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State Auditors Find Lack of Oversight for Charter Management Organizations

A State of Connecticut internal audit of the State Department of Education (SDOE) released today, found that there are no safeguards in place to ensure that charter school management organizations are using state dollars properly.

The auditors’ report examined the financial records of the SDOE and called for 40 recommendations, including the need to develop new policies to detect whether charter management organizations are using state funds inappropriately, extravagantly, or if they are charging excessive fees.

“Based on the evidence uncovered by state auditors and other researchers, legislators need to take action to put an end to excessive profiteering by prohibiting management fees and demanding that any Connecticut taxpayer dollars given to charter schools stay in the schools and not end up in the hands of millionaires and corporate reformers,” said CEA President Sheila Cohen.

Cohen added, “These CMOs are operating with little or no oversight or transparency as to how state dollars are being used. It is unconscionable that CMOs are using money earmarked for students to line their own pockets.” (See chart: CMO executive salary increases)

The auditors’ report confirms findings of an earlier, independent report, Corporate-Style Charter Schools in Connecticut, prepared by Rodriguez Data Solutions LLC, that uncovered disturbing examples of financial malfeasance at charter schools operated by two CMOs. The report found a lack of sufficient oversight and transparency and a failure to disclose adequate information about financial operations. Orlando Rodriguez, an independent research analyst and author of the report, said, “The data suggests they are making quite a bit of profit even though they are technically considered non-profit.”

“We are in the midst of trying to balance a huge state budget deficit, and officials must stop wasting money and stop giving taxpayer dollars to millionaires operating charter schools in Connecticut,” said CEA Executive Director Mark Waxenberg. “The auditors’ report should be a wake-up call for legislators to take action. As the state’s fiscal crisis continues to worsen we must examine every avenue to save taxpayer dollars, and that includes cutting CMO fees.”

CEA is urging legislators to adopt the auditors’ recommendations and is specifically calling for

  • The prohibition of management fees in all Connecticut charter schools
  • More accountability and transparency of all charter schools
  • An investigative audit of all CMOs
  • Total disclosure of CMO finances
  • Public disclosure of all CMO information through the state’s Freedom of Information Act
  • A moratorium on future charter school expansion

“Every dollar for public education is precious, and we need legislation to ensure that every dollar spent by charter management organizations is spent on supporting students in the classroom. More oversight and real transparency will force these schools to be accountable for not only their financial decisions but also their policy decisions that result in excessive expulsion rates and practices that push lower-performing students out of their schools,” concluded Waxenberg.

Click here to read the State of Connecticut Auditors’ Report

Click here to read the executive summary: Corporate-Style Charter Schools in Connecticut

Click here for CMO executive salary increases

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