Group Tasked with Exploring Charter School Fraud Extends Guidance to Include Public Education Audits

A task force to combat charter school fraud following a multi-million-dollar San Diego County scheme released its initial report Wednesday, detailing guidelines for stopping similar misconduct.

The statewide Multi-Agency Charter School Audits Task Force was formed last year in response to the criminal case against the A3 Education charter school network, which took in millions in public funds based on false claims that certain students were enrolled in programs run by the schools.

The public money ultimately went to masterminds Sean McManus and Jason Schrock, who, after pleading guilty, were sentenced along with nine co-defendants.

The task force described the case as “the largest fraud in California’s 31-year history of charter schools,” but said “other California charter school fraud cases have been uncovered in recent years that included illegal, wasteful and fraudulent expenditures.”

State Controller Malia Cohen, who also chairs the task force, said the recommendations “provide a critical road map for ensuring trust, accountability and transparency in the fiscal and audit functions and operations of our entire K-12 public school system.”

Though the report is titled, “Audit Best Practices for Detecting and Curtailing Charter School Fraud,” it includes 20 recommendations for those auditing education agencies, which the task force says “should be applied to all local education agencies including school districts, county offices of education, and charter schools.”

Doing so, members maintain, provides “opportunities to strengthen the audit functions across the entire local education agency system.”

The proposals from the report, Cohen said, “encourage sound fiscal management among local educational agencies, including charter schools, so that we can have the most efficient and effective use of public funds for the education of children in California by strengthening fiscal accountability at the school district, county and state levels.”

The task force included recommendations for new or improved procedures for bolstering training and requirements for CPA firms tasked with public education audits, additional reporting requirements for delays in audit reports, and guidance regarding disclosures of student enrollment and financial and attendance information.

According to a 2023 motion heard before San Diego Superior Court Judge Robert Longstreth, the task force was to be comprised of 15 primary members, including Cohen, representing various interests, including the state, educators, auditors, private charter school groups and those involved with the A3 legal case.

Three additional members were to represent one large-sized school district and county offices of education.

The San Diego County District Attorney’s Office prosecuted the A3 case. District Attorney Summer Stephan, whose office also helped lead the task force according to the motion, responded to the report’s release, saying in a statement that “we are ensuring that moving forward, criminals will not be able to perpetrate large-scale scams that previously took advantage of California taxpayers, parents and students.”

– City News Service contributed to this report.