Auditor general blasts Aspira and Pa. charter-school law

Pennsylvania's auditor general on Wednesday blasted Aspira Inc. of Pennsylvania's management of four Philadelphia charter schools and a cyber charter, likening the organization to a "fox guarding the henhouse" as he called for changes in the state law governing charter schools.

Under Aspira's management, the combined fund balance of the five schools — two of which are facing nonrenewal — dropped from $7.7 million in fiscal year 2014 to minus-$419,000 in fiscal year 2016, according to an audit released Wednesday by Eugene DePasquale that began last year. Charter schools are publicly funded but privately run.

Meanwhile, the schools' management-services payments to Aspira, a nonprofit entity, shot up from $7 million, in 2015, to $13 million the following year. "We saw no justification for why that happened," DePasquale said at a news conference at Philadelphia City Hall.

Ken Trujillo, a lawyer for Aspira, disputed DePasquale's characterization of soaring management fees, the bulk of which Trujillo said went to salaries for maintenance and educational support workers.

The increase "reflects the movement of personnel, that ended up being able to provide more services, for less costs," Trujillo said. "I'm a lawyer, I know what a fee is," he said.

Trujillo said he could not comment on the reason for a $210,000 payment by one of the Aspira-run schools, Antonio Pantoja Charter, to a former administrator that was highlighted in DePasquale's audit.

Except for saying it was paid by the school's insurance company, DePasquale said, officials could not explain the payment — made shortly after Aspira settled a lawsuit for $350,000 with a female employee who had accused Aspira president and CEO Alfredo Calderon of sexual harassment.

DePasquale identified poor record-keeping as a problem, saying his team had "no idea" whether $400,000 in travel expenses were appropriate because they weren't properly documented.

He faulted Aspira's organizational structure, noting that the boards of its five charter schools were nearly identical and that during public board meetings had not approved any vendor contracts, save for the management agreements with Aspira. He said the structure increased the potential for "the risk of fraud, waste and abuse" but that the audit did not reveal anything illegal.

Instead, he pointed the finger at Pennsylvania's charter-school law, saying the law should require charter management companies to be subject to the state's Right-to-Know and ethics laws. Because the superintendent and senior administrators of the Aspira-run schools, which enroll more than 4,000 students, were employees of the management organization, they were not bound by the charter law, DePasquale said.

While DePasquale said he was "convinced" that Pennsylvania's charter-school law requires schools to have their own boards — rather than being run jointly by a management organization — lawmakers and the governor "should make the law clear," he said.

"A lot of parents want choice, but we have to make sure they are quality choices," DePasquale said.

The School Reform Commission voted in December that there were grounds not to renew the charters for two Aspira-managed schools, Olney Charter High School and John B. Stetson, which the SRC previously turned over to the Latino community organization in hopes of improving their academic performances.

The school district has flagged fiscal and academic issues with both schools, which are operating under expired charters. Public hearings must still be conducted, and then another vote taken not to renew the charters.

Charters for two other Aspira schools in Philadelphia — Pantoja and Eugenio Maria de Hostos Charter School — are due to expire this year. Like other cyber charter schools, the Aspira Bilingual Cyber Charter School enrolls students from across Pennsylvania and is authorized by the state.

DePasquale declined to comment on whether schools should be closed. But with Philadelphia soon to take back control of its schools, "now is the ideal time for new board members to take a close look at Aspira and other charter schools," DePasquale said.

The audit covered the July 2013 through June 2016 period. As of June 30, 2016, Aspira and its subsidiaries owed more than $17 million in long-term debt, according to DePasquale. More than $14 million in debt was secured with pledged collateral of the charter schools.

DePasquale said there were no records of the charter schools' boards having authorized the pledging of the collateral.

DePasquale noted that reductions in the per-student tuition rate paid by the Philadelphia School District in 2015 and 2016 could explain "at least partially [Aspira's] drop in financial position."

In all three years of the audit, most of Aspira's schools overspent their budgeted expenditures, according to DePasquale.

Trujillo said the organization had experienced "an absolute turnaround" in the last two years.

Of the organization's management, "anybody who's ever been to Olney prior to Aspira management, would never want Olney to return back to what it was like before Aspira managed it," Trujillo said.