April 8, 2014; Cleveland Plain Dealer

Two Ohio state legislators, Senator Joe Schiavoni and Representative Patrick Carney, both Democrats, appear to suspect that charter schools are not being as transparent as they might be if they were fully complying with the public records laws that apply to other public schools (remember that charter schools, while privately managed and often freed from some of the rules and strictures that apply to traditional public schools, exist as components of public school systems). Schiavoni and Carney have introduced legislation requiring that charter schools comply with public records laws and calling for annual audits of every charter school operator and sponsor. 

The two legislators were prompted to act by the Akron Beacon Journal, which reported that in its recent examination of charter schools, many charters couldn’t provide or refused to provide basic information. Apparently, one way that charter schools “skirt” public records laws is by paying a private management company for management services. The audit requirement would allow the state to look into the management companies’ expenditures, which presumably might not be disaggregated in other reporting regimes. 

As a candidate for state auditor, Carney suggested that the annual audits would help the state catch charter schools that might be misspending money early on, and that annual audits would stand in contrast to the approach of state auditor Dave Yost, a Republican, who issued his audit about misspending by a now-defunct Cleveland charter school more than three years after the misspending began.  Yost’s office responded that audits always occur after the fact, looking back at the last year or more, and would not achieve that closer-to-real-time transparency that Carney’s legislation aims for. In addition, Carrie Bartunek, a spokesperson for Yost, said that the auditor actually does audit every charter school—though she didn’t clarify, at least in this article, whether the audits are annual. 

Publicly mandated (and, presumably, disclosed) annual audits of Ohio’s 367 charter schools pose a challenge for nonprofits. Although privately run, the charters are part of public school systems. The rationale for exempting them from the kinds of transparency and disclosure that apply to public schools might be that many charters are managed by nonprofits, which, as 501(c)(3) public charities, expect that some dimensions of their finances are meant to be confidential. On the other hand, while some charters are managed by nonprofits, others are managed by for-profits, operating similarly but for their tax status. 

Why would for-profit charter school management entities be subject to audits while nonprofit managers remain exempt? It might be that in the case of charter schools, as opposed to nonprofits that simply receive government grants or contracts, these entities function as components of the government itself—in this case, the public education system. That’s a compelling rationale for publicly disclosed audits.—Rick Cohen