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Exhibit 5

LA Times: L.A. Unified ends effort to close embattled charter schools
03/11/2015
Pages 1 – 2

L.A. Unified ends effort to close embattled charter schools - LA Times
LOCAL / L.A. Now

L.A. Unified ends effort to close embattled charter
schools

Kindergarten teacher Claudia Garcia, left, gives instructions as students work on projects at Magnolia Science Academy #7 in Northridge, which
is one of three schools ordered shut down by the L.A. Unified School District last year. The school board has dropped efforts to shut the schools
down. (Anne Cusack / Los Angeles Times)

By Teresa Watanabe • Contact Reporter

MARCH 11, 2015, 3:10 PM

L

os Angeles Unified has dropped efforts to shut down three campuses operated by an embattled charter
school chain accused of financial irregularities in a district audit.
Caprice Young, chief executive officer of the Magnolia Public Schools, hailed the Board of Education for

renewing the charters of campuses in Palms, Northridge and Bell under a legal settlement approved this week.
Charters are independent, publicly funded campuses; most are non-union.
The statewide charter organization, which enrolls 4,000 students in 11 academies focused on science and math, had
denied allegations of financial mismanagement and sued the district last year to overturn the decisions to close the
campuses. A court injunction has kept them open.
Exhibit 5, Page 1 of 2

http://www.latimes.com/local/lanow/la-me-ln-lausd-charter-20150311-story.html

2/1/2016

L.A. Unified ends effort to close embattled charter schools - LA Times
"This is just plain good news and will give the schools the stability they need," Young said Wednesday. "I am
thankful to LAUSD for giving us the opportunity to let us do our job well."
Under the settlement, Magnolia agreed to bring in a new auditor and an educational services provider and submit to
fiscal oversight by a state financial management organization. An audit performed last year for the district’s Office
of the Inspector General found that Magnolia was $1.66 million in the red, owed $2.8 million to the schools it
oversees and met the federal definition of insolvency. The Palms academy also was insolvent, the audit found.
In addition, the review found fiscal mismanagement, including a lack of debts disclosure, weak fiscal controls over
the principals’ use of debit cards and questionable payments for immigration fees and services.
Since then, Magnolia hired Young, a former L.A. Unified school board president, along with a new chief financial
officer and controller. The organization also has added new controls over spending, staff training and other
improvements.
"It's actually very common for charter organizations to face operational challenges when they've just come through
a heavy growth period," Young said. She added that Magnolia was now "fiscally stable and sound."
District officials have acknowledged that the Magnolia schools are performing well academically, with test scores
well above the state's target of 800 on the 1,000-point Academic Performance Index.
Young added that the foundation has taken other steps to address concerns raised in the audit, including freezing
the use of H1-B visas to bring in foreign teachers and administrators. Young said Magnolia schools currently employ
11 staff members on such visas but that she hoped to work with L.A. Unified to improve the process before
continuing it.
She also dismissed concerns that the schools may be improperly influenced by a U.S.-based Turkish cleric,
Fethullah Gulen. Critics have asserted that the Magnolia schools are among more than 100 campuses with ties to
Gulen and seek to cultivate pro-Turkey sentiments.
"I think it's unfounded," she said of the criticism. "I wouldn't criticize anyone of any ethnicity or national origin for
starting a great school."
She noted that 85% of Magnolia students were Latino, many of them low-income. She said programs to share
Turkish culture through language study and other programs would enrich students, just as other charter schools
offer classes in Arabic, German, Spanish and French. She also said the schools follow California learning standards,
which require lessons about the Armenian genocide at the hands of the Ottoman Turks.
Young said the campuses in Bell and Northridge have extensive waiting lists, and the Palms school is near capacity.
Twitter: @TeresaWatanabe
Copyright © 2016, Los Angeles Times

This article is related to: Charter Schools, L.A. Unified School District, Bankruptcy

http://www.latimes.com/local/lanow/la-me-ln-lausd-charter-20150311-story.html

Exhibit 5, Page 2 of 2

2/1/2016