California Schools' Audit Suggests Exorbitant Expenses And Overpayments To String Of Charter Schools

1. Superintendent of Guideline for the California schools, Jack O'Connell, initiated an audit more than a year ago into the fiscal issues 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 independently run but moneyed by the state. The OYO California schools serve students who have left of the traditional high schools. They presently have about 15,000 trainees in 40 storefront places throughout the state. These California schools trainees do the majority of their work at house, meeting with teachers two times a week. According to state records, student achievement 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 article of August 10th, only 11 percent of OYO students graduated during the 2003-2004 academic year. The remainder of students that left school that year either left, were expelled, or moved to other schools. The California schools' audit was conducted by the Fiscal Crisis and Management Assistance Team, who concluded their analysis and presented their findings in a report that was launched in August 2006. The audit points out accounting defects, overpayments by the state, disputes of interest, nepotism, excessive compensation, and blending private company issues with public schools. The OYO was established and still operated by John and Joan Hall, previous instructors from Hollywood High School. They have completely worked together with the California schools' audit, but disagreement the majority of the findings. Some examples from the audit report are: • Accounting Flaws and Overpayments. The Halls count each of their instructors as 1.92 full-time positions. Their representative, Stevan Allen, specified that this is a common practice for charter schools in the California schools system and is a legitimate technique for compensating school staff for longer days and year-round schedules. California schools superintendent O'Connell believes instructors must be counted only as one full-time position each. The auditors disagreed, citing that conventional California schools teachers spend much less time working each year than those at OYO. However, the auditors believed the 1.92 amount is pumped up. This example, alone, accounts for more than half of the $57 million overpayment. Furthermore, the report noted several questionable costs. One example of unrestrained costs, given by the Times was an $18,000 personnel party held at Disneyland. Allen protected that event as an effort at relationship structure between employee, who are spread across the state. He noted that the expenses was less than $50 per employee. • Conflicts of Interest and Mixing Private Company with Public Schools. Besides the charter schools, the Halls own and run numerous private businesses that sell materials and services to schools. The Times kept in mind that the Choices 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. • Excessive Payment. The audit also questions the combined wages for the Halls, which is $600,000 yearly. The report states that it may be extreme for the quantity of time the couple actually works. • Nepotism. The Halls created a different charity with $10.8 countless the California schools' financing, called Pathways in Education. The charity is run by their child, Jamie Hall. Little loan has been invested towards education therefore far. The Halls compete that they previously had actually asked for assistance on their operation from the California schools sometimes, however never ever got any reaction. Thus, they tried to follow California schools requirements as best they might with their understanding of the policies. Even O'Connell conceded that none of

2. the pointed out practices are prohibited. The audit recommends the car donation to goodwill California schools need to attempt to recuperate the $57 million in overpayment from the OYO. O'Connell has actually sent the report to the state's attorney general's office for review and any necessary action.