New Buena Vista High School owner Ron Packard interacts with students. CHARTER OVERSIGHT: More Government Accountability, Mandated Audits Sought
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The Center for Popular Democracy (CPD) has released a new report on charter schools charging lack of oversight and seeking more government accountability including mandated audits.
In a report published by the Washington Post, CPD estimates charter school fraud will cost $1.4 billion this year and charges:
"The number of instances of serious fraud uncovered by whistleblowers, reporters, and investigations suggests that the fraud problem extends well beyond the cases we know about."
Among Michigan cases is that of former charter operator Dr. Steven Ingersoll, Traverse City and Bay City optometrist and education entrepreneur, who awaits sentencing in Bay City Federal Court in June on convictions for tax evasion.
Charter school abuses began to surface when Ingersoll was the subject of a Detroit Free Press report in February 2014 about finances at the Grand Traverse Academy, a K-12 school with about 1,300 enrollment, which he founded and managed.
"How Michigan Spends $1 billion but Fails to Hold Schools Accountable," the Free Press headlined its special investigative report on charter schools statewide.
Ingersoll was able to finance the Traverse City campus over 15 years with about $25 million in municipal bonds authorized through the State of Michigan's special program designed to help charter schools grow.
"According to school auditors, Ingersoll's management company took cash advances from the school's bank account as his fee for managing the school," The Free Press alleged. "By June 30, 2013, auditors found, Smart Schools Management had accumulated prepayments totaling $2.33 million.
"As his liabilities to the school mounted over the years, prosecutors alleged, Ingersoll tried to repay the Traverse City school with proceeds from a $1.8 million loan from Chemical Bank, Bay City. He was accused of steering about $934,000 of the loan into his personal bank account."
Regulators reportedly are scrutinizing Ingersoll's former operations in Bay City, Mancelona and Traverse City, all of which have been taken over by new management companies.
Meanwhile, Ron Packard, former executive of troubled K-12 Inc., New York Stock Exchange listed company (LRN), has purchased the former Buena Vista High School in Saginaw County and is preparing to open the building as a charter school for students next fall.
His new company is Pansophic Learning, a for profit operation, partnering with Safanad Limited, a Middle East company, described on the firms website: "We currently have several operating businesses that are located in the United States, Switzerland, and the Middle East. These businesses include online schools, brick and mortar schools, blended schools. Our Capital Education business partners with colleges to help them implement blended learning or online learning in a traditional college environment."
"Over the past 12 months, millions of dollars of new alleged and confirmed financial fraud, waste, abuse, and mismanagement in charter schools have come to light, bringing the new national total to over $200 million," states the CPD report.
"According to standard forensic auditing methodologies, the deficiencies in charter oversight throughout the country suggest that federal, state, and local governments stand to lose more than $1.4 billion in 2015. The vast majority of the fraud perpetrated by charter officials will go undetected because the federal government, the states, and local charter authorizers lack the oversight necessary to detect the fraud."
Setting up systems that detect and deter charter school fraud is critical, according to CPD. "Investments in strong oversight systems will almost certainly offset the necessary costs. We recommend the following reforms:
*Mandate audits that are specifically designed to detect and prevent fraud, and increase the transparency and accountability of charter school operators and managers.
*Clear planning-based public investments to ensure that any expansions of charter school investments ensure equity, transparency, and accountability. Increased transparency and accountability to ensure that charter schools provide the information necessary for state agencies to detect and prevent fraud.
"State and federal lawmakers should act now to put systems in place to prevent fraud, waste, abuse and mismanagement," CPD urges," concluding:
"While the majority of state legislative sessions are coming to an end, there is an opportunity to address the charter school fraud problem on a federal level by including strong oversight requirements in the Elementary and Secondary Education Act (ESEA), which is currently being debated in Congress.
"Unfortunately, some ESEA proposals do very little reduce the vulnerabilities that exist in the current law. If the Act is passed without the inclusion of the reforms outlined in this report, taxpayers stand to lose millions more dollars to charter school fraud, waste, abuse, and mismanagement."
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