School Choice & Charters

High-Scoring Oakland Charter School Facing Scrutiny

By Sean Cavanagh — April 03, 2012 3 min read
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An Oakland, Calif., charter school, known for its tough-love academic and disciplinary policies, is in danger of not being approved for renewal, after an audit unearthed a litany of instances of alleged financial mismanagement.

The American Indian Public Charter School II, which serves inner-city middle-schoolers, has gained acclaim for being one the highest-scoring schools in California on state exams.

But the preliminary findings of an audit of the school being conducted by the state’s Fiscal Crisis & Management Assistance Team, cited numerous financial problems, and noted that “when an organization lacks internal controls and governing board oversight is minimal, the likelihood of fraud greatly increases.”

The state agency noted several companies that conduct business with the
200-student charter school are owned by the founder of the school or his spouse, and that documents ensuring payment for those services were signed by one or both of them. Additionally, the founder of the school and his spouse have “unrestricted access” to the schools assets, the audit found, and large contracts for construction and other services have not been adequately reviewed by the school’s governing board.

The founder of the school, Ben Chavis, is a strong believer in a no-excuses approach to education, by his own description on the charter school’s web site. It lists school’s “Ten Commandments,” the first one of which is:

“Thou shalt remember that laziness is the quickest path to failure. Thou shalt accept that family culture, accountability/structure, high expectations, and free market capitalism will lead to success in school and life.”

But the audit says the school managers lacked financial accountability of their own in several areas, including:

  • Lease agreements for facilities signed by Chavis showing “various roles as lessee and lessor with no verifiable authorization from the governing board";
  • Entries for the Chavis’ life insurance, payroll and additional benefits paid to or on behalf of him during a time when former employees and Chavis said he wasn’t affiliated with the day-to-day business and was instead only the landlord;
  • Chavis’ wife having a separate outside services contract with the organization to perform back-office bookkeeping and being listed as an employee on the charter school’s payroll records during that same period;
  • Department of Motor Vehicle fees paid with school funds when the school has no vehicles;
  • Multiple checks written to a former board member for various services;
  • “Questionable” credit card spending; and
  • Bank accounts opened and closed without apparent authorization from the board.

The preliminary findings led the Oakland school district’s staff to recommend that the district school board pull the plug on the charter’s renewal. The district noted that the school “has not met the standards and expectations” set forth by the district, and in state law, for charters, which are public schools, typically managed by an entity other than a school district. The board is expected to decide on renewing or rejecting the school’s charter this week, district spokesman Troy Flint said in an interview.

“It’s a complicated case, but the essence of the [recommendation] for denial is based on gross financial mismanagment and a refusal to address these poor practices after repeated warnings,” Flint said.

A call placed to the American Indian Public Charter School II seeking comment wasn’t returned. But in an interview with the San Francisco Chronicle, Chavis said the school’s financial practices are sound.

“Did I do things differently? Sure I did,” Chavis told the paper. “Whatever we did [the charter’s] board approved us.”

He acknowledged owning a building he leases to the school, but said he charges the school half of what he bills a law firm for that space. “I’m about getting results,” he said.

[UPDATE (April 5): Oakland’s school board voted to allow the American Indian Public Charter School II to remain open, by a narrow margin.

After a prolonged discussion, the board voted 4-3 to allow the school to stay in operation, according to the Oakland Tribune. Board members attached a number of conditions, meant to bring new financial accountability to school, to their decision to allow it to continue to operate, the paper reports.]

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