JUDGE FINDS “EVIDENCE ESTABLISHING FINANCIAL MISMANAGEMENT” …BUT ALLOWS MAGNOLIA CHARTERS TO REMAIN OPEN

…either LAUSD staff overreacted or the Board of Ed underreacted. Whichever it was the charter schools get out of jail free.

by Vanessa Romo, LA SCHOOL REPORT | http://bit.ly/WIrpJO

Posted on July 25, 2014 11:26 am  ::  A California Superior Court judge today ruled that two Magnolia Public Schools (MPS) charters can remain open, blocking LA Unified’s effort to shut them down over financial concerns.

The decision by Judge Luis A. Lavin enables Magnolia Science Academy 6 in Palms and Magnolia Science Academy 7 in Van Nuys to welcome students back next month as scheduled. And they can continue to operate as if their charters had been renewed by the district.

Lavin’s ruling hinged on the language of the conditional approval as it was articulated at a March district school board meeting, when the members voted to renew the charters, pending a review of the schools’ finances.

Records from the meeting indicate that the school board intended to review a staff investigation into the schools’ financial status, he wrote. But the decision to deny the renewals was based on staff findings of financial malfeasance, not the Board’s vote to renew or deny the schools’ charters, based on the staff report.

The judge effectively ruled that the district did not act properly in acting on a staff recommendation, rather than a Board review.

While the ruling is a victory for the two schools and the students enrolled there, Lavin also acknowledged “evidence establishing financial mismanagement” by the charter schools organization. As a result, he attached to the injunction several conditions that put the parent company, which operates six other LA Unified charters, on a tight financial leash:

• MPS has until Monday to provide LAUSD with a copy of the 2013-2014 audit report for the charter schools, which the organization has not released.
• MPS has to provide the district with monthly updates of the the charter schools’ profit and loss statements, balance sheets, cash flow and bank statements, check registers, and expense reports.
• MPS must maintain a 5 percent cash reserve for each of its charter schools and cannot engage in deficit spending.
• MPS can no longer do business with Accord, a third-party contractor, or make further expenditures for immigration-related expenses.
• MPS has to provide the district with copies of its vendor agreements.
• MPS must, in a timely fashion, cooperate with any inquiry by LAUSD concerning its finances.

Judge Lavin did not make clear in his order what happens if either of the schools violates the conditions of renewal. Nor is it clear what actions the board can take, if any, to use the audit as a tool for a board-sanctioned non-renewal.

This much is clear. One school board member, Bennett Kayser, is urging the state “to conduct an audit of all in-state Magnolia charter schools,” as he said in a statement late today. He also wants the federal government to take a closer look at Magnolia schools.

“Today’s ruling and the situation in which LAUSD finds itself is purely the result of a lack of oversight and accountability of all charter schools authorized by the Los Angeles Unified School District,” he said. “For too long charter school advocates have looked the other way knowing full well that some truly rotten apples are accessing our children. From bogus H1 immigration visas to out-and-out fraud, this national charter chain has manipulated our system for years,