CCSA Statement on Office of the Inspector General Report

October 3, 2016

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The California Charter Schools Association (CCSA) released the following statement in response to the Department of Education's Office of Inspector General (OIG) report "Nationwide Assessment of Charter and Education Management Organizations."

Sacramento - California charter schools and Charter Management Organizations (CMOs) are committed to being good stewards of public dollars (federal, state and local) in service to students and their families. The very hallmark of California's Charter Schools Act is to provide charters greater flexibility and innovation in the classroom in exchange for higher levels of accountability. Reviews of this nature can provide valuable feedback to the charter school sector on an ongoing basis. And in order to support California's charter sector in their efforts to be fiscally responsible and accountable, CCSA provides professional development, technical assistance and resources to our members.

"The California charter sector takes seriously any concerns about stewardship of federal funds, and believes financial mismanagement should not be tolerated in any public school - district or charter," said Jed Wallace, president and CEO, CCSA. "We are pleased that even though the OIG conducted a judgmental sample report in six states, and therefore was looking for the biggest likely problems, that the report was overall positive for California CMOs with only one finding. CCSA will continue to work with our members, including CMOs, to provide the best technical assistance on financial and governance practices. And California charter schools will continue to be independently audited annually to allow for the identification of issues, recommendations for internal controls, and adjustments to accountability for all sources of funds including federal funds."

It is also important to note that many non-profit charter management organizations (CMOs) have some of the strongest outcomes for low-income students, and some of the highest performing charter schools in the state come from CMO networks according to Stanford University's Center for Research and Education Outcomes, which confirms CCSA's own research

We urge our elected officials to balance this report with the knowledge that California already has many effective mechanisms in place to hold CMOs and charters accountable. Each year, charter schools and CMOs complete individual independent audits to monitor and adjust internal controls at schools across the state as intended.

Finally, ensuring federal funds are appropriately spent is a primary function of the Department of Education (DOE), and they should always strive to continue to improve in that function, whether it be in monitoring State Education Agencies (SEA), CMOs, charter schools or school districts. We believe that the DOE can strengthen their oversight without unnecessarily restricting the operations of high functioning charter organizations. 

We will continue to further review the findings and recommendations of this report to determine other possible implications.

Additional Background

  • While this is a federal level report, California CMOs and charters are part of this review as they, like school districts and all not-for-profit organizations, are required to have an annual independent audit. Charter audits are provided to their authorizer and the state. These audits identify issues and make recommendations on internal controls, include reviews of all sources of funds including federal funds, and make recommendations to ensure charter schools and CMOs are following the various rules of the funding sources.
  • In terms of the specifics of this IG report, CCSA was pleased to see there was only one finding in California - one in which the school actually appears to have had appropriate recusal procedures in place, with the exception of not reporting on the CMO's IRS 990 form.
  • A judgmental sample would normally result in an overall analysis being skewed toward a higher likelihood of problems and findings.  
  • The IG failed to note that most charter schools are nonprofits and would be subject to all California corporation codes which include provisions on self-dealing in conflict of interest. In addition, non classroom-based charters actually do have specific regulations around conflict of interest as part of the funding determination review process. Further, the same federal audit and review standards apply to charter schools as to school districts and other federal fund recipients.
  • There is no doubt that opponents of charters will try to use this report to their advantage. Many organizations are audited, issues are identified, recommendations made and issues resolved. However, entire groups of not-for-profits or small businesses or other groups of entities are not suggested to be closed as a result of findings in audits. 
  • What this audit does not report on is whether or not these schools have high levels of performance, that is not the role of the IG nor should it be. But it is the role of an effective elected leaders on school boards and in the legislature to consider and weigh the need for rational dialogue about the existing rules that CMOs and charters follow regarding independent audits and reports to authorizers combined with are their students performing well. California already has in place what it needs to ensure an effective, high performing and accountable CMO/charter sector.

About the California Charter Schools Association   The California Charter Schools Association's vision is to increase student learning by growing the number of families choosing high quality charter public schools so that no child is denied the right to a great public education. Our mission is to ensure a million students attend charter public schools by 2022, with charter public schools outperforming non-charter public schools on every measure. We do this by serving as the advocacy organization that builds the policy environment needed to grow as quickly as possible the number of students attending high quality charter public schools. For more information, please visit our website at www.ccsa.org.