ACTON — Acton-Agua Dulce Unified School District agreed to pay $726,606 to the state, as part of a settlement, in one of the largest fraud schemes targeting educational dollars for kindergarten through 12th grade students in the nation, the San Diego County District Attorney said.
The District will make eight quarterly payments of about $90,825 each, starting July 1. The last payment will be due April 1, 2023.
Acton-Agua Dulce Unified was one of six school districts that authorized A3 Charter Schools and collected millions of dollars in oversight fees in excess of statutory limits under state Education Code without tracking the actual costs, according to San Diego Superior Court Judge Frederick Link.
“A contract that allows a chartering authority to collect reimbursement for amounts in excess of actual costs of oversight is an unlawful contract,” he wrote.
The other school districts are Dehesa School District in San Diego County, Trona Joint Unified in San Bernardino County, Bradley Union Elementary School District in Monterey County, Cuyama Joint Unified in Santa Barbara County and Meridian Elementary in Sutter County.
“These school districts collected significant fees for oversight work they did not perform,” San Diego County District Attorney Summer Stephan said in a statement.
Charter schools are public schools that operate independently of their authorizing school district.
Acton-Agua Dulce Unified’s charter school program began under former superintendent Brent Woodard with one charter school in 2012. By 2017, there were 17 charter schools authorized by the District. The District is down to 12 authorized charter schools.
Acton-Agua Dulce Unified authorized A3 Charter School’s Valiant Academy Los Angeles, also known as Online Academy of Los Angeles, Mosaica Online Academy of Los Angeles, Mosaica Academy of Los Angeles, and Valiant Academy LA.
Acton-Agua Dulce Trustee Ken Pfalzgraf repeatedly cautioned the District about relying on charter revenue for several years, before he joined the Board in December 2016. He continued to caution his fellow trustees after his election.
“Revenue sources based on taxpayer funds are strictly governed,” he said Monday in a phone call.
Pfalzgraf campaigned on the notion that the District needed to get away from the charter revenue or what he called a “fragile revenue source.”
“That day has come; it is unfortunate it took a court order to bring it to fruition,” he said.
There is a direct, almost dollar for dollar, correlation in what the payback will be in relation to the “sudden” District budgetary deficit.
Acton-Agua Dulce Unified trustees approved layoffs for 12 employees in February, due to lost charter school oversight revenue.
“My second campaign goal was to focus on local students and I think we’ve done that,” Pfalzgraf said.
He said his third campaign goal was to restore Acton-Agua Dulce Unified’s good name in the greater educational marketplace.
“Gone are the days where people are afraid to associate with our district for feat they might be sued,” Pfalzgraf said. “There is light at the end of the tunnel now, you just have to look for it.”
He credited Superintendent Larry King for making those goals a reality.
King joined the District in September 2017. He announced his resignation at the March 11 Board meeting to pursue a new and different challenge.
“I’m proud of our team for having the foresight to set aside funds knowing that something like this would likely transpire,” he said. “And I’m proud of the Board too. I really appreciate the Board’s support on it. They took a fiscally conservative approach on our recommendation and I appreciate that as well.”
He said the District set aside more than the amount it will have to reimburse the state.
“We were prepared for it,” King said.
Acton-Agua Dulce was sued in 2014 by Los Angeles Unified School District and Newhall School District, which accused the District of approving the charter petitions for the now-closed Albert Einstein Academy for Letters, Arts and Sciences, as a way to raise revenue.
Newhall rejected the proposed Albert Einstein charter school. The charter school opened within Newhall School District’s boundaries after Acton-Agua Dulce Unified authorized it.
“This reckoning has been a long time coming,” Marc Winger, Newhall School District’s former superintendent, said in a statement. “Starting in 2014, when the superintendents in the Santa Clarita Valley protested AADUSD’s charter approval plan we pointed to two things. We said this was all about money, not education and we believed there was no way a small district with insufficient staff could provide the necessary oversight for what at the time was 14 approved charters mostly operating in multiple areas outside of AADUSD’s boundaries. A3 and other charter applicants came to AADUSD for the easy approval and lax oversight. It’s unfortunate that the new Board, superintendent and community have to pay the price for the former administration’s unethical money-making scheme.”
Acton-Agua Dulce was included in a 2017 state audit triggered by small school districts authorizing charter schools and the revenue produced by those authorizations.
The San Diego County District attorney’s office announced in February, that defendants Sean McManus and Jason Schrock pleaded guilty in connection to the A3 Charter School scheme that siphoned more than $50 million from the state.
“With these guilty pleas, the defendants now admit they engaged in a devious, systematic public corruption scheme on the backs of students, their parents and the public that diverted millions of taxpayer dollars into their own pockets,” Stephan said in a statement. “This is one of the largest fraud schemes targeting education dollars for K-12 students in the nation. Unraveling this complex scheme came as a result of over a year of persistent and dedicated work by our team of prosecutors and investigators, who specialized in public corruption. This expert DA team will continue their work on this pending case to seek justice and make victims whole through restitution.”
Sentencing is set for June. McManus pleaded guilty to two counts of conspiracy to misappropriate public funds and to stealing more than $500,000. McManus faces up to 10 years in state prison. Schrock pleaded guilty to one count of conspiracy to misappropriate public funds, one felony count of conflict of interest and also to stealing over $500,000. He faces up to nine years in state prison.