New report: charter school fraud could be costing CA taxpayers $81 million

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by Jeremy Deaton

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According to an audit report by California’s Fiscal Crisis & Management Assistance Team, Ben Chavis, founder of Oakland’s American Indian Model Charter Schools, steered an estimated $3.7 million in school funds to his own businesses. The audit also listed thousands in unauthorized credit card purchases: charges for meals, flights, hotels and tickets to see the San Francisco Giants.

While these audit findings suggest the misuse of public funds at one California charter school, this is not an isolated case. Another audit by the Fiscal Crisis & Management Assistance Team found that Kendra Okonkwo, founder of the Wisdom Academy of Young Scientists in Los Angeles, reportedly engineered $2.6 million in payments to herself, her relatives and her close associates. Steven Cox, founder of the California Charter Academy, was indicted for allegedly misappropriating $5.5 million in public funds, leading to the collapse of his school. Emilio Vazquez, executive director of Santa Ana’s Albor Charter School, allegedly funneled more than $12 million to his family, friends and businesses.

A new report released by the Center for Popular Democracy (CPD) charges that, to date, fraud, waste and abuse at California charter schools have drained more than $81 million from the public coffers. The report indicates this may just be the tip of the iceberg. In a state with roughly 1100 charter schools serving more than half a million students, ferreting out fraud presents a significant challenge to overseers. Under the current system, countless abuses are bound to fall through the cracks. CPD highlights three fundamental flaws in California’s oversight scheme.

1. California relies on audits paid for by charter school operators. Oversight agencies depend on self-reporting by the charter schools themselves.

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To view entire report, click here

2. These audits are not designed to uncover fraud. Charter schools commission audits designed to expose inaccuracies and inefficiencies. As a result, fraud detection falls almost entirely to whistleblowers.

3. Local school districts lack the staff needed to find and eliminate fraud. Staff members who oversee charter schools must contend with many competing obligations.

To provide for greater oversight of California charter schools, CPD recommends that every charter undergo an annual fraud risk assessment: an evaluation of the pressures, incentives or opportunities to commit fraud. Oversight agencies should publish the results of these assessments, and charters school authorizers should take these findings into account when deciding whether to renew a school’s charter. To aid in this process, CPD recommends the state provide authorizers with full-time staff members whose sole duty is the oversight of charter schools.

CPD also calls for charters to institute protections for whistleblowers and to train employees in how to identify fraud and. Additionally, CPD suggests California’s Fiscal Crisis and Management Assistance Team create a dedicated hotline that charter school staff and board members can call to report abuse.
Charter schools rely on public funds to fulfill their duty to educate California students. When corrupt charter school operators steer those funds into their own pockets, they rob schools of the resources they need to provide kids with a world-class education. It’s time the state take every step necessary to protect California students.

The CPD report on California charter schools is the latest in a series of reports that has also examined Illinois, New York, and Pennsylvania.

Reader Comments

  1. Once again under the guise of “choice ” the public is being duped and ripped off by for profit schools who defy any accountability to the taxpayer re curriculum, academic success, often who their board consists of and does. This is a purposeful plan to eventually destroy public education, not improve it.

  2. The only problems I see is :#1. Lack of accountability. un effective teachers are not eliminated from the system. Most are promoted to administrative positions where they are still un effective and hamper the good teachers. #2. Most administrators do not accept responsibility for counseling an disciplining students, This is left up to the teachers which takes away from instructional time. Referrals to the office is frowned upon even when necessary. It is the administrators duty to handle these problems or to eliminate the ineffective teachers. Acceptance of sub par teachers is a administrator failure and the reason for low educational level in the US.

  3. Charter Schools are “PROFIT CENTERS” not to be confused with an educational, community/neighborhood schools. Charter schools are focused on making money–not on educating our children. They take away from our public schools and are a waste of time and money

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