Improve oversight of charter programs

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

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After an auditing firm that served dozens of Minnesota charter schools failed under a cloud of wrongdoing, many of the schools were left in the lurch. Lacking a financial adviser, some were unable to fulfill state-required reporting and auditing.

The end of St. Paul Paul-based Anton Group exacerbated an existing problem in Minnesota: a shortage of auditing firms that can handle school finances. Better oversight and financial training are needed to ensure that charter operations are being reviewed and evaluated properly. Ultimately, state-approved auditors should be required and supported.

Many charters have been started by groups with good ideas about education but little experience managing schools. Some have been taken advantage of by shady accountants or even their own board members. Enrollment and (often related) financial problems are the major reasons that charters have closed over the years.

To that end, according to a Minnesota Department of Education (MDE) official, the state plans to put more resources into assisting charters. MDE is looking at doing a "deeper dive" on the enrollment and financial issues as well as helping charters evaluate community needs to assess and better project enrollments.

Charter schools are independent public schools of choice for parents and students. They are run by boards of directors and must contract with a state-approved authorizer per state statutes. The idea was conceived in Minnesota, and the first charter schools in the nation opened here in 1992.

According to MDE, there were 180 charter programs in the state in 2023. About 68,000 students attended those schools, 55 of which are in greater Minnesota with the remaining majority located in the metro area.

Joey Cienian, executive director of the Minnesota Association of Charter Schools, told the Star Tribune that his organization is "hearing about a lot of situations where schools have lost their auditors and can't find a new one."

In 2023, an association survey showed that 29% of the state's charter schools had lost auditors, and some were still struggling to find a new one as the deadline for financial reports neared on Dec. 31, Cienian said. As a result of the shortage, he said, financial service costs have doubled or tripled for some charter schools.

MDE officials said 46 charter schools missed the 2023 reporting deadline, up from 41 last year. Spokesman Kevin Burns told an editorial writer that eight charters were in statutory operating debt last year and that three of those closed.

One of the three was the Legacy of Dr. Josie R. Johnson Montessori, a Minneapolis charter school that shut down earlier this month due to enrollment and financial trouble. It lost its auditor last year and did not submit audits for the past two years, according to the school's authorizer, Osprey Wilds.

"They were misled by their financial services provider into believing their audit was underway," said Erin Anderson, Osprey Wilds' director of charter school authorizing.

In another blow to a Twin Cities charter school, last month the Minnesota Attorney General's Office said that Burnsville charter school leaders needed to provide stronger oversight because of the questionable activities of a former executive director. An investigation by the AG found that a former director of Gateway STEM Academy violated his fiduciary duties by channeling school funds to companies owned or controlled by three of the school's directors or officers — including himself.

State Auditor Julie Blaha told a Star Tribune reporter that she'll ask the 2024 Minnesota Legislature to consider changing auditing requirements.

"I wouldn't propose cutting auditing requirements for charter schools, but we can look for other places where we can recalibrate so more resources are available," Blaha said. "We aren't going to be able to hire our way out of this. We are going to have to change how we do that work."

Strong accounting oversight is needed to help prevent the abuse of public funds — whether it's due to inexperience on the part of boards, intentional theft or lack of resources.