California Controller Malia Cohen released recommendations Wednesday crafted by a task force formed in 2023 to strengthen auditing functions for the state’s charter schools after 11 San Diego charter schools became embroiled in a fraud case.
The task force
The recommendations crafted by the task force are intended to “foster a culture of transparency and accountability by further enhancing auditor expertise, authorization requirements, evaluation and compliance with the K-12 Audit Guide, audit guide procedures, and audit report disclosures for charter schools,” according to the report.
Among the recommendations were that controls begin with the charter school petition approval process, charter school accountability systems, authorize monitoring of charter schools, and the respective oversight functions of the charter school governing board, county offices of education, California Department of Education, and the state controller’s office.
“As we go forward, the recommendations will 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,” Cohen said in a prepared statement.
Cohen said she stepped forward when she learned of the prosecution of the San Diego charter school that had fake students on its rolls — resulting in the state providing $400 million in revenues for non-existent students. The state said, at the time Cohen took on the task, it hoped to recoup $215 million, according to a release from the controller’s office.
A more stringent audit of the school could have prevented the fraud from reaching the dollar value it did, the case revealed.
The task force formation was driven by
Cohen led the taskforce, which met monthly, in conjunction with the San Diego District Attorney’s Office, and William Robert Ayres, the successor receiver in the People v. Sean McManus case, no. SCD266439-01, San Diego Superior Court.
California State Controller’s Office
The California public school system educates more than six million students in more than 10,000 schools, which includes 1,300 charter schools, with more than 300,000 teachers, according to the report.
With the education of the state’s children at stake and significant state investments of taxpayer money in education, it is crucial that all schools be held to the highest level of integrity, accountability, fiscal compliance, and transparency, Cohen wrote in a statement attached to the report.
While the task force was focused on strengthening charter school audits, Cohen said, she wants the recommendations to be broader in scope and extend to the entire state school system to strengthen audit oversight throughout the K-12 education system.
The report also noted the state already handles some of these functions through the Fiscal Crisis and Management Assistance Team (FCMAT) that works with California’s local education agencies to prevent and resolve financial and operational challenges. FCMAT provides oversight to local school districts not just to help avert fiscal crisis, but also to promote sound financial practices.
In addition, various other organizations support local educational associations by hosting conferences, providing tools and templates, workgroup opportunities, and various other resources.
“It is imperative that we implement the task force recommendations to encourage sound fiscal management among local educational agencies, including charter schools, for 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,” Cohen wrote.
To adequately combat fraud in charter schools, according to the report, it is important that all oversight agencies, in addition to the charter school audit function, implement strong internal and monitoring controls to timely identify and mitigate potential fraud.