In a report noting Einstein Academy is failing to serve a “balanced” population or keep adequate financial records, Hart district officials recommended denying the charter school’s petition for renewal.

The report, released with the district’s agenda for its March 1 meeting, is a wide-ranging critique of Albert Einstein Academy for the Letters, Arts and Sciences operations, citing financial concerns, questions about accountability practices and worry about whether the charter school is likely to be able to meet its stated goals going forward.

Albert Einstein Academy for the Letters, Arts and Sciences operates a K-6 charter school in Newhall, which is chartered by the Acton Agua Dulce Unified School District, as well as a high school in Valencia, which is chartered through the William S. Hart Union High School District.

Wednesday’s decision would concern the ninth- through 12th-grade classrooms.

For their part, Einstein Academy officials acknowledged past accounting concerns and said while officials would not be changing its charter management structure, it had addressed concerns and would no longer use district taxpayer funds to open up charter schools outside the Santa Clarita Valley, district officials said.

“Most of the (concerns) they referenced are in the past,” said AEA CEO Maggie Ford, noting issues have corrected by the school’s management.

At a Feb. 1 hearing in front of the school board, AEA officials were questioned about the fact that taxpayer funds from inside the Hart district was used to open schools outside of the district, through Einstein’s charter management nonprofit. 

Ford said the school had no plans to expand beyond its four current campuses, but schools officials also refused to change the charter management structure that allowed for schools to be opened outside the district this way, according to the report. 

Education officials who spoke on the condition of anonymity because a decision is pending in front of the board, noted a denial is unlikely to close the school, as there are several appellate options available.

Denying the charter, if that’s what district officials decide, would really only remove financial liability from the district for any decisions made by the academy’s charter management organization.

“The decision is going to be made based on information we get from staff, from auditors and from school officials, and we’ll make the best decision we can with the information we have, for the children and the taxpayers,” said Hart district board President Joe Messina. “We have a fiduciary responsibility to make sure that district money is used to educate district children.”

Based on the report, the biggest concern seemed to stem from the academy’s history of providing incomplete accounting records to William S. Hart Union High School District officials for several years.

“By failing to prepare and submit timely audit reports, (Einstein Academy) violated the reporting requirements prescribed by Education Code section 47604.33,” according to the staff report. “The extreme delay in reporting also inhibited the District’s ability to monitor Charter School’s fiscal condition and  activities for no less than two years.”

The report also notes: the charter school “skews heavily white,” resulting in underrepresentation of Hispanic or Latino students compared to district demographics; the charter’s Hispanic students are underperforming their district peers in English language arts; the school is not serving a comparable number of English language learners or socioeconomically disadvantaged youth; and the charter school has operated out of compliance with its charter petition for several years.

The Hart district board is expected to make a decision regarding the staff’s recommendation to deny the petition Wednesday, March 1 at the board’s regularly scheduled meeting.

Should the district’s Governing Board decide to turn down the petition request, the school could appeal to the Los Angeles County Office of Education, or the state’s Department of Education, both agencies would be legally capable of providing oversight for the district.

A past audit by a financial team found insufficient controls with respect to the school’s financial procedures.

From a previous story: FCMAT Releases Einstein Academy Audit Final Report

Einstein Academy audit finds missing information, inconsistent policy

In response to the auditors’ questions, AEALAS’ CFO provided organizational charts and lines of financial authority for the charter schools’ operations, according to the draft report.

The updated charts provided clear and detailed lines of authority and reporting responsibility for the school, its supporting organization

“FCMAT found that consistent and complete audit trail documentation continues to be unavailable,” according to the draft report.

An example stated in the report points to a request for board meeting minutes for the 2012-13 and 2013-14 fiscal years, which AEALAS was unable to provide.

Some of the board minutes verifying governing board approvals for the financial transactions sampled by FCMAT were also unavailable, according to the draft report. An Einstein official said past concerns had been noted and addressed, but declined to discuss specifics.

One entry in the report identified the schools’ nonprofit wing the AEALAS Foundation accounting  records identified a vendor as “Pizza Place” with four transactions in October 2013 totaling $13,847.65, “however, the supporting documents indicated that the transactions were for legal services, consulting and reimbursements.”

Of that money, $10,000 went to legal services for a charter school in Thousand Oaks; $2,000 went to Mark Blazer for reimbursements, however details were unavailable to the auditors; $1,000 went to Edward Gika for “biofeedback consulting”; and $847.65 went to Mark Blazer for reimbursements for trips regarding charter school operations.

At the time of the audit, the school’s manual for fiscal policy contained insufficient controls and wasn’t consistently followed, according to the report.

The report also found a statement in the charter petition: “There are no financial arrangements for any charter school operated by AEALAS Inc. to provide financial assistance to any other entity.”

However, the FCMAT draft report found loans between the charter school, its charter management organization and the schools’ nonprofit foundation had occurred. This is not considered “commingling,” which was initially alleged, because the funds were used within the AEALAS organizations.