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Guest opinion

Wells: Legislature more concerned about haircuts than trimming charter-school spending abuses

So far this year the state Legislature has devoted more attention to who can blow-dry hair in Arizona than enhancing oversight and accountability for the more than $1 billion that flows annually from the general fund to our state's charter schools.

In Goodyear, the Bradley Discovery Creemos Academy charter school went out of business on Friday, January 26. The charter holder in the 2015-2016 academic year had paid himself about half a million dollars to companies he operated and had the school do business with — outside public procurement process, something that is legal in Arizona. Another half a million dollars appeared to be a personal slush fund — no receipts required — which may constitute fraud. All part of its audit that was submitted late, at the end of 2016. The charter holder, Daniel Hughes, moved his family out of state before closing the school.

Despite the school's noted financial and academic problems, including a net deficit in excess of $3 million and a 2014 letter grade of a D as well as an F for last year, the charter board in June 2017 — seven months prior to the school's closure — unanimously voted to renew its charter for 20 years.

Meanwhile, the chief financial officer of Scottsdale Unified was forced to resign when it was revealed she provided tens of thousands of dollars in contracting business to a firm that employed her sister and that she had been president of, possibly overlapping her time as CFO. She could face criminal charges — because the self-dealing that is perfectly allowed at charter schools in Arizona is not permitted in district schools.

You'd think a case like this would get the Legislature's attention, especially after a report the Grand Canyon Institute issued in September noted that three-fourths of charters in the state are engaged in self-dealing with related parties and not saving taxpayer dollars. A forthcoming GCI report will note that one-third of charters in the state are engaged in related-party transactions and like Bradley Discovery Creemos have lost money for multiple years with some — also like that school — now reporting significant negative net assets (liabilities exceed all assets).

Recall how quickly the Legislature swooped in to stop cities like Bisbee and Tempe from banning plastic bags or their haste to disallow cities like Tucson from destroying captured firearms. The Legislature is already poising to preempt Tempe's effort to ban dark money.

But when it comes to responsible fiscal accountability, this Legislature — which works so hard to provide an annual tax cut to a favored sector — just looks the other way.

Arizona can do a better job leading in school choice if we enhanced the financial accountability we expect of charter schools, such as:

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1. Requiring charter schools to be subject to the same public procurement standards as district schools. This would make bids public information and fully documented in terms of what was being purchased at what costs. Schools wishing to avoid this could simply bring the business back in-house and have it part of their annual audit.

2. Require any charter that goes into the red to file a plan for improving finances, and then place the charter on probation if it fails to improve. Charters which after three years of probation if combined with inadequate academic performance need to be closed.

3. Re-examine whether the boards of charter schools should be allowed to have a financial interest in the school. Governing boards of district schools are strictly prohibited from doing so, but such conflicts of interest are very common among charter schools.

Common sense financial reforms that respect taxpayers, parents, and children should take precedence over blow driers.

Dave Wells is research director for the Grand Canyon Institute, a nonprofit centrist think tank that serves as an independent voice reflecting a pragmatic approach to addressing economic, fiscal, budgetary and taxation issues confronting Arizona. He can be reached at .(JavaScript must be enabled to view this email address).  Learn more at http://GrandCanyonInstitute.org.

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