Double standard on charters’ finances cheats Ariz. citizens

Arizona’s charter-school experiment cannot be sustained without public confidence in how public money is being spent. ❚ The Legislature took one positive step to increase confidence — and a giant leap to undermine it. ❚ Charter school supporters should be lining up to fix this. ❚ Why?

Because more transparency and financial accountability are in the longterm best interest of charters.

Let’s be clear:

❚ We support charter schools.

❚ They provide a valuable option for parents and have shown success in serving students.

❚ We want them to reach their full potential.

Yet there are increasing concerns about how charters operate with the public money they receive.

investigative reporter Craig Harris recently wrote about how Basis Charter Schools Inc., often cited as exemplary, used its Arizona schools and state tax dollars as collateral to expand in Texas and Washington, D.C.

As a publicly funded school, Basis is not supposed to charge tuition. But it recently solicited donations of up to $1,500 to subsidize teacher pay.

Despite concerns about these practices, the Arizona State Board for Charter Schools on Monday voted to allow Basis to expand its operations in Mesa and Flagstaff.

Other financial concerns were highlighted by Discovery Creemos Academy, which abruptly closed on Jan. 30, leaving more than 100 students stranded.

This catastrophe for children and families happened seven months after the State Board of Charter Schools agreed to let Creemos operate for another 20 years.

The board made the decision despite Creemos’ chronically low test scores and millions of dollars of debt, according to reporting by Ricardo Cano. The board finally revoked Creemos’ charter in February.

In May, reported that charter operators representing 138 of the state’s 538 charter schools showed financial warning signs, according to reporting by Agnel Philip.

But unlike district schools, the state lacked authority to intervene in a charter school’s operation solely for financial reasons.

That brings us to what the Legislature did right:

❚ Lawmakers directed the charter board to develop financial expectations for charters.

❚ Lawmakers also gave the board the power to revoke or refuse to renew a charter for financial reasons.

Ashley Berg, executive director for the Arizona State Board for Charter Schools, told by email that the board will develop expectations “with a wide range of stakeholders” but “does not have a preconceived notion of what that process will be.”

“Now that the Board has the legal authority necessary to close charters for financial deficiencies or deny charter renewals for financial deficiencies, we are in the process of determining how best to exercise that authority,” she wrote.

Jim Hall of Arizonans for Charter School Accountability says the process should involve monitoring how charters spend their money, including a way for parents to know how much public funding for students actually gets to the classroom.

“It is public money,” he said. “We should have every right to know exactly how that money is spent.”

In district schools, there is tough scrutiny on spending.

And lawmakers just made it tougher. Which brings us to what the lawmakers did wrong:

The education funding bill signed by the governor toughens up procurement laws and penalties in response to scandals at the Scottsdale Unified School District, where the former superintendent and another top administrator were ousted in April and a grand jury this month indicted the former chief financial officer in connection with a conflict of interest.

But the new law does nothing to change the fact that what was illegal in Scottsdale is not only allowed in charter schools, but common practice.

A report last year from the Grand Canyon Institute found that 77 percent of charters use “related-party transactions,” which involve spending public money on non-competitive bids with companies owned by charter operators, board members or relatives.

These practices are illegal for district public schools. But they remain legal for charter schools — even after lawmakers moved to toughen up procurement rules and penalties for district schools.

What’s more, the new law requiring district schools to post their budgets and audit information exempts charters.

The problems with procurement practices in the Scottsdale district were uncovered by parents and teachers who reviewed publicly available financial records and documents, which makes the case for providing more information to the public about how public money is spent.

This double standard the Legislature just endorsed may reflect the goal of providing charters with more flexibility to operate without burdensome regulations.

But it undermines public confidence, and it will not withstand public scrutiny.

The charter board can help by monitoring charter-school spending and making the information readily available to the public.

Next year, lawmakers can fix this by applying the same rules about spending public money to charter schools as it applied to other public schools.