Financial Insolvency vs Fraud in Charter Schools

By: Tonya Mead, CFE, PI, MBA,MA Educational Psychology

Multiple sources cite millions lost to fraud, ($100 million in 2014  and $203 million in 2015 alone) in the public charter school sector.   Some say that the charter school movement is a vehicle for fraud.  It would be more logical, perhaps to assume that fraud occurs equally across the three sectors: the traditional public school system, public charter,  and the private school system, as argued in my book.

But back to the point, the National Charter School Resource Center  has shared the general concern and  produced a tool kit for Charter School Governing Boards to help them root out, identify, prevent and resolve two major areas that cause financial issues for charter schools: financial insolvency and fraud [1].

Of the two, The Resource Center has found that  poor financial management is more prevalent than fraud.  Reasons cited? Under-enrollment and under-funding.  Research shows that charter schools typically receive lower levels of public funding than the traditional public schools [2].

Other problems exacerbating from poor financial management: lack of financial expertise among school leaders, misalignment of capital inflows and outflows,  inadequate cash inflows resulting from delinquent payment of receivables by the federal government, insufficient fundraising and poor stop gap measures to cover gaps in funding.

For more details on fraud in charter schools, click here.

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Tonya J. Mead, CFE, PI, MBA, MA, Certified K-12 Administrator and School Psychologist is author of Fraud in Education: Beyond the Wrong Answer and president of Shared Knowledge, LLC http://ishareknowledge.com

Sources:

  1. National Center for Special Education in Charter Schools: O’Neill, P. (2016). A User’s Guide to Fiscal Oversight: A Toolkit for Charter School Governing Boards. Available from: https://www.charterschoolcenter.org/sites/default/files/Fiscal%20Oversight%20Toolkit%20-%20Boards%20(1).pdf
  2. Batdorff, M., Maloney, L., May, J. F., Speakman, S. T., Wolf, P. J., & Cheng, A. (2014).  Charter School Funding: Inequity Expands. Available from: http://www.uaedreform.org/wp
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