A look at the recent financial histories of Minnesota's charter schools shows that while some do a satisfactory job of managing their finances, the majority are overwhelmed by the duties. Meanwhile, Minnesota taxpayers are being underserved.
Minnesota 2020, a think tank based in St. Paul, looked at 145 charter school audits filed for the 2007 school year. Our recent report, "Checking in on Charter Schools: An Examination of Charter School Finances," found that more than 80 percent of Minnesota charter schools had at least one financial infraction. This is unacceptable.
Of the three charter schools in Bemidji, Schoolcraft Learn-ing Community Charter and Treknorth High School only had two infractions on their audits, but Voyageurs Expedi-tionary had five violations causing one to wonder if Voya-geurs' finances are in order.
Charter schools were approved in Minnesota in 1991; the first eight opened their doors in 1992. Between 1992 and 2007, it is not unreasonable to expect that most charter schools would become financially savvy enough to satisfy auditors, but that is not the case.
Some charter schools, including the 24 charters that had no infractions, have qualified people handling their books and sufficient procedures in place to deal with the hundreds of thousands of taxpayer dollars that flow through their schools each year.
Some charter schools, however, have infractions in the double-digits, many of which are repeated year after year.
Here's how charter schools are held financially accountable: The fiscal year ends on the last day of June. Both charter and traditional schools must hire an independent auditor to audit their books and then send that audit to the Minnesota Department of Education. There, MDE officials issue Corrective Action Plans for findings that auditors found most egregious.
Here's the catch: Charters have no incentive to correct the finding. While public schools have a publicly elect-ed school board that can be voted out of office should school leaders mishandle mon-ey, charter schools do not. If the Corrective Action Plan isn't followed by a charter school, a note is placed in next year's audit. That's it.
Some charters take their finances very seriously. In ad-dition to the 24 charters that had no infractions, 22 had only one and 23 had two. Many of them say those findings were minor aberrations and have been corrected.
However, our research shows that there are charter schools that have a long his-tory of financial mismanage-ment. In 2007, 76 charters had three or more infractions.
Take, for example, one of 2007's worst offenders -- Au-rora Charter School in Minne-apolis. In audits from 2000, 2001, 2002, 2003, 2007 and 2008, Aurora was cited for not hav-ing proper segregation of du-ties each year. This means each year the auditor suggest-ed the school refine its finan-cial procedures to better ac-count for taxpayer money and lessen the chance of embez-zlement or theft. Clearly, Au-rora didn't get the message, and hasn't gotten it since 2000.
In 2000, Aurora had one finding. In 2001, two. In 2002, seven. In 2003, five. In 2007, 10. In 2008, four. Handling public funds in a professional manner seems difficult for this school.
Again, it's hard to believe that financial management of taxpayer dollars is a priority at these schools.
In 2007, there were roughly 28,000 charter students draw-ing $10,500 each in state aid to their charter schools. That means hundreds of millions of taxpayer dollars flowed into a system with only minimal financial checks and balances.
Minnesota 2020 also per-formed a check on charter school open meeting law com-pliance. Conducting transpar-ent, open meetings is especial-ly important for charter schools because charters do-n't have popularly elected boards. Their boards of direc-tors are voted upon by char-ter parents and staff, much the same as a college fratern-ity elects its leaders. In addi-tion, traditional public school superintendents must be li-censed -- a lengthy process that makes the superinten-dent an expert in the business of running a school. No such license is required of charter school executive directors.
Nearly 30 percent of schools didn't respond to a request for board minutes of their last meeting. Since 70 percent did respond, we can assume the fault is not with the U.S. mail. We are incredulous that some charters with findings illuminated in this report have communicated to us that the findings were inconsequential. In days when billions of dollars of services are being cut, every penny of the hundreds of millions funneled into the charter system should be accounted for and managed correctly.
Some charters have the ability to do this. Many don't. Lawmakers, policy leaders and charter school advocates should not rest until all charters can be held financially accountable.
John Fitzgerald is Education Fellow at Minnesota 2020, a progressive think tank.