A Naalehu-based public charter school is facing possible closure by the state.
The state Public Charter School Commission on Tuesday voted to issue to Ka’u Learning Academy a “notice of prospect of revocation” — the first step in the process of revoking its charter — alleging issues found in the school’s fiscal year 2017 audit potentially violate provisions of its charter contract.
Those issues were failing to follow standard accounting practices, a lack of separation of duties in school financial procedures and noncompliance with Department of Labor laws and regulations, according to the commission.
The commission also voted Tuesday to withhold Ka‘u Learning Academy’s second allocation of per-pupil state funding, excluding funds necessary to pay essential operational expenses.
The school has 30 days to reply to the notice. It can request a public hearing, and the commission must make a final decision within 30 days of the hearing or within 30 days of the school’s response, if no hearing is held. The commission has an additional 15 days to notify the school of its final decision.
If the commission decides to revoke the school’s charter, a “sequence and timeline will be determined by the commission at the hearing or at a meeting following the hearing,” commission chairwoman Catherine Payne said in an email.
Ka‘u Learning Academy also can appeal a final decision of revocation, which school leaders told the Tribune-Herald they “absolutely” would do.
During Tuesday’s meeting, Ka‘u Learning Academy Managing Director Joe Iacuzzo disputed the severity of the audit deficiencies, referring to them as “basic minor clerical errors,” and said the school’s academic performance remains strong.
“What’s important is it’s a clean audit,” Iacuzzo told commissioners. “There isn’t any fraud … there’s nothing off by tens of hundreds of thousands of dollars. Maybe one of the reasons we don’t have as much time to focus on these issues is because of what we’re accomplishing with our children and families down there in Ka‘u.”
Sandra Silva, a certified public accountant who said she’s now working with the school to resolve its issues, told the Tribune-Herald she also thinks the errors are “clerical” and “fairly minor.”
The independent audit found the school failed to document charges made on the school debit account, failed to run employee compensation — specifically bonuses — through payroll, and paid educational assistants as independent contractors, the latter two the commission said are possibly violations of state collective bargaining requirements.
Steve Hirakami, director of Pahoa-based Hawaii Academy of Arts and Science, also testified in support of the school, telling commissioners an early independent audit of HAAS revealed even more problems which make Ka‘u Learning Academy’s appear “minuscule.”
However, commissioners disagree — they consider findings to be “serious and significant,” Payne said.
“The commission has a duty and obligation to ensure the fiscal viability of the school,” she said in the email. “The audit report had significant findings and the commission takes these findings seriously and raised significant concerns over the ability of the school to correct these problems, some of which were noted from last year’s audit.”
There are at least 34 charter schools statewide. Only one has had its charter revoked — Halau Lokahi Public Charter School in Honolulu in 2015.
Ka‘u Learning Academy, now in its third year, has 95 students enrolled in grades 3-7. If it loses its charter, neighboring public schools would be required to enroll any of its students who reside in their geographic area. Payne said a letter will be sent to Ka‘u Learning Academy students and staff by the end of the week.
The school has been at odds with the commission in the past. Last summer, commissioners denied its request to expand to eighth grade.
In 2016, the commission issued the school a deficiency notice for failing to resolve financial issues, including missed deadlines and improperly processing payroll and employee benefits. The school disputed those issues at the time and alleged part of the problem was they had difficulty reaching and working with commission staff.
More information about the audit and Tuesday’s meeting can be found at tinyurl.com/KLAmeetingmaterials.
Email Kirsten Johnson at kjohnson@hawaiitribune-herald.com.
