October 24, 2018

Financial Framework: greater fiscal accountability for all public schools

There has been a lot of focus lately on the financial mismanagement of a handful of charter schools here in Arizona. And rightfully so, because even though these cases are extremely rare, they have been egregious and deserved to be brought to the public’s attention. What’s not been discussed, however, is that steps have been underway for quite some time to better assess schools’ finances, assist schools in financial trouble, and ultimately close any schools who are in a severe financial crisis.

House Bill 2663 (HB2663) was the K-12 education budget bill passed in the last legislative session for fiscal year 2018-19. This bill contained a provision which allows the Arizona State Board for Charter Schools (ASBCS) to close charter schools which aren’t meeting certain financial standards, and it’s a big step forward in financial accountability.

The ASBCS is currently undergoing a process to update their Financial Transparency Framework to assess the financial health of charter schools.  Once finalized, they will have a comprehensive method to better analyze, process, and assess the financial health of charter schools. Combine this new framework with the new provision of HB2663, and the ASBCS will have a new set of tools to hold charter schools accountable and close those schools which are not meeting a minimum standard of financial health.

“Having access to the financial data to the schools has never been the problem,” said Kathy Senseman, Chairperson of the ASBCS. “The harder part has been having the ability to do something when we recognized a potential financial issue at a school. With the passage of HB2663 and our updated Financial Framework, we’re really going to have some teeth to address situations where schools are in dire financial situations.”

This is important for two reasons. The obvious one is that protecting public dollars from being mismanaged should be a priority for everyone.  Additionally, the second benefit will be that often times schools who are struggling financially can also be the same ones who are not adequately serving their students’ educational needs. By tracking financial data and instilling more accountability into financial performance, the ASBCS should be able to both improve efficacy of public investments into charters schools and improve educational outcomes.

The key to this new framework and any associated processes will be to strike a balance between supporting schools who are spending money to meet rapid growth and performance expectations, versus identifying and fixing schools who are truly being mismanaged.

“Our focus still has to be on student outcome,” continued Senseman. “Being punitive just to be punitive doesn’t benefit anyone. Our goal is to create a framework that can detect problems and then use the appropriate tools to ensure accountability. For operators who are working in good faith, the goal will be to intervene and correct problems so their students continue receiving a quality education. But if you’re an operator who is unwilling to correct any issues, or in the rare cases where the proverbial train has already left the station, this process will let us close down these schools in a way that minimizes the disruption to a student’s educational experience.”

Will this system be perfect? Of course not. There will always be cases of financial mismanagement in schools, be them a district, charter, or private school. But this new framework represents another major step forward in an ongoing and undeniable trend of stronger charter school accountability in Arizona.

And don’t be fooled by some of the rhetoric out there this election season. Greater charter school accountability is something that is fully supported by almost all charter operators, education advocates, parents, and community leaders.  Everyone agrees that accountability and performance go hand-in-hand and Arizona’s public schools. And district and charter schools need to continue delivering on both fronts for our students.


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