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1. Superintendent of Direction for the California schools, Jack O'Connell, initiated an audit more than a year ago into the fiscal issues of the Choices for Youth and Opportunities for Learning (OYO) schools. The OYO is a chain of independent research study charter schools within the California schools system, which are privately run however funded by the state. The OYO California schools serve students who have actually left of the traditional high schools. They presently have about 15,000 students in 40 store locations throughout the state. These California schools trainees do the majority of their work at house, conference with teachers twice a week. According to state records, trainee accomplishment test and high school exit test scores are above average, as compared to other alternative high schools within the California schools system. According to a Los Angeles Times short article of August 10th, just 11 percent of OYO trainees finished during the 2003-2004 school year. The remainder of trainees that left school that year either left, were expelled, or transferred to other schools. The California schools' audit was conducted 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 flaws, overpayments by the state, conflicts of interest, nepotism, excessive payment, and blending personal organisation concerns with public schools. The OYO was founded and still operated by John and Joan Hall, former instructors from Hollywood High School. They have completely complied with the California schools' audit, but dispute many of the findings. Some examples from the audit report are: • Accounting Flaws and Overpayments. The Halls count each of their teachers as 1.92 full-time positions. Their representative, Stevan Allen, stated that this is a common 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 thinks instructors ought to be counted just as one full-time position each. The auditors disagreed, citing that traditional California schools instructors invest much less time working each year than those at OYO. Nevertheless, the auditors thought the 1.92 quantity is pumped up. This example, alone, accounts for more than half of the $57 million overpayment. Furthermore, the report kept in mind numerous doubtful costs. One example of unrestrained costs, provided by the Times was an $18,000 staff celebration held at Disneyland. Allen defended that event as an attempt at relationship building between team member, who are scattered throughout the state. He noted that the costs was less than $50 per employee. • Disputes of Interest and Mixing Private Company with Public Schools. Besides the charter schools, the Halls own and operate a number of private organisations that sell products 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. • Extreme Settlement. The audit also questions the combined incomes for the Halls, which is $600,000 every year. The report specifies that it might be excessive for the quantity of time the couple actually works. • Nepotism. The Halls developed a separate charity with $10.8 countless the California schools' funding, called Pathways in Education. The charity is run by their child, Jamie Hall. Little loan has been spent toward education so far. The Halls contend that they previously had requested assistance on their operation from the California schools sometimes, but car donation vs trade in never got any reaction. Hence, they attempted to follow California schools requirements as finest they could with their understanding of the policies. Even O'Connell conceded that

2. none of the pointed out practices are prohibited. The audit advises the California schools ought to try to recuperate the $57 million in overpayment from the OYO. O'Connell has actually sent out the report to the state's chief law officer's office for review and any required action.