The state can now intervene sooner with problematic Utah charter schools

(Courtney Tanner | The Salt Lake Tribune) The American International School of Utah will close on Aug. 15 after years of financial struggles.

State education officials will now be able to intervene sooner if there is concern that a Utah charter school is falling into debt or misspending taxpayer funds.

That stronger, swifter oversight role has been much anticipated after a particularly tumultuous year for charters statewide. And it passed unanimously at the Utah Board of Education meeting Thursday without debate.

“We’re trying to lock down the accounts,” said Mark Peterson, spokesman for the board. “We want to step in before millions of dollars are lost, before millions for special education are misspent.”

The updated rule will now allow Utah’s superintendent of schools to withhold both state and federal education appropriations when a charter has “an identified deficiency," meaning any time a potential problem with bookkeeping or spending is noticed.

Previously, a school had to be formally placed on probation or slated for closure — which could take months and required more investigation into and evidence of an issue — before the state could intervene. That was often too late to prevent losses.

The move is the latest in a statewide crackdown on spending by charters after the chaos that ensued after the American International School of Utah (AISU) shut its doors last year with millions of dollars of debt it will likely never repay and displaced more than 1,300 students.

The Utah Charter School Board, a subsidiary panel to the state Board of Education that is supposed to provide oversight of all charters, didn’t censure the school until five years into its operations — though there were signs of misspending well before that. Since then, some have questioned whether charters in the state are not being held properly accountable for using public dollars.

And there have been other problems. Capstone Classical Academy in Pleasant View was forced to close after losing $1 million in its first year of operation. Treeside Charter School in Provo filed for bankruptcy. And American Preparatory Academy (APA) in Draper is currently being investigated for not properly documenting more than $4 million in special education funding.

In a statement about the new oversight rule, the Utah Board of Education noted: “Due to recent charter school closures and announcements of possible pending school closures, questions have come up related to what restrictions, if any, should be placed on a charter school’s state and federal monthly financial allotments when probation or closure are proposed.”

The rule approved Thursday was an attempt to provide more structure and accountability prior to a school being forced to close.

Pending the outcome of an appeal, the state will be able to hold back education appropriations for any charter where financial misconduct is being investigated. It will also be able to require reimbursement for funds it finds were misspent. The state, too, can direct its own fiscal monitoring of a charter.

Charter schools were meant to be education’s disrupters. But board members have previously argued when they were set up, there was little specified in state code on how they should operate.

Without much discussion Thursday, they said they now believe there’s enough power to intercede before misspending becomes a major problem.