Journalists, auditors and other investigators have turned up more than $80 million in charter school fraud in California to date, according to a new report by a coalition of left-leaning organizations, which argues that lax oversight of the state’s charter schools is leaving taxpayer dollars vulnerable to abuse.
California has more than 1,100 charter schools that serve more than a half-million students — far more than any other state in the nation. They receive more than $3 billion in public funds each year. But state and local officials don’t have a rigorous enough system to ferret out misuse of those dollars, according to the report, which says that oversight relies too heavily on audits paid for by charter schools and complaints by whistleblowers.
“Despite the tremendous investment of public dollars and the size of its charter school population, California has failed to implement a system that proactively monitors charters for fraud, waste and mismanagement,” says the report.
It was released Tuesday by the Center for Popular Democracy, an advocacy group that is allied with teachers’ unions and has published several studies of state-level charter-school fraud; the Alliance of Californians for Community Empowerment Institute, an organization that works on issues including housing and education; and Public Advocates Inc., a nonprofit law firm and advocacy organization.
The report recounts some of the charter school scandals that have come to light in California. In 2012, for example, state auditors found that the American Indian Model Charter Schools (AIMS) — an Oakland school that had won national recognition for the achievement of its low-income students — had paid its founder, his wife and their various businesses about $3.8 million. The audit was initiated after a whistleblower raised concerns.
More recently, in 2014, state auditors found that a Los Angeles charter school — the Wisdom Academy of Young Scientists Charter Schools (WAYS) — had made payments totaling $2.6 million to the school’s former executive director and her family members and close associates.
“There simply isn’t enough oversight to prevent a huge amount of fraud in the charter sector, and that’s unacceptable,” said Hilary Hammell, a lawyer for Public Advocates. “That’s unacceptable because it’s vulnerable youths and their families who suffer when money that should be spent on kids at the school level instead goes elsewhere.”
The California Charter Schools Association responded with an extensive statement that called into question the motives of the report’s authors, arguing that they had turned up no evidence of a substantial problem. Many of the examples of fraud cited in the report were old and resulted in charter revocation, overhauls in school management or changes to state law, the association said.
“We agree that inappropriate use of public dollars intended for public school students should be prevented,” the statement says. “We believe that the system that California has very carefully and thoughtfully implemented does just that.”
California school system superintendents who suspect fiscal mismanagement at charter schools can request an “extraordinary audit” from a state agency known as the Financial Crisis and Management Assistance Team. But that agency — or some other oversight body — should be auditing all charter schools on a regular basis, according to the report, which argues that absent such a systemic review, misuse of tax dollars is going undetected.
Charter schools are required to submit a number of financial documents to oversight agencies and local school superintendents, including annual audits performed by private auditors. The report’s authors argued that those audits are not designed to catch fraud, while the California Charter Schools Association questioned why charter schools should have to undergo state audits when traditional public school systems do not. “To assume that there is a greater risk at charter schools than school districts, particularly in light of all the real time oversight on financial reports, is simply unfounded,” the association said.
“The report not only provides no evidence of a systemic issue, it does not do justice to the system already in place and that is actually more rigorous for charter schools than for other LEAs in the state (e.g., school districts),” the association said.
Some critics of previous reports about charter-school fraud released by the Center for Popular Democracy have also argued that those reports did not offer equal scrutiny of fraud within traditional public school systems. Others have pointed out that the center counts teachers unions — which have been critical of the charter sector — among its allies and supporters. Randi Weingarten, the president of the American Federation of Teachers, is a member of the center’s board.
This post has been updated.