Friday, March 27, 2015
Public Advocates Group Calls for More Transparency and Financial Oversight of California's Charter Schools
Although California law allows its county superintendents to request an "extraordinary audit" of charter schools, a California group argues in a new report that the current law does not provide enough protection against charter school fraud or mismanagement. The Public Advocates, a nonprofit law firm and advocacy organization, estimates in Risking Public Money: California Charter School Fraud, that California could lose more than $100 million to charter school fraud if the state does not reform its oversight of those schools. Below are excerpts from the report's executive summary:
California is home to the largest number of charter schools in the country, with over 1100 schools providing instruction to over half a million students. In the 2013-14 school year, California charter schools received more than $3 billion in public funding. 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. While charter schools are subject to significant reporting requirements and monitoring by oversight bodies, including chartering entities, county superintendents and the State Controller, no oversight body regularly conducts audits. ...
In this report we describe three fundamental flaws with California’s oversight of charter schools:
Oversight depends heavily on self-reporting by charter schools or by whistleblowers. California’s oversight agencies rely almost entirely on audits paid for by charter operators and complaints from whistleblowers. Both methods are important to uncover fraud; however, neither is a systematic approach to fraud detection, nor are they effective in fraud prevention.
General auditing techniques alone do not uncover fraud. The audits commissioned by the charter schools use general auditing techniques rather than techniques specifically designed to detect and uncover fraud. The current processes may expose inaccuracies or inefficiencies; however, without audits targeted at uncovering financial fraud, state and local agencies will rarely be able to detect fraud without a whistleblower.
Oversight bodies lack adequate staffing to detect and eliminate fraud. In California, the vast majority of charter schools are authorized by local school districts that lack adequate staffing to monitor charter schools and ferret out fraud. Staff members who are responsible for oversight often juggle competing obligations that make it difficult to focus on oversight and identify signs of potential fraud and abuse.
Risking Public Money is available here.