The D.C. Public Charter School Board decided at a meeting Wednesday not to immediately initiate the closure of Options Public Charter, the Northeast Washington school at the center of allegations that its former managers diverted millions of dollars to their own for-profit companies.
But the charter board’s staff, seeking to improve oversight after the Options allegations, proposed several policy changes meant to ensure accurate and timely disclosure of charter school contracts, conflicts of interest and salaries of top-paid officials.
The proposals are a “result of our reflections and learnings from the Options episode,” said Scott Pearson, the charter board’s executive director. Former Options officials allegedly ran a contracting scheme — which court papers say involved the help of an insider at the charter board — that moved large sums of money from school coffers to two companies that offered services back to the school.
Charter schools are required to submit all contracts worth more than $25,000 to the charter board for review and to disclose any conflicts of interest in financial transactions. They also are required to submit minutes from the meetings of their boards of directors.
But Pearson said schools have not always submitted those items on time or at all, which could limit the charter board’s knowledge of some sizable contracts. The proposed policy changes are meant to clarify what is expected, acknowledging that the charter board has “frankly not been as clear as we should have been about what contracts needed to be submitted and what contracts didn’t.”
Under the proposal, schools would for the first time face sanctions if they fail to submit contracts and meeting minutes.
Charter schools also would be required to disclose the total compensation of their top three highest paid officials and to publish that information on the charter board’s Web site.
That idea stems from what Pearson called “one of the more disturbing aspects of the Options incident”: high salaries and bonuses for school officials. Donna Montgomery, the former chief executive of Options, allegedly earned at least $425,000 in one year, according to a pending civil complaint.
According to court documents, Montgomery and two other former Options leaders allegedly received “exorbitant” bonuses shortly before leaving the school to run their companies full time earlier this year.
They were allegedly aided by J.C. Hayward, a news anchor for WUSA (Channel 9), who according to the complaint approved the lucrative contracts and bonuses in her role as Options board chairwoman at the time. And Jeremy L. Williams, the former chief financial officer of the city charter board, allegedly maneuvered to ensure that the contracts were not reviewed by board staff.
All of the accused have denied wrongdoing. No one has been criminally charged, but investigators have been conducting interviews and a grand jury is expected to convene as early as this week.
Pearson said the board does not intend to regulate salaries but instead wants to encourage disclosure of information about the city’s public charters.
“Charter schools have full control over their operations,” Pearson said. “But we do think transparency and sunshine is important.”
Several charter board members greeted the idea coolly, expressing discomfort with the idea of publishing salaries online. They argued that such additional disclosure might burden law-abiding charter schools or make recruitment of top-level executives more difficult.
“I want to be careful that we don’t overreach and add unnecessary burdens to all the charters because of the misbehavior of one or two,” said John H. “Skip” McCoy, the board’s chairman.
Charter schools usually must disclose the salaries of their top earners on annual reports to the Internal Revenue Service, but those reports are sometimes incomplete and often are outdated by the time they become public.
The charter board is accepting public comment on the proposals and plans to vote on them in December.
The Options self-dealing allegations, revealed publicly earlier this month, prompted charter board officials to announce that the board was moving toward closing the charter for financial mismanagement. Options is the city’s oldest charter and serves about 400 at-risk teens.
The board now plans to decide whether to initiate the school’s closure by December, postponing any decisions to give Josh Kern — a court-appointed receiver charged with overseeing the school — time to assess Options operations. The school will continue to operate at least through the end of this school year.
A final decision on the school’s long-term future must be finalized before Feb. 4, which is the deadline for high school students to enter enrollment lotteries at schools across the District.