Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
LAUSD Letter to Magnolia Public Schools on its findings

LAUSD Letter to Magnolia Public Schools on its findings

Ratings: (0)|Views: 44 |Likes:
LAUSD tell Magnolia Public Schools that it does not meet the conditions for renewal of its charter for Magnolia Science Academies 6 and 7
LAUSD tell Magnolia Public Schools that it does not meet the conditions for renewal of its charter for Magnolia Science Academies 6 and 7

More info:

Published by: Los Angeles Daily News on Jul 22, 2014
Copyright:Traditional Copyright: All rights reserved

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

07/22/2014

pdf

text

original

 
Cliarter
SchooCs
Division
JOHN
E
DEASY, Ph.D.
Superintendent
LOS NGELES UNIFIED SCHOOL DISTRICT
MATT HILL
333 South Beaudry Avenue, 20
th
Floor Los Angeles, CA 90017 Office: (213) 241-0399 • Fax: (213) 241-2054
June 27, 2014 Dr. Umit Yapanel, Board President c/o Magnolia Educational and Research Foundation Dr. Mehmet Argin, CEO Magnolia Public Schools 13950 Milton Avenue Suite 200B Westminster, CA 92683
Chief Strategy Officer
JOSE COLE-GUTIERREZ
Director Charter Schools Division
VIA
EMAIL
U.S.
MAIL
RE:
MAGNOLIA SCIENCE ACADEMY
#6 (CDS #19647330117648)
MAGNOLIA SCIENCE
ACADEMY #7 (CDS #19647330117655) Dear Board President Yapanel and Dr. Argin, This correspondence
is
to inform Magnolia Educational and Research Foundation ( MERF ), as the governing entity for Magnolia Science Academies 6 and 7 ( MSA 6 and MSA 7 ), that MSA 6 and MSA 7 did not meet the conditions
of
its conditional renewal. Accordingly, the conditional renewals
of
MSA 6 and MSA 7 are rescinded and the renewal petitions are inoperative for the charter term beginning July
1
2014. The material findings are set forth below.
BACKGROUND
Pursuant to Education Code section 47605 (b), the LAUSD Board
of
Education ( Board ) held a public hearing on March
4
2014, to consider the renewal petitions
ofMSA
6 and MSA
7.
MERF representatives attended the public hearing regarding the renewals. On that date, the Board approved the conditional renewal petitions
of
MSA 6 and MSA
7.
The renewals were conditioned upon further review
of
the schools' fiscal processes and operations that does not result in any material findings. The conditions for the renewals
of
both schools were to be met by June 30, 2014. On March
27 2014
the District notified CDE and LACOE
of
the conditional renewals
ofMSA
6 and MSA
7.
(See attached). MERF was copied on the notifications. The Office
of
Inspector General ( OIG ), through the accounting firm
of
Vicenti, Lloyd Stutzman ( VLS ), performed a forensic accounting review
of
MSA
6
MSA
7
and some information related to MERF, the schools' Charter Management Organization, also known as Magnolia Public Schools. Based on the significant material findings
of
the forensic review, the District has concluded that MSA 6 and MSA 7 did not meet the conditions
of
its renewals, thereby rendering the renewals inoperative.
 
Board President Yapanel and
Dr
Argin Re: Magnolia Science Academy
6
Magnolia Science Academy 7 June
27 2014
M TERI L
FINDINGS
Page
2
0/8
Education Code section 47607(a)(2) provides that charter school renewals are governed by the standards and criteria in Education Code section 47605, and shall include, but not be limited to, a reasonably comprehensive description
of
any new requirement
of
charter schools enacted into law after the charter was originally granted or renewed. Education Code Section 47605(b) states: A school district governing board shall grant a charter for the operation
of
a school under this part
if
it is satisfied that granting the charter
is
consistent with sound educational practice. Section 4 7605(b) provides that the governing board shall not deny a petition for the establishment
of
a charter school unless it makes written factual findings, specific to the particular petition, setting forth specific facts to support one or more
of
the following findings: (1) The charter school presents an unsound educational program for the pupils to be enrolled
in
the charter school. (2) The petitioners are demonstrably unlikely to successfully implement the program set forth in the petition. (3) The petition does not contain the number
of
signatures required by subdivision (a)
of
Education Code 47605.
(Not applicable to a
renewal
petition)
(4) The petition does not contain an affirmation
of
each
of
the conditions described subdivision (d)
of
Education Code 47605. (5) The petition does not contain a reasonably comprehensive description
of
all required elements. Education Code section 47607(a)(3)(A) also provides that the authority that granted the charter shall consider increases in pupil academic achievement for all groups
of
pupils served the charter school as the most important factor in determining whether
to
grant a charter renewal. State regulations further provide: When considering a petition for renewal, the district governing board shall consider the past performance
of
the school's academics, finances, and operation in evaluating the likelihood
of
future success, along with future plans for improvement
if
any. (Title
5
California Code
of
Regulations, section 11966.4, subdivision (b)(1).)
MSA
6
and MSA
7
are demonstrably unlikely
to
successfully implement the program set forth in the renewal petition pursuant
to
Education Code section 47605(b)(2), based on the following findings:
1
Financial
Solvency
of
the
CMO and
MS
6
and
MSA 7,
or Lack
Thereof
MERF: Magnolia Science Academies are operated by the nonprofit corporation/charter management organization (CMO) Magnolia Educational and Research Foundation (MERF). MERF operates
 
Board President Yapanel
and
Dr
Argin Re: Magnolia Science Academy
6
Magnolia Science Academy 7 June
27 2014
Page
3
0/8
11
MSA charter schools, 8
of
which are authorized by LAUSD. VLS performed some analysis
of
the financial information
of
MERF and reviewed transactions that involved loans and/or transfer
of
funds to MERF or to any
of
the MSA schools. As
of
June 30, 2013, MERF meets the IRS definition
of
being insolvent. At the end
ofFY
2013, MERF had deficit net assets
of
($1,661,985). This level
of
deficit spending raises substantial doubt about the financial solvency
of
MERF. The forensic review revealed that MERF met its cash flow by borrowing monies from the Magnolia charter schools. At the end
of
FY 2013, MERF reported owing a net amount
of
$2.8 million to the various schools it oversees. This is a very significant and material finding. MERF is a CMO established to provide support and services to the schools it operates. The insolvency
of
the CMO not only raises significant questions about the governance
of
the schools and overall health
of
the organization but also its capacity to implement the educational program and its future likelihood
of
success. The March 4, 2014 board report recommending the conditional renewal
of
MSA 6 and MSA 7 reported that the 2012-20l3 consolidated audit showed that the organization had positive net assets in the amount
of
$4.8 million which was reported in the board report. CSD was provided the 2012-20l3
consolidated
audit
of
all the MSA schools and based its fiscal analysis on that audit. VLS performed an evaluation on the
individual audits
provided
of
MSA 6, MSA
7
and MERF which revealed a different and concerning fiscal picture
of
the schools as noted below given the insolvent position
of
the CMO.
MSA6:
The forensic review revealed that MSA 6 meets the IRS definition
of
being insolvent with liabilities exceeding assets by $351,461as
of
June 30, 2013.
1
This level
of
deficit spending raises substantial doubt about the financial solvency and management
of
the fiscal affairs
of
the
school particularly
when considering that MERF, the CMO for the school, met the definition
of
insolvency in its 2012-20l3 audit. Although audited financial information regarding fiscal year
20l3 2014
revenues was not yet available, based on the second interim report filed by MSA
6
it is projected that the schools will still have negative net assets
of
($238,029) for fiscal year 2013-
14.
MSA
7:
As
of
June 30, 2013, MSA 7 had negative net assets
of
($218,978).
In
two
of
the last three completed fiscal years, MSA 7 operated in a deficit mode with expenditures exceeding revenues. The report noted that fiscal year ending June 30, 2013, resulted in increase to net assets
of
$281,537 which is a positive trend for the school and helps alleviate concern about the entities ability to meet its financial obligations; however, the school was still
in
a deficit financial position at the end
of
June 30,
20l3.
Again, this is particularly concerning when considering that MERF
met
the definition
of
insolvency in its 2012-2013 audit.
2
iscal Mismanagement
The forensic review revealed Issues which
nse
to a level
of
fiscal mismanagement. The following are material areas
of
concern:
1
Based on the latest audited financial information for MSA 6, MSA 7, and MERF gathered during the forensic review.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->