The abrupt closure of a charter school in Goodyear is renewing calls for stricter oversight of charter schools throughout Arizona.
The case of Discovery Creemos Academy, formerly Bradley Academy, has prompted threats of a lawsuit and accusations of fraud against the charter’s chief executive officer. Tax filings show the publicly funded charter transferred an increasing amount of money to CEO Daniel Hughes and companies he owned in the years before the closure.
Dave Wells, research director at the Grand Canyon Institute, said the case demonstrates the “lax oversight” by the state.
The academy “should never have been allowed to open this year,” he said. “If we had proper charter school financial accountability, it would have been closed well before the 2017-18 school year.”
Wells and other education experts said some of the financial dealings at Discovery Creemos Academy would be illegal at public schools. Unlike public schools, nearly all Arizona charters operate outside the rules of the public procurement process, meaning they do not have to adhere to regulations on competitive bidding, Wells said.
“The financial oversight that we provide for district schools should be the same that we provide for charter schools,” said Arizona Education Association president Joe Thomas.
The AEA called on lawmakers Tuesday to consider a suite of charter school reform bills that have been introduced by Democratic legislators but have yet to be given committee hearings. The bills have been introduced in previous sessions, but have never advanced to a floor vote amid the politically charged atmosphere surrounding charters. Senate Bill 1303 Senate Bill 1174 Senate Bill 1309 House Bill 2142 House Bill 2358 House Bill 2364 House Bill 2365Eileen Sigmund, the president of the Arizona Charter Schools Association, said cases like Discovery Creemos are rare and insisted the state has sufficient oversight and auditing mechanisms in place for charters.
“We are always open to new ideas but the bulk of the legislation is brought in bad faith by entities that have been opposed to Arizona's quality charter sector,” Sigmund said.
The situation at Discovery Creemos Academy has drawn comparisons to an ongoing investigation into the spending practices at Scottsdale Unified School District. Advocates say the cases demonstrate the differences between public schools and charters.
Last month, Scottsdale Unified’s chief financial officer resigned amid a conflict of interest investigation into payments she authorized to a company owned by her sister.
An attorney hired by SUSD determined those actions violated state laws on conflicts of interest. However, those statutes don’t apply to charters, Wells said.
“The more egregious transactions by Discovery Creemos Academy's charter holder remain legal under state law," he said.
The issue of charter schools funneling payments through entities owned by executives is not unique to Discovery Creemos.
A study by GCI last year found 77 percent of charter schools engage in business transactions involving their owners, board members or their families, a practice known as “self-dealing” or “related-party transactions.”
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