California Virtual Academies to be Audited by State Controller

• By Richard Chang
• 06/24/16

California’s Superintendent of Public Instruction has contracted with the state’s highest-ranking accountant to conduct an audit of California Virtual Academies (CAVA), a network of 14 online charter schools that enrolls about 15,000 students.

Superintendent Tom Torlakson said in a statement that the state controller’s investigation has been prompted by “serious question raised about a number of [CAVA’s] practices.”

These questions include whether the nonprofit's online charter schools:

• Are organizationally separate from K12 Inc, a for-profit company that these nonprofit charter schools contract with;
• Accurately reported attendance, enrollment and dropout graduation rates to the California Department of Education (CDE);
• Appropriately allocated and reported shared expenses; and
• Appropriately identified, accounted for and disclosed related-party relationships.

“The goal of the audit is to make sure these schools are spending public education funds properly and serving their students well,” Torlakson said.

The audit started June 20 and will continue through June 30, 2017. It will cost the CDE $300,000.

The CDE contracted with the controller’s office because “[w]e have significant experience auditing school districts,” said Taryn Kinney, spokeswoman for controller’s office.

The audit states that the concerns with CAVA include poor student performance rates; possible overstated attendance and enrollment records to spike funding; related-party relationships and transactions between the not-for-profit charter schools and the for-profit K12 Inc.; and the charter schools' organizational independence from K12.

K12 is a Virginia-based for-profit that operates CAVA schools and other online charter schools, providing curricula, management and instructional services. K12 earns tens of millions of dollars annually in state funding. State Attorney General Kamala Harris is currently investigating the publicly traded company as part of a larger examination of online charter schools.

The audit openly questions relations between CAVA and K12, stating that “some of the charter schools board members were related to top CAVA administrators who were hand-picked by K12, Inc.” One previous review indicated instances in which the same individual served on the board of multiple charter schools and instances in which individuals who served as charter school management also served on the school’s board.

Representatives of K12 could not be reached for comment.

Last week, three educational reform organizations released a report addressing the underperforming virtual charter school sector, calling on states to overhaul legislation and to close chronically low-performing schools.

The “Call to Action to Improve the Quality of Full-Time Virtual Charter Schools” urges state leaders to work within state policy frameworks to close chronically underperforming full-time virtual charter schools, saying it’s their “legal and moral responsibility.”