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Chu Strengthens Accountability of Nation's Charter Schools

September 23, 2010
Press Release

Introduces the Charter School Good Governance and Transparency Act

WASHINGTON – Rep. Judy Chu, D-Calif., introduced a bill today to end financial abuses in charter schools.  Chu's bill, the Charter School Good Governance and Transparency Act, directs charter schools to complete annual independent financial audits that ensure they follow sound financial practices and properly spend education dollars on our nation's students.

Earlier this year, a federal investigation found incidents of extensive embezzlement, self-dealing and bribery in over 40 different charter schools.  The gravity and extent of these abuses led the Inspector General to call it "vitally important" for the federal government to ensure appropriate oversight over charter school operators.

"I'm proud to introduce this bill to hold charter schools accountable for their use of taxpayer funds," Chu said.  "Especially in our current times of economic distress, it's absolutely vital that we ensure every available dollar is spent educating our students.  Charter schools sometimes offer a more innovative approach than traditional schools, but they must be subject to the same checks and balances that taxpayers have come to expect.

"The investigations and incidents of financial abuses at charter schools throughout the country are nothing short of alarming.  This bill institutes common sense financial practices and transparency to help charter schools better serve our nation's students and taxpayers."

According to a 2009 National Association of Charter School Authorizers survey, roughly 10% of all charter school funding, roughly $1.2 billion, does not undergo financial audits and is therefore at risk for fraud. Recent state and local investigations have uncovered numerous instances of such abuse.

In Los Angeles, a principal at the New Academy Canoga Park Charter School allegedly misappropriated $2.6 million, which directly led the city to begin the process of closing the school.

An investigation into Philadelphia's charter schools revealed that 13 schools were involved in complex real estate maneuvers, apparent conflicts of interest and lucrative CEO salary arrangements. The city's investigation has resulted in 9 criminal investigations by the US Attorney's Office.

In Texas, a statewide audit revealed that half of all the charter schools in the state had overestimated enrollment counts, resulting in an extra $26 million in payments to charter schools.  The state estimates that it will only be able to recoup $17 million because $9 million went to charter schools that have closed their doors.

Because charter school boards are not publically elected, taxpayers have no say in how their money is spent and no remedy for any misgivings they may have regarding the financial dealings of local charter schools.  Chu's bill helps close this lack of taxpayer oversight by ensuring charters receive regular public audits, similar to those required of traditional public schools.

The National Association of Charter School Authorizers (NACSA), whose mission is improving the quality in charter education, helped craft this legislation and has signed off on this bill as introduced.

Representative Judy Chu was elected in July 2009 to the U.S. House of Representatives as the Representative of California's 32nd District, which includes East Los Angeles and the San Gabriel Valley.  She is a member of the House Judiciary Committee, Government Oversight Committee, and Education and Labor Committees, where the Charter School Good Governance and Transparency Act was introduced.

Congresswoman Chu's career in politics spans 24 years.  A lifelong educator, Congresswoman Chu taught community college classes in Los Angeles and East Los Angeles for 20 years. She holds a Ph.D. in psychology and a B.A. in mathematics.