Photo Courtesy of Success Academy
Success Academy South Jamaica is one of four Success Academy charter schools in Queens.
By Forum Staff
An audit of Success Academy Charter Schools-NYC’s financial controls revealed reporting deficiencies, City Comptroller Scott Stringer said on Monday.
Stringer’s analysis found:
- Duplicative and questionable payments from Success Academy schools to the Success Academy management “Network,” which are inconsistent with the terms of their contract.
- An inability to demonstrate that some special education services were actually delivered to students, despite Success’s billing the City Department of Education. The audit calls for the DOE to be reimbursed.
- Reporting inconsistencies, which make administrative costs appear lower to the public and oversight agencies – and in-classroom expenditures appear higher – than was actually the case.
- Lax record-keeping and missing documentation for loan agreements worth millions of dollars, which may have never been put in writing by Success.
- Noncompliance with Success Academy’s own fiscal controls over credit card and other spending.
- Clear violations of the internal financial rules under which Success claims to operate.
Success Academy Charter Schools-NYC operated 24 charter schools in New York City – including four in Queens – which served 8,715 students in Fiscal Year 2015. The schools collectively maintain a “management agreement” with a legally separate entity formally known as “Success Academy Charter Schools, Inc.,” also known within the Success Academy organization as the “Network,” Stringer noted. Under the management agreement, the Network provides management services, including financial-reporting services, to the Success Academy schools in exchange for a management fee of 15 percent of the per-pupil revenue that the Success Academy schools received from the DOE. In FY 2015, the Success Academy schools collectively paid the Network a management fee of $18.3 million. The audit focused specifically on Success Academy Harlem 3, which necessitated examining some Network finances, Stringer explained.
The Comptroller’s Office’s audit found:
- Duplicative payments from the Success Academy schools to the Success Academy Network
- Incorrectly classified expenses allowed Success to overstate spending on students
- Charging the DOE for special education services that may not have been provided
- Untimely and missing employee background checks
- A failure to document or obtain required approvals for loan agreements totaling $8.5 million
“Any entity receiving taxpayer dollars must operate efficiently and follow the rules,” Stringer said. “We found irregularities in this audit of Success Academy that raise serious concerns. Billing the DOE for special education services without records to verify that they were provided, financial reports that made administrative costs seem lower than they actually were, ineffective fiscal controls over credit card and other spending, missing loan agreements for millions of dollars — all were findings uncovered by this audit. We found situations in which Success Academy was violating its own standards, or those of oversight agencies. We hope Success Academy will embrace our recommendations and adjust its practices. This isn’t about district versus charter schools—it’s about protecting taxpayer dollars and following the rules.”
Stringer also noted that the audit, which covers Fiscal Years 2013, 2014, and 2015, makes 28 recommendations to ensure Success Academy is in compliance with its own financial rules, as well as those of its charter authorizer and other oversight agencies.
