October 17, 2017 2016-141
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the oversight and monitoring of charter schools operating outside the geographic boundaries of their authorizing school districts (district).
This report concludes that some districts are using exceptions in state law to authorize charter schools that operate outside of their respective boundaries. These authorizations have allowed districts to increase their enrollments and revenue without being democratically accountable to the communities that are hosting the charter schools that they authorize. In addition, the districts we visited could not demonstrate that they limited the fees they charged to their actual costs of providing oversight, as state law requires, and two of the districts charged additional service fees without justifying the costs of providing related services.
Further, the districts do not generally have robust processes to ensure that their respective charter schools are financially stable and academically successful. State law requires districts to monitor the fiscal condition of the charter schools they authorize but does not identify specific procedures that authorizers should perform to fulfill this responsibility. Accordingly, the districts we visited provided varying levels of oversight regardless of whether the charter schools operated inside or outside their boundaries. The districts could strengthen their financial oversight of charter schools by incorporating best practices into their processes, such as by obtaining charter school lease agreements and evaluating the reasonableness of the charter schools’ financial projections.
None of the districts we visited could demonstrate that they consistently monitored the academic performance of their respective charter schools. However, state law identifies academic performance as the most important factor to consider when deciding to renew or revoke a school’s charter. As a result, districts that fail to document regular academic assessments of their charter schools may not have sufficient evidence to revoke an underperforming school’s charter.
ELAINE M. HOWLE, CPA