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Financial health of D.C. charters difficult to evaluate

The D.C. Public Charter School Board released the latest version of its CHARM report that reviews the financial performance of the institutions it oversees. The level of scrutiny has increased because as I pointed out Option's books last year were deemed satisfactory only to find that millions of dollars were being pulled out of the school by former administrators. Therefore, as the Washington Post's Emma Brown discovered, there are now new details about the arrangements charters have made with outside management firms. Still the document has me asking for more.

For example, under Community Academy it is stated "$2,372,970 to Community Action Partners for management fees." But no mention is made that this charge is the subject of a legal complaint by D.C.'s Attorney General. Other comments almost beg for additional information. D.C. Bilingual paid CentroNia $962,000 for management and another $4.5 million for personnel costs and other expenses. It would be valuable to understand what the management fee covers and the arrangement concerning employee expenses. This is especially important since the report states that the school's financial audit shows it is not bidding out contracts over $25,000 and above as is required.

Eagle Academy compensates its board chair for consulting services related to developing "medical services" for the school. The report says that it remunerated this individual $20,000 but it is not clear it this is tied directly to the above contract. The charter also reimbursed EES for Medicaid billing. This is one of the companies that is involved in the Options mess. A board member of this school is also an executive with the company.

I could go on and on. For the many charters that have management fees like Basis there is a statement that says "Obtain and review separate consolidated financial statements for BASIS School, Inc. But apparently when this report was issued the financials statements were not obtained, and therefore it is not clear how the almost $1.3 million dollars were used. This does not include $2.6 million for "leased employees wages and benefits."

I think as a movement we are asking for trouble. The report makes me feel like every dollar of public funds that is spent by these schools must be reviewed for appropriateness, which is of course impossible. In the past I've called for the financial performance of charters to be a part of the Performance Management Framework. Perhaps we need a tier system for the way a school allocates its funding.

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