Report: Most charter schools mismanage finances

The progressive think tank Minnesota 2020 has released a new study suggesting the majority of charter schools in the state do not follow basic financial guidelines and, in some cases, violate state law.

The study describes the charter school movement as "rife with mismanagement." It found financial irregularities in 121 of the state's 145 charter schools during an audit of the fiscal year that ended on June 30, 2007.

The study, "Checking in on Charter Schools: An examination of Charter School Finances," was released at a press conference Tuesday morning in Minneapolis.

"Charter school directors cannot handle simple financial accounting practices, nor do many charter schools have an interest in allowing the public to be aware of their machinations," the report concluded.

The organizations said it reviewed financial audits of 145 charter schools for the fiscal year that ended on June 30, 2007. The reports were filed with the Minnesota Department of Education.

The report identified five charter schools among the biggest offenders. They included two Minneapolis schools: the Aurora Charter School, where 98 percent of the students are Hispanic, and Heart of the Earth Charter, a Native American school that closed last summer after its executive director, Joel Pourier, was accused of embezzling more than $1.3 million.

The report also identified the Recovery School of Southern Minnesota in Owatonna, the Duluth Public Schools Academy in Duluth, and the E.C.H.O. Charter School in Echo as having the most financial offenses in their 2007 audits.

Among other trends in charter schools around the state, according to the report:

• 83 percent had at least one financial irregularity;

• 29 percent did not comply with the law regarding board meeting minutes;

• 55 percent had limited control of the school's funds;

• 26 percent didn't have proper collateral for their bank deposit insurance;

• 51 percent of those with problems identified on their 2007 financial audits had the same problems in the 2008 audits.

The study recommends the state reconsider renewing charters with schools that cannot successfully pass financial audits or provide board meetings minutes. It also suggests revoking charter with schools that have long-standing financial problems.

In a statement, the Minnesota Department of Education said both school districts and charter schools frequently have "findings" in the financial audits they submit to the state. Districts and charter schools are required to submit plans to the Education Department to correct their financial shortcomings, but the department said it's up to the local school districts and charter school boards to make sure corrective action is taken.

The think tank report follows a 2008 report by the state auditor which also raised questions about financial management at charter schools. In that report, the auditor's office recommended that charter school board members be required to attend financial management training. It also found that charters were roughly comparable to district schools in terms of financial health.

(The Associated Press contributed to this report)