Audit finds closed Kansas City charter was overpaid $4.3M

KANSAS CITY, Mo. (AP) — A Kansas City charter school was overpaid at least $4.3 million in the two years before it closed because administrators falsified and inflated student attendance, according to a state audit released Friday.

State Auditor Nicole Galloway said that Hope Academy reported a 97 percent attendance rate when the actual rate was about 32 percent. She also noted that several students who had graduated were included in the perfect attendance records. The inflated attendance boosted the school’s budget because charter schools, like traditional public schools, receive state funding based on student enrollment and attendance.

The audit also found students received credit for classes in which they weren’t participating and for unapproved activities outside of the classroom, such as grocery shopping, house cleaning and dog walking.

“What we see is the school failed these kids,” Galloway said. “It was the school’s responsibility to provide these kids an education.”

Hope Academy attorney Dana Cutler said the auditor’s recommendations did not arrive until after the school was closed.

“The recommendations by auditor would have been considered and implemented had the school continued to be open but by time we got through with the audit process, there was not a lot of reason to say we would do these things because the board had no school at that point,” she said.

The school, whose mission was helping dropouts and students at risk of dropping out, operated from 2009 to 2014. With its academic performance among the lowest in the state, it already had been placed on probation by its sponsor, the University of Missouri-Kansas City, when the state Department of Elementary and Secondary Education conducted a surprise visit in the fall of 2013.

Along with attendance issues, the state discovered that one student allegedly paid an employee $700 for academic credits, although the student was refunded after the impropriety was discovered. Administrators and some staff were immediately placed on leave, and the auditor’s office began its investigation. The university announced in Dec. 2013 that it would no longer sponsor the school.

The problems led the state to withhold its final financial payments to the school, reducing the amount that was overpaid from $4.3 to $3.74 million. Galloway said the overpayment estimates are “low” because attendance records as far back as 2010 show unusually high attendance rates. But she said there weren’t adequate records to place an estimate on the suspected overpayment for those earlier years.

Galloway said it appears that the school’s leadership used the overpayments to help purchase two buildings but later defaulted on the loans.

She said the school, which had about $374,000 on hand as of July, has no immediate way to pay back the money. Charter schools sometimes keep money in their coffers to cover the cost of closure activities.

Galloway said her office didn’t have the authority to determine whether there have been “criminal violations,” but provided a copy of the audit to the state education department. She added “the ball is in their court to coordinate with the appropriate law enforcement authorities.”

Education department spokeswoman Sarah Potter said in an email that the agency is in contact with the Missouri attorney general’s office.

“The audit confirms our concerns regarding inflated attendance reports resulting in significant overpayment to the school,” the education department said in a written statement. “It is the Department’s position that all funds now being held by Hope Academy be returned and distributed to serve the children in the Kansas City Public School District and K.C. charter schools.”

Nanci Gonder, a spokeswoman for Missouri Attorney General Chris Koster, said the office is reviewing the audit.

 

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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