SF Gate - March 24, 2015, by Jill Tucker - California’s 1,100 charter schools are subject to insufficient financial oversight, lax practices that leave the door wide open to fraud, mismanagement and abuse, according to a report released Tuesday by a trio of education policy groups.

Since the first charter school opened in 1992, state or local officials have uncovered more than $81 million in fraud or mismanagement. But that’s probably the tip of a very big iceberg, according to the report released by Public Advocates, Alliance of Californians for Community Empowerment and the Center for Popular Democracy.

The report’s authors estimate that charter school fraud could be closer to $100 million in 2015 alone, based on methodology cited the Association for Certified Fraud Examiners 2014 Report to Nations on Occupational Fraud and Abuse.

“Charter schools promised to innovate and show best practices for schools — but is this how they are living up to that promise? This is not an example of how schools should work – this is an example of what not to do,” said Martha Sanchez, a parent and community leader with the Alliance of Californians for Community Empowerment.

The California Charter School Association, however, criticized the report for “making estimates based on global assumptions calls into the question the credibility of the report and the organizations that published it.”

“While we don’t presume to understand the motives behind this report we do know that California is a state where the charter school sector, authorizers and legislators have come together to put into place real solutions,” according to the charter organization, in a statement. “It is unfortunate that we continue to have similar distractions for a sector that the report itself suggests is demonstrating to be responsible users of precious public funds in addition to serving a half a million public school students well.”

The report cites several instances of uncovered fraud, including $2.7 million for excessive amounts of school supplies at Los Angeles’ Wisdom Academy of Young Scientists Charter Schools, provided by vendors who were family members or close acquaintances of the former executive director and who charged exorbitant prices.

The report also cited Oakland’s American Indian charter schools, where the former director reportedly diverted more than $3 million to his own businesses via rent and other expenditures.

The agency that authorized the charter school — typically the local school district or county office of education — is responsible for oversight, but they don’t always have enough staff to perform fraud risk assessments, the report said.

The report recommended that charter school audits include an assessment by someone certified in financial forensics and that school board or county boards of education should require charter schools to ensure fraud controls are in place before granting a charter or renewing one.

“California already spends too little on public education, so it’s critical to ensure that this money actually goes where it’s intended — to serve kids,” said Hilary Hammell, an attorney at Public Advocates. “When charter school operators misappropriate public education money, our state’s most vulnerable families suffer.”

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