of the New York City school custodial system, a deeply corrupt system that has resisted decades of reform efforts.
Much of the scholarship on organizational corruption--or systemic wrongdoing by employees who violate society's norms with the support of their organization's internal norms (Ermann and Lundman 1982)--assumes that corruption can be reduced through accountability devices such as oversight, surveillance, audits, performance evaluations, sanctions and structural reorganizations (Sherman 1978; Susan Rose-Ackerman 1993; Maynard-Moody, Stull, and Mitchell 1986). The conventional belief is that, if adequate controls exist, managers will enforce them and subordinates will follow them (Gardiner and Lyman 1993; Ward and McCormack 1987). That is why so much of the debate in the literature revolves around issues such as the types of audits needed to achieve different levels of fiscal accountability (Sheldon 1996), the deterrent value of criminal and civil sanctions (Walt and Laufer 1992; Coffee 1980), and the role of inspectors general (Gates and Moore 1986). If scandals continue despite these reforms, experts usually recommend tightening existing controls (Anechiarico and Jacobs 1996; Segal 1999).
But corruption may not result merely because an organization's internal accountability mechanisms are not tight or numerous enough. The history of the New York City custodial system, the subdivision of the city's board of education (BOE) that is responsible for cleaning and maintaining its 1,200 schools, shows that the assumptions underlying traditional corruption controls do not allow for organizations whose cultures are so deviant and whose missions have been so twisted that managers can barely recognize conduct that is deviant and employees regard wrongdoing as their right.
In the custodial system, exposes dating to 1924 paint a picture of "custodians," or school superintendents, who control thousands of dollars in building maintenance budgets and employ dozens of "helpers" such as cleaners and handymen, systematically transforming their schools into enterprises for bribery, extortion, theft, and nepotism. (BOE 1924; People v. Cappeta 86 A.D.2D 876, 447 N.Y.S.2d 293 ; SCI 1992). With little accountability and broad discretion over budgets and staff, custodians gave family and lovers no-show jobs as helpers and handed them thousands of dollars in fraudulent overtime. They used school maintenance budgets to renovate their homes. They extorted kickbacks from emergency contractors (People v. John Manfredi 166 A.D.2d 460, 560 N.Y.S.2d 679). A number did not even maintain a presence at their schools, pursuing second jobs instead. Meanwhile, supervisors turned a blind eye to custodians' abuses and sometimes shared in the kickbacks from contractors.
Repeated scandals put pressure on top officials at the BOE and the Division of School Facilities (DSF), the BOE subdivision responsible for overseeing the system's 1,000 custodians, to try traditional internal corruption controls, including stripping custodians of discretion, tightening central oversight, and auditing custodians' financial records (BOE 1977a; NYC Comptroller 1989). But most of these initiatives turned to dust in the custodial system's daily operation as managers failed to enforce them, custodians and their supervisors refused to follow the rules, and incentives for corruption remained embedded in the agency infrastructure.
In 1993, in the wake of a highly publicized investigation, the state passed a law changing custodians' incentives. It stripped them of some of their civil service protections and tried to make them accountable for performance to principals. …