PCSB Continues to Improve its Financial Oversight, States DC Auditor’s Report

The Office of the DC Auditor (ODCA) released a report on the fiscal oversight of public charter schools in the District, “Oversight Improvements Must Continue to Ensure Accountability in Use of Public Funds by DC Public Charter Schools”.  While PCSB does not agree with all of the findings in the report, we appreciate ODCA’s recognition of continued progress in our fiscal and compliance oversight over public charter schools. 

“The Auditor’s report highlights the continued progress PCSB has made in ensuring public charter schools are good stewards of taxpayer dollars,” DC Public Charter School Board Executive Director Scott Pearson said. “We are encouraged that the DC Council, led by Councilmbembers David Grosso and Elissa Silverman, has already introduced legislation to strengthen our authority to oversee charter school finances."

PCSB’s responses to the specific recommendations made by the Auditor can be found below. Key responses to the audit report findings include:

• Since the end of the audit’s scope in school year 2013-14, PCSB has already taken steps to address many of the recommendations put forth in the Auditor’s report.  For example, we have a link to the DC Charters Operations Manual developed by FOCUS and EdOps available on our website.

• We have also worked with Councilmembers David Grosso and Elissa Silverman to introduce legislation in the DC Council that would enhance our authority to conduct fiscal oversight over public charter schools that contract with charter management organizations, particularly for-profit management companies. PCSB will continue to work with the DC Council to ensure it is narrowly tailored enough to avoid undue burden on good actors, while appropriately enhancing PCSB’s fiscal oversight authority.

Our Responses to the Recommendations

PCSB agrees with one recommendation, partially agrees with three recommendations, and defers comment on one recommendation.

Recommendation 1: The Public Charter School Board should continue to strengthen its annual financial and compliance reviews to ensure all financial and contracting requirements are met, and met timely.

PCSB partially agrees with this recommendation.

PCSB conducted sufficient financial reviews in both SY 2012 and SY 2013 based on the authority currently granted for fiscal oversight. The recommendation of the Auditor appears to be focused on their finding that financial oversight in SY 2011 was insufficient. However, the auditor’s report finds that more recent financial audits were conducted sufficiently. We ask that the report place due emphasis on the successful audits in SY 2012 and 2013, and that the first audit result, “In school years 2011-2013, that the Public Charter School Board did not consistently complete its planned fiscal and operational oversight activities of charter schools” should be revised to reflect that reality.

PCSB also does not fully agree with the Auditor’s finding that fiscal oversight in SY 2011 was insufficient, as it was based partially on a claim that audited financial statements, budgets, and 990 forms could not be produced by PCSB.  These resources are readily available at here.

PCSB acknowledges its past challenges with compliance reviews and with obtaining and maintaining records pertaining to public charter school contracts larger than $25,000.  However, since the conclusion of the audit period PCSB has taken steps to resolve this.  First, PCSB has implemented a new contracts submission policy to clarify requirements for LEAs in submitting contracts. We have also created an annual review of LEA’s expenditures that may be subject to contracting requirements, to ensure contracts are properly bid, awarded and submitted to PCSB for review. In addition, PCSB publishes contracts more than $25,000 on its website here.  PCSB has also hired a full-time School Finance Specialist for the first time.  Previously, this responsibility was handled by a full-time equivalent, who was also tasked with managing PCSB’s own finances.

Recommendation 5: PCSB should publish current fiscal policies and procedures for charter schools.

PCSB partially agrees with this recommendation.

PCSB agrees with the need for all public charter schools to have strong fiscal policies and procedures, and we are currently working to assemble all of PCSB’s relevant policies for finances and operations into an easy-to-use format for schools.  PCSB also uses its convening power to allow fiscally high performing charter schools to share best practices with the whole charter community.  Friends of Choice in Urban Schools (FOCUS) and EdOps also publish an operations manual with guidance for public charter schools, and PCSB makes this manual available on its website.

However, PCSB does not believe it is appropriate to create overly detailed policies regarding public charter schools' internal finances and operations.  PCSB made the operational decision to no longer publish the fiscal policy handbook because it was overreaching and incomplete.  PCSB rejects the claim that this decision has resulted in a loss of accountability or increased risk for misuse of funds.

For example, the Auditor’s report mischaracterizes and places undue emphasis on the November 1 deadline listed in the fiscal policy handbook. In reality, the November 1 deadline is a soft deadline for draft audits.  Final audits may be submitted after that date, and schools are made aware that final audits are due by January 1.  Based on this later deadline, just one public charter school submitted a late financial statement in SY 2012 and three submitted late in SY 2013.  Of those three in SY 2013, two have since voluntarily relinquished their charters.  

PCSB holds all public charter schools responsible to the requirements of DC Code, and according to the auditors report, conducted sufficient financial oversight reviews of public charter schools in SY 2012 and SY 2013.

Board responds to report recommendations