January 17, 2008

NYSUT goes to court in charter audit lawsuit

Source: NYSUT Media Relations

ALBANY, N.Y. January 17, 2008 - New York State United Teachers is going to court in support of the state's right to hold charter school management accountable for how tax dollars are spent and how their schools perform.

NYSUT is seeking amicus status to file a "friend of the court" brief in state Supreme Court in response to a lawsuit by charter management, which challenges the state comptroller's authority to audit charter spending and performance, as well as the Legislature's authority to establish accountability for how charters spend tax dollars.

The lawsuit was filed by the New York State Charter School Association, Inc.; New York City Center for Charter School Excellence; and 16 charter operators* of schools in New York City. The suit seeks a permanent injunction prohibiting the Office of the State Comptroller from auditing, or attempting to audit, charter schools.

NYSUT has more than 585,000 members, including teachers in a number of charter schools. "Teachers live and breathe accountability" on a daily basis, said NYSUT President Richard C. Iannuzzi. "Charter management wants to define itself as a public entity when receiving tax dollars, but redefine itself as private and unaccountable to the state comptroller when spending those tax dollars." Court filings by the attorney general's office say the 16 charter operators received an average of 91 percent of their annual budgets from federal, state and local tax dollars. That amount is approximately $45 million of their $50 million in annual spending.**

"Knowing where dollars go, how students do and how charters select their student body are essential to education policy decisions," said Iannuzzi.

NYSUT's brief supports the position advanced by the comptroller and the attorney general that the comptroller not only is authorized by law to audit charters but "in fact has an obligation to do so," said NYSUT Executive Vice President Alan Lubin. "'Charter Corporate' is trying to make an end run around the comptroller and Legislature who, to their credit, have made it clear that all schools must be accountable and transparent."

NYSUT has always supported the concept of "charter schools as incubators for replicable, innovative strategies that improve learning for students at risk," Iannuzzi said. "But, for that to happen, we need sunshine: on spending, on how students are selected and tested, and on how schools perform. Decisions on education policy and spending need to be based on that type of essential information.

"Charter school management makes it clear through this lawsuit that it wants two separate school systems in New York: one that is fully accountable to the public and one that is not," Iannuzzi said.

NYSUT's decision to weigh in on this court case stemmed from "our clear divergence with the anti-sunshine philosophies expressed by charter management's lawsuit," Lubin said. He noted:

  • Legislation enacted in 2005 requires the comptroller's office to audit every school district, BOCES and charter school by March 31, 2010. That law says audits are not limited to just financial records, rebutting the charters' contention that state auditors can't ask about how they admit students or how schools perform.
  • Findings from initial charter audits conducted by the comptroller's office (see below) revealed a range of problems, rebutting the charters' assertion that the comptroller's audits are redundant to accountability measures already in place.
  • The 16 charter school operators suing the state receive, on average, 91 percent of their funding from public sources, court papers show. (The state's 97 charters received $217.8 million from local school districts in 2005-06, a funding stream that includes local, state and federal tax dollars.) Lubin said it is "absurd" that charter management claims its schools "are independent, not-for-profit education corporations" and thus not subject to comptroller audits, when they are publicly funded and should be accountable to the public.

*Originally, 13 charters were listed in the lawsuit; this was later amended to 16.

**Total reached by adding 16 charter budgets contained in court papers.


Here are some of the problems identified in the handful of charter audits conducted by the comptroller's office. (Sources: Audits by the Division of State Government Accountability and School District Accountability Initiative, state comptroller's office, December 2007)

  • A December 2007 audit found the KIPP Academy Charter School in New York City paid $67,951 for the teaching staff to go on two five-day trips to the Caribbean at the end of two consecutive school years at an all-inclusive resort. The audit also found the school director granted KIPP Academy's chief financial officer a 19 percent raise without board approval.
  • In November 2007, auditors announced they had found the Enterprise Charter School in Buffalo spent $84,610 without proper approvals and without ensuring it received the goods and services it paid for. The payments included tickets to a play in Toronto, payments to a liquor store, social events and unauthorized payments to a former CEO for travel and lodging.
  • A state comptroller's audit in December 2007 found the Merrick Academy Charter School in Queens overpaid a national management company by $14,000. The comptroller's audit said discrepancies and errors were found in the school's financial records the previous three years.
  • December 2007 audits of the Harbor Science and Arts Charter School in Harlem and the Community Partnership Charter School in Brooklyn found the hiring of some teachers and staff without the required background checks.

In 2007, the comptroller audited nine charter schools and 226 public schools.

NYSUT represents 585,000 teachers, school-related professionals, academic and professional faculty in higher education, professionals in education and health care and retirees. NYSUT is affiliated with the American Federation of Teachers, National Education Association and the AFL-CIO.


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