YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2004-59

August 25, 2004

Better oversight of charter schools is needed

Since 1998, the legislature has allowed charter schools to be established in the St. Louis and the Kansas City public schools districts.  Primary responsibility for oversight of charter schools rests with sponsors that grant charter schools the right to operate.  The Department of Elementary and Secondary Education (DESE) provided approximately $73 million in state and federal funds for distribution to 25 charter schools in fiscal year 2003.

DESE did not take a pro-active role in ensuring charter schools are fully accountable and in compliance with state statutes.  DESE officials believe their role has been limited by charter school laws; however, the department has placed other requirements on charter schools in addition to those established by state regulation, and penalized schools for not meeting certain requirements.  The lack of oversight by sponsors and involvement by DESE has contributed to problems regarding teacher certification, submission of annual financial audit reports, school charters, and funds deposited in banks.

Charter schools have not always complied with state laws and/or regulations

Sponsors and DESE have taken limited action to ensure charter schools complied with state statutes and regulations in regard to teacher certifications, financial reporting and provisions required to be included in charter school applications.  For example, auditors found half of the schools in operation in September 2003 did not meet the 80 percent teacher certification requirement.  This certification percentage is lower than the 95 percent teacher certification requirement for public schools.  Since September 2003, sponsors had only placed four schools on probation or notified the schools that charter renewal was in jeopardy for not complying with this requirement.  (See page 8)

Oversight by sponsors was inconsistent

Auditors found 4 of 8 sponsors provided minimal oversight of charter schools.  Officials from one sponsor acknowledge they have not reviewed performance.  An official at another sponsor said his organization practiced "damage control" reacting to problems once they occur.  (See page 4)  

Some schools have uninsured funds in banks

Auditors found 14 charter schools had over $5 million in uninsured funds in banks putting those funds at risk.  (See page 14)

Complete Audit Report