Auditor General DePasquale Says Audit Shows Erie R.I.S.E. Leadership Academy Charter School Failed Students, Educational Mission

September 10 2014

Auditor General DePasquale Says Audit Shows Erie R.I.S.E. Leadership Academy Charter School Failed Students, Educational Mission

Says school’s response to audit recommendations is a good sign, but it’s too early to see results 

HARRISBURG (Sept. 10, 2014) – Auditor General Eugene DePasquale said today the audit of the Erie R.I.S.E. Leadership Academy Charter School found significant failures in operations, compliance with laws and accountability to taxpayers which need to be fixed so student success can be the number-one focus.

The 30-page audit covered January 28 through March 27, 2014 and found a multitude of operational and procedural concerns including hiring the CEO’s family members, violations of its own charter agreement by having larger than approved classroom sizes and no attendance or disciplinary plans.

At the time of the audit, the charter school was in such disarray that DePasquale took the unusual step of issuing an interim report in March to publicly call attention to the school’s operational shortcomings and recommend improvements.

In their response to the final audit, charter school officials say there are now plans to correct the deficiencies through new policies, procedures and internal controls.

“I commend school officials for taking my interim audit report seriously,” DePasquale said. “We will have to wait to assess their progress in our next review.” 

The audit report includes academic performance measures from the Department of Education that show seven out of 10 students were below proficiency standards for reading and math.

“To have this many students below proficiency is unacceptable,” DePasquale said. “Clearly, the school’s operational failings interfered with its ability to focus on students’ academic success.” 

Auditors noted that the school’s board of trustees failed to effectively oversee the school’s operations because it did not have proper review and reporting processes. 

At least four charter school employees violated the Pennsylvania Public School Employees’ Retirement System (PSERS) provisions by simultaneously collecting charter school salaries and state pensions, which is also a violation of the United State’s Internal Revenue Retirement Code. Those in violation included the school’s CEO who collected a $120,000 salary while receiving pension payments.

Charter school employees failed to complete and file Statements of Financial Interest as required by the Public Official and Employees Ethics Act. Auditors also found that the CEO hired his nephew, brother and cousin to work at the school.

DePasquale said pension and conflict of interest issues have been forwarded to the appropriate investigative and regulatory agencies, including the state Ethics Commission and PSERS.

Auditors found that the school’s CEO and its financial consulting company, which has significant control over the school’s operations, failed to provide the board of trustees with essential information, including: treasurer’s reports, bills, expenditure approvals, check registers and complete annual financial reports. At the time of the audit, the school also lacked basic documents, including: payroll, certification records, criminal background checks, vendor contracts, enrollment data and Statements of Financial Interest.

“Without this information, the board of trustees was flying blind and could not monitor the school’s financial operations or hold the CEO, and the for-profit financial consulting firm, accountable,” DePasquale said.

Among some of the other concerns, auditors found: 

• High turnover in key academic leadership positions, including four principals since the school opened in July 2011.

• Student-teacher ratios exceeding the charter’s 20 to 1 ratio requirement. For example, there was a 32-students to one-teacher in a kindergarten classroom.

• No disciplinary rules or mandatory attendance plan. It appears the school did not monitor attendance or follow up with parents about absent students.

During the audit period, it appeared that the lack of strong leadership from the charter school’s board of trustees and CEO interfered with its educational mission.

“School officials say they are committed to improvement and will implement policies and procedures necessary to succeed,” DePasquale said. “That’s a positive first step. For the sake of the students and parents who put their trust in this school, I hope school administrators follow through with action.”

The Erie R.I.S.E. Leadership Academy Charter School opened in July 2011. It serves 188 students from three supporting school districts which provide an estimated $1.5 million in tuition funding.

The Department of the Auditor General examines the records of school districts, charter schools, intermediate units, and area vocational-technical schools. The audits — among other things — assess whether or not school entities received the state subsidies and reimbursements to which they were entitled, accurately managed taxpayer funds, and complied with ethics codes. The audits also determine whether or not teachers and administrators were properly certified for the positions they held during the audit period.

The audit report for Erie R.I.S.E. Leadership Academy Charter School is available online at: www.PaAuditor.gov/ErieRISELeadershipAcademyCharterSchool.

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