A report by an Arizona think tank found that most charter schools in the state abused public funding by engaging in business transactions that involved their owners, board members or their families.
The Grand Canyon Institute report indicated that 77 percent of all Arizona charter schools engaged in some form of related-party transactions, and that the state's regulatory system failed to ensure that tax dollars given to the schools are primarily used for the education of students, The Arizona Daily Star reported on Monday.
The report is based on a three-year forensic audit of the charter schools' finances, and it focused primarily on related-party transactions. The report defined these transactions as the schools spending tax dollars on non-competitive bids with companies that are owned by the charter operators, board members or their immediate relatives.
While the practices are illegal for public schools, they are legal for charter schools because they are not subject to competitive-bid laws.
If a charter holder is using tax dollars to do business with a family member, Arizona Charter School Association President Eileen Sigmund said it doesn't necessarily mean they're scamming taxpayers. She said offenders will be caught by the state charter school board.
One of the reasons charters are outperforming district schools is because they don't have the bureaucratic waste due to government red tape around procurement practices, Sigmund added.
State Sen. Kate Brophy McGee, a Republican from Phoenix, said charter schools should be held to the same standards as public schools because both deal with public money.
"We've given district schools more and more regulation, while not requiring the same of these very nimble charters, and we wonder why the public schools aren't as successful," McGee said.
The think tank is asking that charter schools be held to the same procurement standards as public schools, and that related-party transactions be clearly disclosed.
Arizona has 547 charter schools with about 180,000 students enrolled during the past school year.