This paper asserts that California's system of education funding is rife with waste. A state commission found that the system was "convoluted--driving up administrative costs, diverting attention from educational concerns, and depriving the public of readily accessible, comparative information." The paper suggests that the California Department of Education contributes to this problem by acting as a conduit of state funds rather than an enforcer of the rules meant to guarantee the lawful use of those funds. This paper focuses on oversight problems; fraud; failure to implement compliance review; categorical programs; desegregation dollars; class size reduction spending; sanctions for failing schools; categorical program flexibility transfers; abuses at the district level (San Francisco Unified School District, Los Angeles Unified School District, Fresno Unified School District, Emeryville Unified School District, and Orchard School District); how state irresponsibility fuels district waste; and how legislators can stop waste and help children (e.g, parental choice in education. (Contains 13 tables). (SM)