State orders Utah charter school to pay back $3 million in misspent special education funds

Utah Board of Education approves amount, but American Preparatory Academy administrators say they’ll appeal.

(Photo courtesy of American Preparatory Academy) Pictured is American Preparatory Academy in Draper.

A Utah charter school has been ordered to pay back nearly $3 million in special education funding that state auditors say was not actually spent on services for students with disabilities.

After months of reviewing the ledgers at American Preparatory Academy, the accounting team at the Utah Board of Education reported that it was unable to find any system that showed the money was “being properly expended.” And the board voted last week to accept the team’s recommendation to require the misspent allocations be returned.

“This isn’t a penalty,” said Bryan Quesenberry, an attorney who represents the state board. “This is a repayment of what is owed.”

Administrators with American Preparatory Academy, though, strongly dispute the state’s findings. They say there has been no misappropriation, and they plan to appeal the decision.

Directors, parents and students rallied outside the state school board offices Thursday — though board members were meeting online and weren’t present — demanding they drop the case against the school.

“We feel this is unacceptable,” shouted the academy’s executive director, Carolyn Sharette, into a microphone.

The charter’s spending first came into question in spring 2019, when the school requested its annual reimbursement from the Utah Board of Education for what it had spent on special education for the 2018-19 school year. At that point, according to an internal memo obtained by The Salt Lake Tribune in a public records request, monitors with the board say they discovered “several unallowable activities.”

The main concern was that the academy, which has six campuses and 5,000 students, did not keep clear books on how it spent special education dollars, so there was no way for the state to know what that money was spent on. In other instances, though, when the state auditors could track funding, they concluded it was spent on “disallowed” expenditures. That included paying for paraeducators who worked with students both with and without disabilities.

State law requires that special education funds only be spent for direct costs for services and only on the students who need them.

Originally, the auditors said they couldn’t account for $3.8 million total that the charter had spent for one year, as well as roughly $4 million in federal special education allocations for three years. The state dropped its concerns over the federal amount in an agreement with APA (though it doesn’t mean those won’t have to later be repaid). And it turned its focus on recouping the Utah funds.

The state conducted a second audit at the request of the charter. That largely confirmed its findings.

Attorneys for both the board and APA then met for 16 hours to mediate and agreed on a settlement. The academy would repay about 75% of the funds — or $2.785 million. The Utah Board of Education approved that in December after deliberating in a closed session.

At that point, the charter accused the board of breaking its settlement agreement by not holding the discussion in a public meeting. That’s what led to the vote Thursday, where the board reaffirmed its earlier decision.

“We’ve been over this many times,” said board member Scott Hansen.

Seven of the 15 members of the board are new, though, and weren’t part of the body when it took the December vote. One of those, James Moss, said he couldn’t vote to support the repayment because of that; board member Natalie Cline joined him. The vote was 12-2.

Member Matt Hymas, who is the high school director at American Preparatory Academy’s West Valley City Campus II, recused himself.

Quesenberry questioned his involvement Thursday after Sharette, APA’s executive director, sent an email to all the new board members, including Hymas, before the vote on the repayment.

“I find Ms. Sharette’s email to board member Hymas to be highly unfair,” Quesenberry said, noting that Hymas is Sharette’s subordinate.

Hymas insisted: “I have not had my hands in this pot.”

Outside the Utah Board of Education offices, Sharette and about 50 people protested the board’s decision. They carried posters that said, “Stop the shame” and “Stop the stigma.”

The charter has defended itself and the unique way it runs its special education program. APA keeps all students with disabilities in the same classroom as their peers, instead of separating them out, like most other schools. Sharette said that helps all students feel equal — and why their paraeducators serve both populations and were paid for that.

“We know that our kids have to be included,” she said. “We are not asking to break rules.”

The crowd chanted back, “Inclusion works!”

(Screenshot) Joan Ottley-Zeaman, the director of special education services for American Preparatory Academy, speaks at a rally on Thursday, Feb. 4, 2021.

Joan Ottley-Zeaman, the director over APA’s special education services, added: “This program has been very carefully thought through. It’s being very carefully managed.”

Both said they were disappointed with the state board and said the school never got a chance to speak with members directly. Their appeal will likely be put on the schedule for next month’s board meeting.

Under the current repayment settlement, APA has 10 years to return the misspent funds, providing 10% back each year.