Charter schools’ self-dealing hurts kids and needs attention

Fordham has worked in Dayton – as a funder, charter-school authorizer, and charter-school advocate – to push for the creation and growth of high quality charter schools since 1998. Over the last decade one of the highest performing charter school clusters in the city has been the Richard Allen (RA) Schools (RA has three schools in Dayton that serve about 800 children). Over the years I’ve spent time with the leaders of Richard Allen, visited their schools, and even helped judge their annual debate competition. In short, I have always been impressed by both the educators and the students I’ve met and worked with from the RA schools and believe the schools delivered quality education to students.

It is because of these personal connections to the schools over the years that I found the recent “Special Audit of the Richard Allen Academy Schools” such painful and disturbing reading. The Special Audit provided a litany of “missing money, missing records and self-dealing” that has led to $929,850 in findings for recovery. The audit describes a situation where public dollars were used without any basic accountability or transparency. It reads as if the schools’ leadership considered the schools a private operation free of any responsibility for how the state dollars were spent. There also seemed little understanding as to whom the public resources were meant to support.

For example, the audit details how the schools contracted with the Montgomery County Department of Jobs and Family Services to provide summer and after-school readiness enrichment services to needy Dayton families. The RA administration, despite receiving public dollars for the express purpose of providing programs, charged participating families a weekly fee – to be paid in cash – for attending the after school program. According to the audit, “the fees were paid in cash. We could not identify any program fees recorded or deposited by the Schools.”

In response to the audit, Richard Allen officials issued a statement to the Dayton Daily News that read:

The language chosen for use in the audit report attempts to create the perception that there was intent to run afoul of the laws of this state by the parties referenced therein. What the auditors were tasked with ascertaining was whether the funds expended by the schools were for a proper public purpose. As stewards of public funds, we would expect no less. However, we are dismayed by the arbitrary and capricious nature in which the auditors determined what documentation they would and would not give credence to.

Such defiant language might have more credibility if the state auditor were someone other than Dave Yost. Yost is a Republican who supports charter schools and school choice generally. He also is a former prosecutor who knows how to follow the facts. He made his name in politics for his vigorous prosecution of political corruption. His stated mission as auditor is “to protect Ohioans’ tax dollars while aggressively fighting fraud, waste and misuse in public spending.”

The problems facing the leadership of the Richard Allen family of schools are likely just beginning as the auditor has referred many of the findings to the Ohio Ethics Commission, the Ohio Department of Education, the Internal Revenue Service, state retirement agencies, and the Montgomery County Department of Job and Family Services. If the Ohio Ethics Commission, for example, finds that a violation has occurred, its findings are turned over to the appropriate prosecuting authority for criminal prosecution.

The Richard Allen Academy Schools Audit highlights, yet again, the need for Ohio statute to clarify the roles and duties of school governing boards, school operators, and school sponsors (aka authorizers). Some of the problems highlighted in the audit are a result of state law that allows the blurring of responsibilities and accountabilities across the different authorities responsible for charter performance. The auditor reported:

As a result of these relationships, the Schools, their management company, and sponsor are generally operated by the same individual, the organizations are closely related, financial operations have been commingled, and management lines have been blurred. The lack of separation between the Schools, their management company and their sponsoring organization increases the risk of financial mismanagement, inappropriate relationships and statutory ethics violations.

This blurring of responsibilities was the topic of a February 4 Columbus Dispatch editorial that observed:

The greatest weakness in Ohio’s charter-school system is a lack of clear boundaries between the principal players in a charter school

  • The governing board, which creates the school and is responsible for it;
  • The sponsor, which is authorized by the state to oversee a school and hold the governing board accountable for performance;
  •  In some cases, an operating company, nonprofit or for-profit, that is paid by the governing board to run the school;
  •  And the Ohio Department of Education, which oversees it all.

Legislation to address these issues has been introduced almost every year since 2005, and the most recent effort was included in the Senate’s version of the recent biennial budget. Each time the legislation is presented it gets killed by self-interested groups that benefit from the current confusion.

The situation with the Richard Allen Schools is surely a sad one for the hundreds of children and their families who attend the schools, for the dozens of teachers in the buildings who are working hard every day to provide first-rate instruction to their students, and for Dayton – which still has too few high-performing elementary school options for its children. Yet, maybe some good can come out of this if the General Assembly finally creates a system of reasonable checks and balances for Ohio’s charter schools.

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