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1. Superintendent of Instruction for the California schools, Jack O'Connell, initiated an audit more than a year ago into the fiscal concerns of the Options for Youth and Opportunities for Knowing (OYO) schools. The OYO is a chain of independent research study charter schools within the California schools system, which are privately run but moneyed car donation to church by the state. The OYO California schools serve students who have actually dropped out of the conventional high schools. They presently have about 15,000 students in 40 shop locations throughout the state. These California schools trainees do many of their work at home, conference with teachers two times a week. According to state records, student accomplishment test and high school exit examination ratings are above average, as compared to other alternative high schools within the California schools system. According to a Los Angeles Times post of August 10th, only 11 percent of OYO students finished throughout the 2003-2004 school year. The remainder of trainees that left school that year either dropped out, were expelled, or moved to other schools. The California schools' audit was carried out by the Fiscal Crisis and Management Support Group, who concluded their analysis and presented their findings in a report that was released in August 2006. The audit mentions accounting defects, overpayments by the state, conflicts of interest, nepotism, extreme payment, and blending private service issues with public schools. The OYO was founded and still operated by John and Joan Hall, former instructors from Hollywood High School. They have actually fully cooperated with the California schools' audit, however conflict most of the findings. Some examples from the audit report are: • Accounting Problems and Overpayments. The Halls count each of their instructors as 1.92 full-time positions. Their spokesperson, Stevan Allen, stated that this is a typical practice for charter schools in the California schools system and is a legitimate method for compensating school personnel for longer days and year-round schedules. California schools superintendent O'Connell believes teachers must be counted just as one full-time position each. The auditors disagreed, mentioning that conventional California schools instructors spend much less time working each year than those at OYO. However, the auditors thought the 1.92 quantity is inflated. This example, alone, represent over half of the $57 million overpayment. Additionally, the report kept in mind a number of questionable expenditures. One example of unrestrained costs, provided by the Times was an $18,000 staff party held at Disneyland. Allen defended that occasion as an attempt at relationship building in between personnel members, who are spread across the state. He kept in mind that the costs was less than $50 per staff member. • Conflicts of Interest and Mixing Private Company with Public Schools. Besides the charter schools, the Halls own and run a number of personal businesses that offer products and services to schools. The Times noted that the Alternatives in OYO was the nonprofit part of the setup, with the Opportunities part being for-profit. The audit calls this practice and setup into concern. • Extreme Payment. The audit likewise questions the combined incomes for the Halls, which is $600,000 yearly. The report specifies that it might be excessive for the quantity of time the couple really works. • Nepotism. The Halls created a separate charity with $10.8 countless the California schools' funding, called Pathways in Education. The charity is run by their daughter, Jamie Hall. Little money has actually been invested towards education so far. The Halls compete that they previously had actually asked for assistance on their operation from the California schools often times, but never got any reaction. Therefore, they tried to follow California schools requirements as best they could with their understanding of the policies. Even O'Connell conceded that none of the mentioned

2. practices are unlawful. The audit recommends the California schools ought to attempt to recover the $57 million in overpayment from the OYO. O'Connell has actually sent the report to the state's chief law officer's workplace for evaluation and any required action.