LAUSD to expand investigation includes all Magnolia Science Academys as ordered by Dr. Deasy

http://laschoolreport.com/just-in-lausd-expanding-probe-into-magnolia-charter-schools

LAUSD’s audit of two Magnolia Science Academy charter schools leading to their possible closure has triggered investigations into the financial health of six other schools run by the same non-profit group.

“We are looking at the other Magnolia charter schools through the Office of the Inspector General,” Superintendent John Deasy told LA School Report today.

The district denied the charter renewal applications for Magnolia Science Academies 6 and 7 after an independent audit conducted on behalf of the district determined that the schools’ parent company, Magnolia Public Schools (MPS), is insolvent. The audit uncovered a number of fiscal management violations.   

MPS, which is based in Westminster, Calif., operates eight schools within LA Unified that serve more than 2,700 students. It also runs three other schools in San Diego, Santa Clara and Costa Mesa.

The organization told LA School Report today it is appealing the denials to the LA County Board of Education, an avenue that state laws provide. The schools have also filed for an injunction in LA Superior Court to allow the schools to remain open. A hearing is set for July 24.

LA Unified’s chief legal counsel, David Holmquist, said the district routinely expands the scope of its investigations when there is evidence of potential instability. 

“It’s our normal course of action when we get a report that says something is wrong,” he explained.  

Holmquist said the findings of further investigations could launch the revocation process for the remaining Magnolia schools, putting the future of more than 2,300 students in jeopardy.

About 140 students who attended Magnolia Science Academy 6 in Palms and another 300 who attended Magnolia Science Academy 7 in Van Nuys will have to find new schools to attend starting in the fall. 

Fiscal mismanagement problems and low enrollment have plagued most the LA Magnolia campuses since the first charter was founded in 2002. Most recently, a 2012 audit of Magnolias 1, 2 and 3 by the Inspector General’s office found that Magnolia “needed to strengthen their internal control systems and their oversight of fiscal and financial operations.” 

According to that review of the non-profit group’s financial statements and accounting records numerous concerns emerged such as: non-disclosure of transactions; failure to maintain required reserves; failure to appropriately apply accrual basis of accounting; insufficient monitoring of cash receipts and deposits process; insufficient documentation for disbursements; a lack of control over journal entries, and lack of adequate training for the accounting staff.

Despite the irregularities, the district did not initiate the revocation process for any of schools. Instead, it made recommendations for the charter management company to correct the problems.

These are Magnolia’s eight schools in LA Unified:

• Magnolia Science Academy 1– Reseda
  Enrolls 538 Students
  Charter renewed in 2012 and expires in 2019

• Magnolia Science Academy 2 — Valley
  Enrolls 440 students
  Charter renewed in 2012 and expires in 2017

• Magnolia Science Academy 3 — Carson
  Enrolls 426 students
  Charter renewed in 2012 and expires in 2017

• Magnolia Science Academy 4 — Venice
  Enrolls 202 students
  Charter renewed in 2013 and expires in 2018

• Magnolia Science Academy 5 — Hollywood
  Enrolls 240 students
  Charter renewed in 2013 and expires in 2018

• Magnolia Science Academy 6 — Palms
  Enrolls 137 students
  Charter was up 2013, not renewed

• Magnolia Science Academy 7 — Van Nuys
  Enrolls 301 students
  Charter was up 2013, not renewed

• Magnolia Science Academy 8 — Bell (Pilot School)
  Enrolls 497 students