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March 20, 2013

 

Recommendation on American Indian Model Schools

 

The leadership of American Indian Model Schools (AIMS) has repeatedly broken the law, engaged in financial mismanagement, and violated the terms of its charter. When provided numerous opportunities to reform its practices, AIMS failed to make changes that would address these issues and protect public funds.

 

As a result of not only this misconduct, but also the persistent refusal to fully acknowledge or correct these transgressions, the Superintendent and staff of the Oakland Unified School District (OUSD) recommends that the charters granted to AIMS for the operation of American Indian Public Charter School, American Indian Public Charter School II, and the American Indian Public High School be revoked, effective June 30, 2013.

 

Justification

 

The recommendation to revoke the charters is based on substantial evidence resulting from investigations by OUSD and by the Fiscal Crisis Management Assistance Team (FCMAT). These agencies have determined that:

 

1. in violation of conflict of interest laws, the AIMS founder personally profited from $3.8 million in public funding that was funneled to his private business interests.

 

2. AIMS violated the prohibition against charging tuition when it assessed a financial penalty on students for absences from an enrichment program.

 

3. AIMS committed fiscal mismanagement and violated Generally Accepted Accounting Principles (GAAP)

a. neglecting to implement policies to prevent credit card misuse;

 

b. losing a $30,000 escrow deposit in a failed real estate transaction with Lumbee Holdings, the founder’s company;

 

c. failing to prevent an employee’s forgery of a teacher’s attendance report.

 

Despite having 14 months to address the FCMAT findings, and almost six months to address the District’s Notice of Violation, AIMS has:

1.     failed to remedy the violations that prompted the revocation proceedings.

2.     declined to implement reforms, such as training or protocols, to guard against future conflicts of interest.

3.     refused to fully and unconditionally acknowledge the conflict of interest.

4.     opted against retaining a third party, such as a charter school management agency, to oversee finances and operations and prevent future improprieties.

5.     removed governing board members who expressed dissenting opinions.

6.     failed to ensure a proper separation between the founder—the source of the illegal conflict of interest—and the school.

7.     submitted misleading and false documentation in response to inquiries.

 

Background

 

·        Late 2011: the Alameda County Superintendent of Schools requests that the Fiscal Crisis Management Assistance Team (FCMAT) initiate an investigation of AIMS.

 

·        June 12, 2012: FCMAT issues an “Extraordinary Audit” detailing conflict of interest violations, fiscal mismanagement and improper use of public funds. The County Superintendent refers the FCMAT report to the Alameda County District Attorney.

o   As a result of the findings, the California Department of Education terminates After School Education and Safety (ASES) funding and the California Finance Authority finds AIMS in default of the Charter School Facilities Grant Agreements.

 

·        September 27, 2012: The OUSD Board of Education approves a “Notice of Violation” against AIMS and provides a 60-day period in which to remedy the violations.

 

·        November 26, 2012: AIMS provides a written response to the Notice of Violations (NOV) that includes misleading statements and fails to identify adequate remedies for addressing the conflict of interest violations and fiscal mismanagement.

 

·        January 23, 2013: The OUSD Board votes to issue a “Notice of Intent to Revoke” and schedules a public hearing on the matter for February 27, 2013

 

·        March 20, 2013: The Board takes final action on whether to revoke the AIMS charters effective June 30, 2013

 

Conclusion

 

As the authorizer of the AIMS charters, the Oakland Unified School District has a legal duty to ensure that AIMS schools properly use public funds. The AIMS Schools have distinguished themselves in the classroom, and the teachers and students deserve praise for their accomplishments. This does not change the District’s obligation to ensure that the AIMS schools meet their legal and ethical obligations.

 

The options available to us to ensure this compliance are limited. Charter law does not allow us to unilaterally remove the administration or take control of the school’s operation. The law is explicit that the authorizer must either accept the current response of AIMS as satisfactory and in compliance with the law—which it clearly is not—or recommend that its charter be revoked. No other remediation is provided for in California’s charter law.

 

Given that AIMS has been afforded ample opportunity to remedy the issues and continuously failed to take comprehensive or decisive action, the District must exercise our legal responsibility and ethical obligation and recommend that the OUSD Board of Education revoke the charter granted to American Indian Model Schools.