Pass / Fail | So Cal education, LAUSD, the Cal States and the UCs

California state auditor probing LA's Magnolia charter schools

Reading an explanation of benefits is confusing.
Reading an explanation of benefits is confusing.
Photo by Bill Dickinson via Flickr Creative Commons

The California State Auditor is investigating Magnolia Public Schools, a Southern California-based charter network that has been accused by L.A. Unified of misusing funds. 

"Magnolia Science academies, like all other charter schools in the state, are public schools; as such they receive tax payer dollars for their operations," Assemblymember Adrin Nazarian of Sherman Oaks said in his request for the audit.

The state's audit will cost $320,000 and scrutinize a minimum of four of the network's 11 schools, sifting through vendor and payroll records, truancy and test score data and fundraising practices. 

Magnolia Public School officials said they welcome the evaluation. 

"Our school leadership has always embraced a policy of transparency and accountability when it comes to the fiscal solvency of Magnolia Public Schools and our commitment to superior student achievement," said Mike MeCey, a spokesman for Magnolia.

Nazarian asked for the probe at Thursday's meeting of the California Joint Committee on Legislative Audit, on which he is seated, in response to findings by L.A. Unified's Office of Inspector General. 

After sampling transactions from Magnolia campuses in 2012, L.A. Unified found over $43,000 in duplicate payments to vendors, flagging those as potential misuse of funds.

The Los Angeles Unified school board ordered a second audit in 2014, voting to close two of the schools if any fiscal problems arose. 

The audit, which the district is calling a "forensic review," revealed that schools sent $2.8 million to the network’s management organization. The funds were poorly documented loans, and much of the cash was never paid back to classrooms, according to L.A. Unified. 

District auditors found the management organization met the definition of insolvent, operating on a $1.7 million deficit.

Magnolia refutes much of the findings.

"With the state's continued struggle to recover from the recession and schools, throughout the state, struggling to maintain high quality education despite cuts in state funding, it is imperative that an extensive statewide audit is conducted,"  Nazaraian said.

L.A. Unified moved to close two of the schools, but a judge intervened, arguing the district should have made the decision in an open meeting to give Magnolia an opportunity to respond.