Skip to content

A Fiscal Search Engine on Arizona Charter Holders. But It Won’t Identify Charter CEO Casino Spending.

March 24, 2018

I recently read about two Arizona charter schools embroiled in issues of fiscal mismanagement.

The first is Starshine Academy in Phoenix. An excerpt from ABC.com:

[U.S. Department of Justice] Investigators allege [Starshine Academy] founder Trish McCarty used taxpayer money for personal expenses. Recent records show the school nearly $3 million in debt. …

Investigators questioned a cash advance made at a Sante Fe casino, car rentals and Walmart purchases paid for by the school. McCarty said the purchases were legitimate because Starshine had a location there. Still, the state board said many financial records were missing or incomplete.

The second is Discovery Creemos Academy in Goodland. From ABC.com:

Over the years more than 350 Arizona Charter schools have closed, many for financial reasons. However, most closures have not been as dramatic as Discovery Creemos Academy in Goodyear. The school closed in January with no notice to families, and it is now is under investigation by the state attorney general.

Arizona is a red carpet for charter school fraud.

I first wrote about the looseness of Arizona charter law in March 2013. A notable excerpt:

A word about Arizona charter schools: Approved charter plans are in effect for 15 years (Arizona Department of Education [AZDE], Title 15 Article 8). A charter “must meet or make sufficient progress toward academic performance expectations.” (The term “sufficient progress” opens quite the loophole, doesn’t it?) The charter sponsor (who is declared immune from prosecution for charter operator impropriety, including unpaid bills) is the one who is to review the charter every five years to decide whether the charter is “in compliance”:

The charter may be renewed for successive periods of twenty years [based upon a sponsor review every five years]  if the sponsor deems that the school is in compliance with its own charter and this article.

Thus, the AZDE reviews the charter every 15 years, and the sponsor reviews the charter every 5 years.  That makes for some very loose oversight. In fact, the charters are mandated to “ensure that, except as provided in this article and in its charter, it is exempt from all statutes and rules relating to schools, governing boards and school districts.” No kidding. It’s right there. Title 15-183 D (5). The Arizona charters are instructed to be sure that they conduct their business as an entity exempt from statutes relating to traditional public schools.

In the awesomeness of parental choice, it sure would be great if parents could have some idea of (at least) the financial condition of the charter school that they have supposedly been empowered to choose.

When it comes to parental empowerment for ensuring that the chosen charter school remains solvent, well, that kind of empowerment simply doesn’t exist. Just ask the parents of students enrolled at Discovery Creemos: Happy New Year, and, by the way, no more choice to attend here. We are now closed.

Regarding the fiscal flimsiness of many Arizona charter schools, ABC.com has more to add:

Numerous other Arizona charter schools are on regulators’ watch list after annual audits register them as a “going concerns.” The Arizona State Board for Charter Schools considers these schools to be at risk of closing within a year.

ABC.com also notes that the Arizona State Board for Charter Schools (ASBCS) offers this search engine to allow the public to examine the fiscal condition of Arizona’s charter schools. Too ASBCS offers information on how to use the search engine and a FAQ sheet that includes info on how to interpret its financial reports.

(Note: In order to view a comprehensive listing of Arizona charter holders and associated charter schools, simply type “A” in the charter holder search engine.)

As of this writing, one can view the following fiscal information information on all 391 charter sponsors:

  • Going Concern:  Risk that the charter operator will discontinue operations within a year.
  • Unrestricted Days Liquidity: Number of days the charter holder can pay its expenses absent an influx of cash.
  • Default: Whether or not a lender has issued formal notice of default to charter holder.
  • Net Income: Whether or not charter holder’s revenue exceed expenses.
  • Fixed Charge Coverage Ratio: Amount of cushion in charter holder’s cash flow to cover fixed obligations or chargers.
  • Cash Flow: Change in charter holder’s cash balance from one fiscal year to another.

One Arizona charter operator of interest to me is BASIS, Inc. In April 2017, I wrote a post about BASIS charter schools’ debt. So, I used the ASBCS search engine to examine BASIS, Inc., finances, and I noticed, among other issues, that BASIS, Inc., has erratic cash flow (it was $1M in the red in FY2015). Too the cushion in BASIS, Inc.’s cash flow is thin. Finally, BASIS Inc.’s net income is of concern. In other words, BASIS’s expenses have exceeded its revenue for both FY2015 and FY2016 (FY2017 not reported)– if problem that will only become a crisis if it remains uncorrected.

And now, for some ASBCS fiscal reporting fine print, as taken from its FAQ sheet:

It is important to note that the financial framework excludes measures of how a charter holder manages and expends its funds as the financial framework is not designed to evaluate a charter holder’s spending decisions.

Thus, even though via the ASBCS search engine parents are able to view information on a charter holder’s fiscal history, the parents are not able to know, for example, exactly why schools operated by a particular charter holder are exceeding revenue– and whether this means that the charter holder is a poor budgeter– or whether it means that the charter holder is spending public funds on him-/herself or is having to fiscally cover for a charter school CEO who is doing so.

There is no ASBCS search engine category for “frequency at which charter holder bleeds money for trips to casinos.”

money to burn

________________________________________________________________________________________

Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?. You should buy these books. They’re great. No, really.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

4 Comments
  1. Connie Dennis permalink

    How do I find out more information about charter schools finances in Florida?

  2. John Plencner permalink

    Sounds like an ideal candidate for grand jury oversight. Entities such as Cemetery Districts and other quasi-public agencies have found, to their dismay, that the grand jury can have access to everything, under threat of contempt of court.

Trackbacks & Pingbacks

  1. The Ultimate in Charter School Self-Dealing: AZ Taxpayers Pay Twice for Same Schools, For-Profit Owner Reaps Before, During, and After Sale | deutsch29

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: