Audits Cast Shadow on Charter School’s Future : Education: Spending criticized at L.A. campus that enrolls dropouts. Backers say problems can be fixed.

While teachers lacked textbooks and supplies, the principal of Los Angeles’ only charter school for dropouts drove an expensive school-leased sports car and staff members spent $7,000 on a secret retreat to Carmel, according to two outside audits.

Critics on the Los Angeles Unified School District board, which is to review the audits of Edutrain Charter School today, say documents provide ample evidence that it’s time to abort the experiment, which started in July, 1993.

If Edutrain closes its Grand Avenue doors, it will be the first charter school in the nation to fail since Minnesota enacted legislation to free some of its public schools from the bonds of their parent districts in 1991.

Supporters say the management and financial audits merely detail severe growing pains, some of which they blame on vague and confusing state legislation. In hopes of persuading the Los Angeles Unified board to continue funding the school, Edutrain officials recently proposed an extensive reorganization that includes replacing both its top administrators.

“We made some mistakes. The school made some errors in its first year of operation,” Winston Doby, president of the Edutrain Board of Governors, told school board members earlier this month. “What we are asking you is to put the kinds of actions that occurred last year in perspective.”

Edutrain’s charter called for luring dropouts back to school and keeping them there by offering part-time classes and individualized instruction. At first it seemed wildly successful: Enrollment spiked to 500 students last spring and 68 former dropouts graduated in a gala June ceremony.

Then Edutrain faltered, struggling awkwardly to keep pace with the rapid growth amid mounting internal turmoil and outside scrutiny. This fall, only 100 students showed up for classes, and in October two dozen teachers and staff members were laid off.

Now a financial audit by KPMG Peat Marwick Co. has found the school is nearly $1 million in debt and owes at least $240,000 more to Los Angeles Unified for students it anticipated in the fall but who never enrolled.

So far, no one is alleging intentional wrongdoing at Edutrain. But questions abound about how the school spent its money and whether it has the administrative and financial fortitude to resurrect itself.

The financial audit indicates that the school’s future depends on persuading Los Angeles Unified to accept its reorganization plan and on more than doubling its student enrollment within the next two months.

In past meetings, the school board has been divided, lauding Edutrain’s efforts to salvage dropouts but expressing concern with the apparent lack of oversight and general disorganization.

“I don’t think there was any malice, but I can’t say we should continue to spend public funds on a school that has had this many problems in such a short time,” Los Angeles Unified board member Leticia Quezada said during a Nov. 14 special meeting. “In the charter school movement . . . it’s going to be very critical that the community schools are above reproach.”

Edutrain is one of the state’s first 100 charter schools, allowed under 1992 legislation to operate independently with the permission of local school boards. Los Angeles Unified is responsible for granting charter contracts within its boundaries and ensuring that the schools live up to their own expectations.

Los Angeles Unified board members plan to review information from the two Edutrain audits today, then decide next Monday whether to let the school survive.

Their ultimate decision is complicated by Edutrain’s debt--much of which is owed to UCLA for start-up costs--because state charter school legislation does not clearly delineate who would have to repay that money if the school closed.

“That’s a factor that should be taken into account in granting them additional time, because it’s a way to get them to pay off that debt,” said Rich Mason, general counsel for Los Angeles Unified.

Among the spending decisions questioned in district excerpts of the management audit by K. H. Consulting Group--which have not been publicly released--are perks Edutrain provided to administrators that far exceed benefits offered other public school administrators. Among them are the lease of a $39,000 sports car for school President Keith Turnage, payment of $500 a month toward the rental of his Mt. Washington home and the hiring of a bodyguard to protect him.

The management audit also questioned the wisdom of a $7,000 Carmel retreat for a select group of 13 staff members and the $22,000 cost of last year’s graduation ceremony--held at the Los Angeles Convention Center--which amounted to about $325 per graduate.

Edutrain board members have defended the price of staging an elaborate graduation and said they have been unable to confirm that the Carmel retreat took place.

But they have acknowledged that they erred in agreeing to furnish Turnage a fancy car and offset some of his rent to compensate him for housing students and holding school events in his home. They said they reversed those decisions in August.

Several respected educators and business people sit on Edutrain’s board, including Doby, who is vice chancellor of student affairs at UCLA; Darick Simpson, project director for the L.A. Minority Business Development Center; restaurateur Jean-Claude Sakoun, and Virgil Roberts, a record company executive and board member for the LEARN school reform movement.

Some Los Angeles Unified board members have said they consider many of the expenditures excessive, particularly when Edutrain teachers told the auditors that they had to make do without sufficient textbooks and other essential supplies.

“We used our own books in our classrooms, ones we brought from home,” said one former teacher who asked not to be identified.

Several current and former teachers told The Times that the school frequently ran out of toilet paper and the telephones were disconnected once because the bill had not been paid.

The management audit also asked why Edutrain had spent nearly $30,000 on furnishings. At the Nov. 14 board meeting, Doby said that the money had purchased desks and chairs for the school. Some teachers, however, said they and their students were left with used chairs and ripped curtains while administrators worked in top-floor offices filled with new desks, wall-to-wall carpeting and vertical blinds.

District board member Jeff Horton described the spending on administrators as “just self-serving ‘I wanna act and be rich.’ ”

Also troubling to the district board are allegations in the management audit that underage students were housed in four school-funded apartments and in Turnage’s own home, and that in some cases girls and boys were allowed to live together without supervision.

At the Nov. 14 meeting, board President Mark Slavkin said Edutrain should have asked permission from Los Angeles Unified to “deviate from the charter . . . and provide overnight housing.”

The school responded that the housing was reserved mostly for students over the age of 18 and then only in extreme situations, such as when they became homeless, were being abused at home or when their parents traveled out of their parole area. About 15% of Edutrain’s students are on parole and at least 85% have arrest records.

However, some students interviewed by the auditors charged that the school housing and accompanying clothing allowances were doled out based on a system of favoritism, not need, and that the apartments were widely known as party pads.

Allegations of favoritism extended to hiring decisions as well, according to the management audit, which described Edutrain as “nepotism heaven.” Nearly a fifth of the employees were related, the auditors found, and staff members reported that job descriptions were sometimes crafted to match the skills of desired hires.

A core group of teachers, many of whom helped found the school, were paid $70,000 annual salaries--more than twice what other Edutrain teachers received. One top administrator allegedly received nearly half his salary as expense reimbursement in an apparent attempt, the audit said, to prevent the money from being tapped for child support payments.

Yet the relative autonomy of charter schools meant that Los Angeles Unified only learned of the troubles at Edutrain after a random visit last May by a state financial analyst who was curious about how the school had designed its program.

Chuck Pillsbury, an analyst with the state Department of Finance, found far fewer students in classes and roll books than the number for which Edutrain was being funded. Pillsbury brought his discovery to the attention of Los Angeles Unified administrators, whose initial investigation turned up conflicting answers and sloppy roll-book keeping.

The auditor with K. H. Consulting Group reported a similar experience when seeking financial records, saying they were incomplete and in disarray.

A former teacher, who requested anonymity, charged that Edutrain administrators became “power hungry” but that no one outside the school knew because Edutrain lacked oversight: The school’s own board met once a month or less and Edutrain is the only Los Angeles Unified charter school where teachers agreed not to be represented by a union.

That lack of outside eyes left crucial decisions in the hands of a few top administrators, the teacher said, none of whom had ever managed their own schools.

Doby, the Edutrain board president, conceded that key administrators were not qualified to manage a school as large as Edutrain. But he has consistently maintained that it was an overzealous entrepreneurial spirit seeking to meet an unexpected demand, not a thirst for power, that dragged the school down.

“I think it reveals some of the weaknesses of the charter school movement,” said Los Angeles Unified board member Horton. “Namely, that some kind of entrepreneurial spirit is sufficient to meet the needs of students. This, to me, is a proof that it isn’t necessarily.”