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A new report recently released by the Coalition for Community Schools and the Center for Popular Democracy (CPD) finds that the drastic growth of overinvestment in charter schools and underinvestment in oversight has left Louisiana’s students, parents, teachers and taxpayers at risk of academic failures and financial fraud.
The Center for Popular Democracy is a nonprofit organization that promotes equity, opportunity, and a dynamic democracy in partnership with innovative base- building organizations, organizing networks and alliances, and progressive unions across the country.
Coalition for Community Schools New Orleans (CCS) is a New Orleans alliance of parent, youth and community organizations and labor groups fighting for educational justice and equity in access to school resources and opportunities.
The report, “System Failure: Louisiana’s Broken Charter School Law” cites billions of taxpayer dollars plunged into charter schools since Hurricane Katrina hit, including over $831 million in the 2014-15 school year alone.
Local education advocate Karran Harper Royal, who is a part of the Coalition for Community Schools, says the hope is that with the release of this report the state will both tighten its controls over the financial management of charter schools, making them more accountable to parents, children and taxpayers, as well as review its approach to academic accountability.
Since 2005, charter school enrollment in the state has grown 1,188 percent. The Louisiana Department of Education’s Recovery School District, originally created to facilitate state takeover of struggling schools, is now the first charter-only school district in the country. Currently, a school that fails to make required academic improvement is either closed or re-opened by another charter operator. It is a process that advocates say is hurting children.
“We don’t think that closing a school is accountability,” Harper Royal says, adding that thousands of New Orleans public school students have been displaced by charter school closures. “More needs to be done to help struggling schools, which actually means helping struggling students. Closing schools doesn’t solve the problem. Destabilizing the education of already vulnerable children cannot be seen as accountability.”
The report identifies five fundamental flaws with the financial and academic oversight of Louisiana’s charter schools:
1 Oversight depends too heavily on self-reporting by charter schools or the reports of whistleblowers. Louisiana’s oversight agencies rely almost entirely on audits paid for by the charters themselves and whistleblowers. While important to uncover fraud, neither method systematically detects or effectively prevents fraud.
2 The general auditing techniques used in charter school reports do not uncover fraud on their own. The audits commissioned by the charter schools use general auditing techniques designed to expose inaccuracies or inefficiencies. Without audits specifically designed to detect and uncover fraud, however, state and local agencies will rarely detect deliberate fraud without a whistleblower.
3 Inadequate staffing prevents the thorough detection and elimination of fraud. Louisiana inadequately staffs its charter-school oversight agencies. In order to carry out high-quality audits of any type, auditors need enough time. With too few qualified people on staff—and too little training for existing staff—agencies are unable to uncover clues that might lead to fuller investigations and the discovery of fraud.
4 Underinvestment in systems that help struggling schools succeed. Lawmakers and regulators have invested in systems that set high standards and then close schools that fail to meet them, rather than helping them improve to meet the standards. This investment in a severe accountability system does not support schools achieving academic success.
5 Heavy reliance on data that is vulnerable to manipulation. The state’s academic oversight system relies largely on sets of data that can be manipulated by regulators, authorizers, or the charters themselves. Without reliable data, schools, parents and the public have no way to accurately gauge academic quality at their schools.
Since 2005, about $700 million in public tax dollars have been spent on charter schools that currently have not achieved a C or better on the state’s grading system. As the state has insufficiently resourced financial oversight, it has failed to create a structure that provides struggling schools and their students with a pathway to academic success. Coupled with an unwillingness to help failing schools succeed, the rapid growth of charters has failed Louisiana children, families and taxpayers.
The report calls for a set of core reforms to end the hemorrhaging of public funds to fraudulent charter schools and also calls on state and federal lawmakers to put systems in place to prevent fraud, waste, abuse and mismanagement. To address the serious deficiencies in Louisiana school districts, AROS suggests mandating new measures designed to detect and prevent fraud, increasing financial transparency and accountability, redesigning the data collection process, and redesigning the system to support struggling schools.
More telling than the general flaws highlighted by the report are the specific incidents of fraud, waste and mismanagement detailed by the document—transgressions that would have elicited quick and vigorous cries of corruption had they occurred under the Orleans Parish School Board. The incidents date as far back as 2003 and include:
• February 2010—the former business manager of Langston Hughes Academy pled guilty to stealing over $600,000 from the charter school by making more than 150 cash withdrawals from Hughes’ operating account over 15 months. The theft was discovered in the organization’s annual audit. The employee was sentenced to five years in federal prison and ordered to pay over $675,000 in restitution.
• In 2011, another audit of D’Arbonne Woods Charter School revealed that employees had again been paid merit pay in excess of the amount allowed in the school’s personnel policies, this time by $51,650 more than the admissible amount. The audit also found that pay advances of $2,900 had been made to an employee, with only $200 paid back by the end of the audit year. The employee no longer worked for the school and the auditor found the likelihood of collection of the monies limited.
• In 2011, an employee of Lusher Charter School’s accounting department embezzled $25,000 by forging five checks she wrote to herself from the school’s bank account. The school discovered the theft and it was reported in its annual financial audit.
• December 2013—New Orleans police charged a former New Orleans Military and Maritime Academy business manager with stealing $31,000 by writing checks that were invoiced as if they were to office supply stores, but were really to a non-profit he controlled.
• In 2014, an employee of KIPP New Orleans Inc., the operator of six charter schools in Orleans Parish, misappropriated two checks totaling almost $70,000. The employee altered two checks intended for vendors and the theft was discovered when the vendors complained that they hadn’t been paid. The employee admitted the theft. The theft was made public in an audit.
• Also in 2014, the operations manager stole over $9000 from Arise Schools, a New Orleans-based charter group. The theft was made public in a 2014 audit, but was discovered by the school when they noticed money missing from a debit card. The employee twice bought $1,500 in gift cards with the organization’s debit card, in March and June 2014. The rest of the embezzlement was done in small amounts, tacking on his own purchases when he bought supplies for the school. After an investigation in which the employee admitted to the theft, Arise immediately fired him, filed a police report and filed an insurance claim, but did not report the theft to the state auditor, as required by law.
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