A statewide task force formed to combat charter school fraud following a multi-million dollar San Diego County fraud scheme released its initial report Wednesday, detailing guidelines for curtailing similar education-related financial misconduct in the future.
The Multi-Agency Charter School Audits Task Force was formed last year in response to a major criminal case surrounding the A3 Education charter school network, which took in millions in public funds based on false claims that certain students were enrolled in programs run by the schools. The public money ultimately went to the scheme's masterminds, Sean McManus and Jason Schrock, who were indicted, pleaded guilty, and sentenced, along with nine co-defendants.
The task force described the case as "the largest fraud in California's 31-year history of charter schools," but said "other California charter school fraud cases have been uncovered in recent years that included illegal, wasteful and fraudulent expenditures."
A3 Education recruited small public school districts to sponsor the charter schools in exchange for oversight fees. Prosecutors say A3 enrolled about 40,000 students throughout the state, none of whom received any services, in a scheme costing the state as much as $50 million.
Get top local stories in San Diego delivered to you every morning. >Sign up for NBC San Diego's News Headlines newsletter.
The company that operated a network of 19 online-only schools was accused of paying sports leagues as little as $25 a student for information used for enrollment. School districts are funded by the state based on the number of students.
State Controller Malia Cohen, who is also chair of the task force, said 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. I am eager to partner with task-force members and education stakeholders to implement these recommendations to encourage sound fiscal management among local educational agencies, including charter schools, so that we can have 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."
Local
The report includes 20 recommendations for those auditing state education agencies, which the task force says "should be applied to all local education agencies, including school districts, county offices of education and charter schools, providing opportunities to strengthen the audit functions across the entire local education agency system."
The task force recommends new or improved procedures for bolstering training and requirements for CPA firms tasked with auditing local education agencies, adding reporting requirements for delays in audit reports, and added guidance regarding financial disclosures and disclosures of student enrollment and attendance information.
"Controller Cohen didn't hesitate to take action to seal the cracks that were exposed by our successful prosecution of this widespread charter school scam," San Diego County District Attorney Summer Stephan said in a statement. "Thanks to the task force, we are ensuring that moving forward, criminals will not be able to perpetrate large-scale scams that previously took advantage of California taxpayers, parents and students."
The full report can be viewed here.
The Associated Press contributed to this report — Ed.
