Auditor says former KC charter school reaped $4.3 million with false attendance records

A former Kansas City charter school for high school dropouts collected an excess of $4.3 million in state funds through inflated attendance records, according to a state audit released Friday.

Hope Academy, which closed its last campus building in June 2014, had been reporting attendance rates as high as 97.9 percent when state education officials surprised the campus with a visit in October 2013.

The audit supports claims made by the state that the school had falsified attendance records and therefore collected state dollars well beyond what the school should have received.

The audit, which gave the school an overall rating of “poor,” also criticized the school for giving students credit for service learning activities that were not education-related but were personal activities like lawn-mowing and dog-walking. The audit also found mistakes in some of the school’s contracts and purchases.

“This was a second-chance school that was supposed to help kids set their lives back on track,” State Auditor Nicole R. Galloway said. “Hope Academy failed these kids. Whenever we find fraudulent records of taxpayer dollars spent, we’re going to call it out.”

Hope Academy took issues with many of the claims in the audit, including saying that the school’s charter with its sponsor, the University of Missouri-Kansas City, allowed the school to count students as in attendance who were doing work by computer off campus.

Many of these were nontraditional students, including many who were homeless, the school said, and they benefited from flexible scheduling.

But the state’s investigation raised concerns with the attendance records that took Hope Academy’s board by surprise when the complaint was first made, said the board’s attorney, Dana Cutler.

“The board worked in a very transparent way with the auditor and gave access to everything they had,” Cutler said.

UMKC notified the school in December 2013 that it was withdrawing its sponsorship in June 2014, citing concerns with the school’s academic performance. Legal attempts by Hope Academy to compel UMKC to continue its sponsorship failed.

The state had immediately suspended payments to the school in the fall of 2013, holding back about $600,000 of the estimated $1.24 million the state said it overpaid for the 2013-2014 school year.

The audit states that the school had received an additional $3.1 million in overpayment for the 2012-2013 school year.

The charter school in those years had been in an expansion mode, spending millions remodeling and moving from its original Zion Grove campus into two buildings — its Bennington and Paseo campuses — with another purchase of a Meyer campus that wasn’t ever used.

The audit found no indication that any of the excess revenue had been spent for personal uses.

The Department of Elementary and Secondary Education, in a statement, said the department has been in contact with the state attorney general’s office.

The audit, which the education department requested, “confirms our concerns,” the statement said. “It is the department’s position that all funds now being held by Hope Academy be returned and distributed to serve the children” in Kansas City Public Schools and charter schools.

Hope Academy, according to the audit, closed its buildings after the state made its complaints, relinquished its properties and sold its assets or surrendered property to UMKC.

In June 2014, Hope Academy’s board offered to pay the Missouri Department of Elementary and Secondary Education $200,000 and enter into a payment plan for the rest until debt is paid or legal matters are resolved. But the education department has not accepted the settlement.

A balance remains with the $640,000 overpaid for the 2013-2014 school year, plus the $3.1 million overpayment from the prior year, the audit said. As of July 31, the audit said, the school reported a cash balance of $374,279.

Hope Academy is resolving some remaining legal issues, Cutler said, but the board will be able to refund the remaining funds in its balance to DESE within 60 days.

This story was originally published December 4, 2015 at 2:00 AM with the headline "Auditor says former KC charter school reaped $4.3 million with false attendance records."