A recent report by Minnesota 2020, “Checking in on Charter Schools, A Review of 2008 Financial Management Practices,” discovered that auditors found at least one financial irregularity on yearly audits of about 75 percent of all charter schools in Minnesota.
This is a dark cloud over the state’s roster of charter schools, but it does contain a silver lining: 25 percent of these schools had perfect audits. In fact, there are 12 charter schools that had perfect financial audits two years in a row.
These schools can certainly tell the laggards a thing or two about how to run a charter school.
The 1991 legislation that authorized charter schools set them free from the constraints of traditional education: They could work with teachers in new ways, they could engage parents in new ways and they could provide academic and financial oversight in new ways.
“Checking in on Charter Schools” shows that, after nearly 20 years in business, the proper financial oversight for charter schools is the same as for traditional schools – indeed, for all businesses. A series of checks and balances strictly and routinely adhered to clears up nearly every conceivable problem.
Take the case of Hiawatha Leadership Academy, a K-3 school with 340 students in South Minneapolis. Shannon Blankenship, the Chief Executive Officer, said the key to financial health is a professional relationship between a staff member, at least one financially savvy board member and the executive director. Between these three, every dime that comes in and goes out of the organization can be tracked and documented.
“You have to have a strong, active board of directors that has financial literacy to help mentor and guide the executive director,” he said. “You need people who can look at a spreadsheet and anticipate cash flow, who can meet monthly to review budgets to actuals.”
He said his school’s sponsor organization, Augsburg College, gave them monthly advice and attended all board meetings. In addition, he has one person on staff who logs in all incoming bills and outgoing checks. “You have to have internal controls,” he said. “They all have to be signed by two people and be reviewed by the board. When you see mismanagement, it’s usually because of not enough internal controls or board oversight.”
Minnesota 2020’s report found that 31 percent of all charter schools were marked by independent auditors as lacking such internal controls. In fact, auditors found problems in 115 of the state’s 154 charter schools.
These are difficult times for any school, traditional or charter. State aid has dropped an inflation-adjusted 13 percent since 2003, and in June Gov. Tim Pawlenty shifted 27 percent of school funding to the next year, creating a cash crunch throughout the education system.
“These times require expertise on the board,” Blankenship said. “I’d be scared to death if I didn’t have my funding planned out three years in advance. I don’t want to wake up on Jan. 1 and say we don’t have the money to continue.”
For a public entity to not guard against financial mismanagement is the height of irresponsibility. If the charter school fails, the losers aren’t the parents or teachers or administrators, it’s the children who have to attend a new school. That’s a sacrifice that shouldn’t have to occur.
Therefore, it is of the utmost importance that all charter schools learn from those that manage their business affairs correctly. To do less is irresponsible.
These are the charter schools that produced a clean financial audit. Last year, 17 percent of the 145 schools had clean audits. This year, 20 percent of the 154 schools had clean audits. An * denotes the charter schools that had clean audits in both 2006-07 and 2007-08.
- Academia Cesar Chavez Charter School*
- Ascension Academy*(Prestige Academy)
- Beacon Academy*
- Beacon Preparatory School*
- Best Academy
- DaVinci Academy
- Dugsi Academy
- Eagle Ridge Academy Charter School
- Emily O. Goodridge-Grey Accelerated*
- Fraser Academy
- Friendship Academy Fine Arts Charter
- General John Vessey Jr Leadership
- Great Expectations
- Great River School*
- Green Isle Community School*
- Harvest Prep School/Seed Academy
- Hiawatha Leadership Academy
- Hmong Academy
- Loveworks Academy for Arts
- Minnesota International Middle Charter
- Minnesota Transitions Charter School
- Naytahwaush Community School
- Nerstrand Charter School*
- New Century Charter School*
- New Discoveries Montessori Academy
- New Millennium Charter School
- Paideia Academy Charter School*
- Paladin Academy/Liberty High
- Rochester Math & Science (Adam Abdulle Academy)*
- Schoolcraft Learning Community Charter
- Seven Hills Classical Academy
- St. Croix Preparatory Academy
- Stride Academy Charter School*
- Swan River Montessori Charter School*
- Treknorth High School
- Ubah Medical Academy Charter School
- Voyageurs Expeditionary
- Woodson Institute for Excellence