Majority of charter schools not following basic financial guidelines: Minnesota 2020 study

CHECKING IN ON CHARTER SCHOOLS; June 15, 2009; Minnesota 2020 study

Seventeen years after the first charter school opened in Minnesota, this examination of fiscal year 2007 charter school financial audits shows that the vast majority of charter schools do not follow basic financial guidelines or, in some cases, state law. Since this analysis agrees with a recent report by the Office of the Legislative Auditor and audit examinations written in 2001, 2002 and 2003, we conclude that these financial problems are not being adequately addressed by the Minnesota Department of Education (MDE) and, further, are endemic of the charter school system.

Efforts by the 2009 Legislature to provide more accountability to charter schools was welcome, but shorthanded. The charter school program is financially flawed and basic concepts about charter schools - such as unelected school boards and under informed business management - need to be changed.

In November and December, 2008 and January, 2009, Minnesota 2020 combed through the financial audits of 145 charter schools for the fiscal year that ended on June 30, 2007 - reports that were filed with MDE by December 31, 2007. Our research found several trends in charter school financial management:

    * 83 percent were found to have at least one financial irregularity in their audit - five years earlier, that figure was 73 percent;

    * 51 percent of those schools with problems identified on their 2007 financial audits had the same problems identified on their 2008 audits, according to the MDE;

    * 29 percent did not respond to a request for board minutes - five years earlier, that figure was 33 percent;

    * 55 percent were found to have "limited segregation of duties," a requirement that ensures no single charter school official has control of the school's funds;

    * 26 percent didn't have proper collateral for deposit insurance, a requirement that ensures the charter school can pay its bills…