Charter School Offenses Alleged

A California Department of Education investigation into a now-defunct charter school operator that served more than 4,500 children found financial improprieties involving its executive director.

California Charter Academy director C. Steven Cox misused millions of dollars in state funds, distributed money to his family and friends and profited by serving in a dual role as president of a company serving the campuses, according to an audit released Thursday.

The audit also found that Cox illegally converted some private schools to charter campuses -- publicly funded schools free from many state regulations -- and opened sites outside the school districts where they were approved. That enabled him to receive at least $23 million more in state funding than the academy was entitled to, the audit said.

In addition, three elected officials who serve on the academy board received campaign donations from Cox while also presiding over questionable financial transactions involving the academy, the audit found.

Cox has repeatedly declined to discuss the investigation.

The academy’s 50 schools shut down last summer amid the investigation launched by state Supt. of Public Instruction Jack O’Connell. The unexpected closures left families across the state scrambling to find schools in which to enroll their children.

O’Connell asked state and local prosecutors to investigate possible criminal wrongdoing involving the academy. The Department of Education plans to file bankruptcy petitions against the schools and the management firm to recover assets.

“We will pursue every legal option to track down the adults involved who funneled money away from students in California,” O’Connell said in a written statement. “We will also seek to recover funds that should have been used to the benefit of students’ education.”

The academy ran campuses from Southern to Northern California under the auspices of four charter schools sanctioned by three California school districts: Oro Grande Elementary in Victorville, Orange Unified in Orange County and Snowline Joint Unified in San Bernardino County. That placed some of the campus oversight in the hands of districts that were hundreds of miles away.

In 2000, a year after founding the California Charter Academy, Cox opened a for-profit business, Educational Administration Services, to manage the charter schools. More than 4,500 students in kindergarten through 12th grade and 7,000 adults were enrolled in academy campuses.

A series of scandals at charter organizations, including the yearlong investigation into the Victorville-based California Charter Academy, led to reforms of charter school laws over the last three years. Those changes include a ban on school districts operating charter campuses outside their boundaries and rules preventing charter schools from being renewed if they fail to raise test scores and rank among the lowest in the state for three years in a row.

In response to the audit, the California Charter Schools Assn., a nonprofit group that serves more than 500 charter schools, called for additional changes to state laws. The group wants school districts and counties to be held accountable for poor oversight of charter schools, and wants the state to be able to revoke their powers to authorize charter schools.

“We’ve advocated strongly in favor of increased oversight for charter schools,” said Caprice Young, the association’s president and chief executive. “Because we know that if even one charter schools fails, it impacts the whole movement, and more importantly it hurts kids.”

State Education Secretary Richard Riordan said the investigation and new laws show that charter schools are more accountable than regular public schools.

“One bad apple doesn’t undermine a system,” he said. “When a charter school fails, it shuts down. How about other schools? They keep going, and kids get a bad education year in and year out.”