New Mexico: State auditor blasts Public Education Department over charter school oversight

from Meredith Machen, New Mexico

Charter school oversight problems are rampant.  In today’s New Mexican the State Auditor revealed a serious lack of oversight of charter schools  by the State Public Education Department (PED).

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At issue was charter school financial mismanagement and conflict of interest.  The Auditor charged that the PED was unresponsive even though the school was raided by the FBI in August.  This case highlights the struggle between local school districts vs. state control of the charter authorization and oversight process.  This is only one of 18 cases nationwide of charter educational management firms nationwide that the U.S. Department of Education, the FBI, SEC, and IRS are investigating

By Robert Nott The New Mex

Citing the state Public Education Department’s failure to sign a contract for an audit of a charter school under FBI scrutiny, the State Auditor’s Office blasts Public Education Department over charter school oversight deemed the agency “at risk” and questioned its oversight of charter schools across New Mexico.   In a Dec. 2 letter to Education Secretary-designate Hanna Skandera, State Auditor Hector Balderas charged that the department failed to act on repeated reports of conflict of interest and financial mismanagement at the Albuquerque-based Southwest Learning Centers, which operates three technology-centered charter schools for different age groups.

FBI agents this summer raided one of the schools — the Southwest Secondary Learning Center — and seized documents and computers. The action raised questions about misappropriation of funds at the school. Shortly thereafter, school director Scott Glasrud resigned amid allegations that he had a conflict of interest because he personally profited from financial deals between the school and his own private company. For example, the school had paid $1.1 million to his company to lease airplanes for use in its aviation program.

The State Auditor’s Office has been pressuring the Public Education Department to take action on the charter school since early August, shortly after the FBI raid.

In this week’s letter, Balderas said the department has been mostly unresponsive to requests that officials there sign a contract for a forensic audit of Southwest Learning Centers — one that would involve collecting data for a possible court hearing — by Nov. 5 of this year. “In the meantime, the schools, oversight agencies and the public have no assurance regarding the resolution of considerable fraud risks,” Balderas wrote, adding that the department’s “delays have engendered skepticism about your capacity to successfully navigate this crisis.”

Evan Blackstone, chief of staff for the State Auditor’s Office, said the agency would not comment on the issue beyond Balderas’ letter, other than to say the office had not yet received the contract as of Wednesday evening. But Larry Behrens, a spokesman for the Public Education Department, said in an email that officials from the department and the State Auditor’s Office had met and agreed on a timeline for addressing the forensic audit. “However, it appears other motivations have led to them setting new arbitrary deadlines and changing course from what was agreed upon,” Behrens said in the email. “The contract for the forensic auditor was in place as of last week, so a letter asking us to comply is puzzling.” That forensic auditor, he said, is Wagner Valuation and Financial Forensics LLC of Albuquerque.

Last month, an education official asked a separate firm to terminate its contract for a financial audit of Southwest Learning Centers “due to its impaired independence in the matter.”

Hipolito “Paul” Aguilar, deputy secretary of finance and operations for the Public Education Department, made the request in a letter to Steven Keene, managing partner for Albuquerque-based Moss Adams LLP. The letter suggests that either the Public Education Department or Southwest Learning Centers might sue Moss Adams, and asks the firm to hand over all documents related to the case.

This isn’t the first time the state auditor has prodded the Public Education Department over charter school oversight. In mid-July, the office warned the department of 185 findings in a 2012 audit of the department — including 16 related to financial oversight and compliance failures — regarding state-chartered schools. About 60 schools in New Mexico are chartered by the state. Another 40 schools in the state have received charters through their local school districts.

The Legislature in 2012 passed Senate Bill 446, mandating new accountability guidelines for charter schools, including annual site visits by local officials as well as officials from the Public Education Department and the Public Education Commission, which approves or denies state charter school applications. But Doug Wine, executive director of the New Mexico Coalition for Charter Schools, said schools that were authorized before 2012 — including the Southwest Learning Centers — did not immediately fall under that law and are not yet subject to it until their next renewal period, which may explain the lack of scrutiny.

Carolyn Shearman, chairwoman of the state’s Public Education Commission, declined to comment on the situation. She said the commission would discuss it during a three-day session next week at the Jerry Apodaca Education Building, 300 Don Gaspar Ave. More than 20 school charters, including the three in the Southwest Learning Centers chain, are up for renewal during that session. Three other schools — Monte del Sol Charter School, Tierra Encantada Charter School and Turquoise Trail Charter School — are currently chartered by the Santa Fe Public Schools but wish to renew their charters through the state during that session.

Contact Robert Nott at 986-3021 or

Posted in Authorization, Charter School Management, Department of Education, Lawsuits, New Mexico.

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