Charter Schools Still Owe At Least $2,872,464

Former Superintendent Austin Beutner ”made an agreement with the Charter Schools to pay maybe ten cents on the dollar for what they owed. [This] was never revealed to us.”

– LAUSD Board Member Scott Schmerelson

Billing customers and keeping track of their payments is a basic business accounting function and is key to running a successful organization. It is critical to have up-to-date information available so that management can immediately see disruptions in payment patterns and intervene to ensure that all bills are paid.

When it comes to keeping track of overallocation fees owed to the LAUSD, the bureaucrats at the Charter School Division do not seem to be performing their fiduciary duties for the students of the District and the taxpayers. While they should have immediate access to the balances owed by charter schools that requested more space on public school campuses than they were legally entitled to receive, Superintendent Carvalho only seems to be able to report information that is almost three months old.

In an informative dated May 30, 2024, Carvalho reported to his bosses on the School Board that as of the end of March charter schools still owed the District $2,872,464 for unpaid over-allocation fees. Of the 65 schools that had been assessed these state-mandated fees, only 42 had paid them in full. The largest debtor is Ocean Charter School. This publicly funded private school owes the District’s students $925,905.

Of the 23 charter schools with a balance, 17 have reached an agreement with District bureaucrats “to pay [the] total amount owed for FY 2015-16 through FY 2020-21 in multiple installments.” The Board Informative does not mention the terms of these repayment plans maintaining a secrecy about these payment plans that has existed since they were first snuck into a footnote on a report dated April 8, 2022. It appears that the elected School Board never voted to approve these agreements.

Based on the Superintendent’s assurance that “as of March 31, 2024, 59 of 65 charter schools had fully paid, and/or were current on payment plans to fully pay (as applicable)”, the apparent monthly payment can be calculated by determining the difference between the September 2023 “Outstanding Balance” and the one reported on March 31, 2024. The Ocean Charter School will take six years to pay its balance due based on its $12,345.33 apparent monthly payment. Six other schools are following payment plans that put them on track to pay what they owe in three years. State law states that these fees are supposed to be paid when they are incurred. The charter schools are not even paying for the benefit of delaying payment as it does not appear that interest is being added to the balance due.

Under District policy, 90% of these payments are supposed to be forwarded to the students who lost space (including classrooms used to provide special education services and music and art instruction). However, with the payment plans negotiated by the Charter School Division, the students currently attending these schools will have mostly moved on to new schools by the time they are done paying

The cost to the District for not demanding payment when it was due is highlighted by the fact that six schools have not made any payments in the past six months. Four have not made a payment since at least January 17, 2022. All of these schools have closed their doors making it extremely unlikely their debt of $1,174,592 will be collected. However, ICEF Lou Dantzler Preparatory Charter Elementary does have a sister school that is still open and should bear the obligation of paying the overall organization’s debt.

Missing from the Superintendent’s report is a complete accounting of all the invoices for over-allocation fees that have been sent to charter schools. While the report states that the “Total Amount Owed” for all years is $14,113,221, this does not include the $7,678,022 that was removed without explanation on April 8, 2022. Unless there was a legitimate reason for deducting these fees, charter schools actually owe the District $10,550,486.

It is surprising that José Cole-Gutiérrez still has a job after he was caught lying about the policies he instituted that had children with Special Education needs receiving their services in closets and stairwells. At the very least, this should have been a warning to the Board that they need to keep a very careful eye on him and the actions of his staff. Demanding a complete and accurate accounting of how much the LAUSD is owed in over-allocation fees is a good place to start.

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Carl Petersen is a parent advocate for public education, particularly for students with special education needs, who serves as the Education Chair for the Northridge East Neighborhood Council. As a Green Party candidate in LAUSD’s District 2 School Board race, he was endorsed by Network for Public Education (NPE) Action. Dr. Diane Ravitch has called him “a valiant fighter for public schools in Los Angeles.” For links to his blogs, please visit www.ChangeTheLAUSD.com. Opinions are his own.