Audit Reveals Sacramento Charter School Wrongly Received $180 Million

A state audit found that a Sacramento area charter school received more than $180 million in funding it was not eligible for, engaged in wasteful spending, and assigned teachers to classes they did not have the credentials to teach.

The report from the California State Auditor found that Highlands Community Charter and Technical Schools did not meet the conditions set for its funding and also did not comply with state law in calculating daily attendance.

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The auditor also claims that Twin Rivers Unified School District failed to provide sufficient oversight of the charter school.

According ot the audit, Highlands receives K-12 funding despite serving adult students under the Workforce Innovation and Opportunity Act. According to the school's website, it serves adults ages 22 and up at no cost, providing a high school diploma program, English language classes and career technical education.

"By not offering the required amount of instruction at the schoolsite, requiring students to attend class at the schoolsite for the minimum amount of time required by law, or meeting requirements for nonclassroom-based instruction, HCCS was not eligible to receive the $177 million in K–12 funding it received in fiscal years 2022–23 and 2023–24. Further, Highlands received more than an estimated $5 million in overpayments, of which $3.5 million is in addition to the $177 million in disallowed funding, by not complying with state law in calculating its average daily attendance," the audit states.

The audit also alleges that Highlands engaged in "questionable transactions," including violating prohibitions against gifts of public funds, not seeking board approval for some contracts and purchases, lacked clear hiring and compensation policies, hired and promoted unqualified individuals and in one instance, entered a contract for mentor services with the spouse of a Highlands director.

The auditor's report also indicates poor student performance under Highlands.

"HCCS had a graduation rate of 2.8 percent in fiscal year 2023–24," the audit noted. "CDE determined that Highlands’ schools’ graduation rates were so low that they dropped the overall statewide graduation rate for the 2023–24 school year by more than half of a percentage point, from 87 percent to 86.4 percent."

One possible reason for the poor student performance, the audit posits, is the student-to-teacher ratio, which was about 51 students for every one teacher.

As far as oversight, the audit states that Twin Rivers authorized the charters for both schools and bears primary responsibility for overseeing them. But the auditor found that Twin Rivers relied heavily on annual audits that had errors.

"If Twin Rivers had conducted more thorough oversight, it could have identified some of the violations we identified as part of our audit and taken action to address them earlier," the audit states.

In response to a draft of the audit, Highlands' legal counsel claimed that no prior concerns had been raised about the charter school until this year.

"If there was a failure here pertaining to credentialing, it was no fault of Highlands, and Highlands should not be penalized for any mistakes and directions provided by oversight agencies," the counsel stated, in part.

Following the release of the audit on Tuesday, the California Charter Schools Association said that Highlands was already making some of the necessary changes.

"While today’s audit findings underscore the scope of necessary corrections, we are encouraged by the sweeping reforms and leadership changes announced today by Highlands' Board," CCSA shared in a statement. "The unique communities served by Highlands — and their unique needs — deserve a high-integrity, high-performance organization in their corner, along with an oversight agency that ensures those reforms are fully implemented."

The state auditor made a number of recommendations for Highlands to follow to ensure compliance, including new attendance policies, new guidance on tracking classroom-based learning, implementing new policies in regards to use of public funding, and standardizing hiring practices. It also made several recommendations for the California Legislature, Twin Rivers, the California Department of Education, the Commission on Teacher Credentialing and the Sacramento County Office of Education to implement to prevent this situation from happening again.

Read the full audit here .

Following the audit's release, Highlands said it has made a number of changes and appointed new leadership, with the hope of leading the institution "into a new era of transparency, accountability and service."

The charter school appointed Jonathan Raymond, former Sacramento City Unified superintendent, to lead Highlands through "a full-scale turnaround effort."

"His mandate is clear: to confront past failures, restore public confidence, and protect a critical institution that serves thousands of immigrants, adult learners, and returning citizens every year," the school shared in a statement.

Beyond the leadership change, the school said some of its key reforms include a credentialing compliance initiative, workforce restructuring, site consolidation, instructional time reform, governance and financial reform and further oversight and transparency.

In response to the audit, Twin Rivers maintains it was following state law, while also calling for more revisions to state policy.

"Despite disagreeing with some of the assertions made in the audit, TRUSD maintains that it met existing law and also remains committed to continuous improvement. TRUSD has and will continue to update oversight procedures, has retained outside experts, and taken proactive steps to ensure even greater transparency and accountability of charter schools moving forward," the district shared in a statement, in part.

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