School Choice & Charters

Audit: How Charter School Management Groups Pose Risks to Federal Funds

By Arianna Prothero — October 04, 2016 2 min read
  • Save to favorites
  • Print

A federal audit warns that cozy relationships between charter schools and the organizations that run some of them could put federal funding at risk.

Charter management organizations, or CMOs, are groups that run critical functions like finances, fundraising, communications, and curriculum for multiple charter schools.

Not all charter schools are run by a CMO—the majority of charter schools in the country are actually single-campus operations.

The level of independence between the school and the CMO varies on a case-by-case basis, and the U.S. Department of Education’s Office of Inspector General, which conducted the audit, is basically saying that in some instances there is so little independence between the school and the management group that it could lead—and has led—to trouble.

The OIG audit examined 33 schools in six states and found several examples of conflicts of interest, related-party transactions, and insufficient segregation of duties—all controls designed to prevent fraud.

The lack of proper guard rails in these relationships between charter management organizations and their schools, the audit concludes, significantly increases the risk that federal programs are not being implemented correctly and are wasting public money.

Furthermore, the audit found that the Education Department did not have good enough procedures in place for monitoring the specific issues that could arise out of the unique setups between charter schools and charter management organizations, nor did it instruct state education agencies to do so.

The schools the OIG examined were picked based on their tax filings, local and state audits, news stories, and other operational characteristics, which means that this sample in the audit does not necessarily reflect charter schools as a whole.

The audit also includes both for-profit and not-for-profit charter management groups. It’s important to note that the audit’s definition of charter management organizations differs somewhat from general charter school parlance. Typically, charter management organizations, or CMOs, are nonprofit, while education management organizations, or EMOs, are for-profit.

You can find the full audit here.

Related stories:


Related Tags:

A version of this news article first appeared in the Charters & Choice blog.


Commenting has been disabled on edweek.org effective Sept. 8. Please visit our FAQ section for more details. To get in touch with us visit our contact page, follow us on social media, or submit a Letter to the Editor.


Events

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Teaching Webinar
6 Key Trends in Teaching and Learning
As we enter the third school year affected by the pandemic—and a return to the classroom for many—we come better prepared, but questions remain. How will the last year impact teaching and learning this school
Content provided by Instructure
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Curriculum Webinar
How Data and Digital Curriculum Can Drive Personalized Instruction
As we return from an abnormal year, it’s an educator’s top priority to make sure the lessons learned under adversity positively impact students during the new school year. Digital curriculum has emerged from the pandemic
Content provided by Kiddom
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Equity & Diversity Webinar
Leadership for Racial Equity in Schools and Beyond
While the COVID-19 pandemic continues to reveal systemic racial disparities in educational opportunity, there are revelations to which we can and must respond. Through conscientious efforts, using an intentional focus on race, school leaders can
Content provided by Corwin

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School Choice & Charters Virtual Charters in Hot Water Again. Accusations of Fraud Prompt $150M Lawsuit
Indiana officials seek to recoup more than $150 million they say was either wrongly obtained or misspent by a consortium of virtual schools.
Arika Herron, The Indianapolis Star
2 min read
Indiana's attorney general Todd Rokita speaks at a news conference on Sept. 16, 2020, in Indianapolis. Rokita filed a lawsuit against a group of online charter schools accused of defrauding the state out of millions of dollars Thursday, July 8, 2021.
Indiana's attorney general Todd Rokita speaks at a news conference on Sept. 16, 2020, in Indianapolis.
Darron Cummings/AP
School Choice & Charters How the Pandemic Helped Fuel the Private School Choice Movement
State lawmakers got a new talking point as they pushed to create and expand programs to send students to private schools.
8 min read
Collage showing two boys in classroom during pandemic wearing masks with cropped photo of feet and arrows going in different directions.
Collage by Gina Tomko/EducationWeek (Images: Getty)
School Choice & Charters Opinion Taking Stock After 30 Years of Charter Schools
Rick Hess speaks with Nina Rees, president and CEO of the National Alliance for Public Charter Schools, on charter schools turning 30.
8 min read
Image shows a multi-tailed arrow hitting the bullseye of a target.
DigitalVision Vectors/Getty
School Choice & Charters In Fight Over Millions of Dollars for Charter Schools, a Marijuana Tax May Bring Peace
The Oklahoma State Board of Education voted unanimously to rescind a polarizing lawsuit settlement, pending certain stipulations.
Nuria Martinez-Keel, The Oklahoman
3 min read
Money bills cash funds close up Getty
Getty