How a Sacramento charter school misused $180 million and became a poster child for reform

Navigating Charter School Accountability: Lessons from the Highlands Case

The landscape of education is constantly evolving, with innovative models like charter schools offering unique pathways to learning.

However, as with any system, robust oversight and accountability are paramount to ensure public funds are used effectively and educational goals are met.

This article delves into a critical case study involving a Sacramento charter school, exploring the complexities of its operations, the findings of a significant audit, and the broader implications for charter school governance.

We will examine the timeline of events, the critical audit findings, and the lessons learned for authorizers, school leaders, and the broader educational community.

Understanding the Genesis of a Charter School: High Hopes and Early Challenges

In 2014, Highlands Community Charter and Technical Schools emerged in Sacramento with a noble mission: to empower adult learners.

The school aimed to provide pathways for individuals seeking to earn diplomas, enhance their English language proficiency, or acquire valuable vocational skills.

Many of its students were adults who had faced significant life challenges, including prior incarceration or navigating the complexities of being new immigrants.

The initial vision was to be a beacon of opportunity, fostering educational attainment and economic mobility.

However, almost from its inception, the school found itself under scrutiny.

Investigations and critical reports began to surface shortly after its first campus opened.

Despite these early warning signs, the charter school was permitted to expand significantly, growing to encompass over 50 sites and serving approximately 13,700 students, managing a substantial budget.

This expansion, occurring amidst ongoing concerns, highlights a critical juncture where oversight mechanisms were either insufficient or ineffective, setting the stage for more profound issues to emerge.

The Critical Audit: Unpacking Financial Mismanagement and Educational Deficiencies

A pivotal moment in understanding the challenges at Highlands Community Charter came with the release of a comprehensive report by the California State Auditor's Office.

Commissioned by state legislators, this extensive audit brought to light a series of serious improprieties that had far-reaching consequences.

The findings painted a stark picture of financial mismanagement and a significant disconnect between the school's operational practices and its educational mandate.

Financial Irregularities and Ineligible Funding

One of the most significant revelations from the audit was the discovery that Highlands Community Charter had received over $180 million in K-12 funds to which it was not eligible.

This substantial sum represented a misallocation of resources, impacting the integrity of the funding system.

The audit determined that the adult school had improperly accessed funding streams designated for K-12 students, a practice that carried significant financial and accountability implications.

This finding underscored a fundamental misunderstanding or deliberate circumvention of funding rules, particularly concerning the school's classification and the eligibility criteria for various educational grants.

academic Performance and Graduation Rate Concerns

Beyond financial discrepancies, the audit also cast a harsh light on the school's academic outcomes.

Graduation rates were alarmingly low, to the extent that they negatively impacted the overall state graduation rate.

Studies indicate that the school's graduation rate hovered around a mere 2.8%, with its California Innovative Career Academy (CICA), an independent study school established in 2019, showing a rate of 16.9%.

These figures raised serious questions about the effectiveness of the educational programs and the support provided to students.

The audit also noted that the school had eliminated the 11th grade, a move that appeared to be a strategy to circumvent standardized testing requirements, further complicating the assessment of academic progress.

Questionable Expenditures and Staffing Practices

The audit also detailed a pattern of questionable expenditures by school leadership.

Taxpayer dollars were reportedly used for lavish spending, including a three-day professional development trip to San Diego costing $1.96 million, a leadership conference in Maui for $80,000, and a monthly lease of $33,000 for a semi-professional ballpark.

Additionally, over $145,000 was spent on gifts for students.

These expenditures, viewed in the context of low graduation rates and financial improprieties, suggested a significant disconnect between the school's mission and its spending priorities.

Furthermore, the audit uncovered concerning staffing practices.

School leaders were found to have hired friends and family members for positions they were not qualified to hold.

Critically, a large number of teachers lacked the appropriate K-12 credentials required to teach in a K-12 setting, despite the school's classification.

Research shows that at the time of the audit, only 53 out of 250 teachers possessed the necessary K-12 credentials.

This deficiency in qualified teaching staff was identified as a potential contributing factor to the poor academic performance of students.

The audit also highlighted that many teachers lectured for only two to three hours a day, with students reportedly attending classes at will, and that the school lacked verifiable attendance documentation.

The Role of Authorizers and Oversight: A Shared Responsibility

The findings of the Highlands audit pointed not only to issues within the charter school itself but also to systemic failures in oversight.

The audit explicitly placed responsibility on Twin Rivers Unified School District, the California Department of Education, and the Sacramento County Office of Education for not taking adequate action after previous reports indicated problems.

Twin Rivers Unified: The Authorizer's Dilemma

As the charter school's authorizer, Twin Rivers Unified School District played a crucial role in its governance.

The audit revealed that the district collected significant facility fees – approximately 3% of the charter's K-12 funding – to provide oversight.

However, despite earlier reports, including a 2018 Fiscal Crisis and Management Assistance Team (FCMAT) report that highlighted questionable practices, Twin Rivers Unified proceeded to give conditional approval to the California Innovative Career Academy in 2019.

The audit concluded that if Twin Rivers had conducted more thorough oversight, it could have identified and addressed violations earlier.

The district's oversight was characterized as minimal, relying too heavily on the charter school's annual audits, some of which contained inaccuracies.

While district officials maintained that they met existing legal requirements, the case underscored that legal compliance alone may not be sufficient for effective oversight.

The situation highlighted the need for authorizers to go beyond perfunctory checks and engage in proactive, in-depth monitoring of fiscal health and academic performance.

The Broader Oversight Ecosystem

The problems at Highlands Community Charter were not solely attributable to one entity.

Observers suggest a systematic failure involving multiple stakeholders.

Myrna Castrejón, president and CEO of the California Charter Schools Association, described it as a failure on all ends: authorizing, oversight, and school leadership.

The evolving nature of charter school models and the complexities of adult education funding created an environment where interpretations of rules could be loose, and reactions to emerging issues might lag behind the pace of change.

This suggests that educational policy and regulatory frameworks need to be agile and responsive to the dynamic nature of innovative educational initiatives.

A Timeline of Events: Tracing the Path of Challenges

Understanding the sequence of events provides crucial context for the issues that unfolded at Highlands Community Charter.

The timeline reveals a series of decisions, investigations, and developments that led to the critical audit and its aftermath. * **March 4, 2014:** The charter petition for Highlands Community Charter and Technical Schools is approved by Twin Rivers Unified School District. * **August 18, 2014:** Highlands Community Charter and Technical Schools opens its initial campus in Sacramento. * **September 17, 2014:** A five-year contract, valued at $390,000, is awarded to LAED Consulting, owned by Linda Fowler, who serves on both the Highlands and Twin Rivers Unified school boards. * **September 18, 2014:** Linda Fowler resigns from the Highlands school board but indicates she will continue to vote on board matters as a liaison from Twin Rivers Unified. * **November 19, 2014:** Following objections, the Highlands board rescinds the LAED Consulting contract, with the firm receiving $13,000 for two months of service. * **July 2015:** The California Fair Political Practices Commission initiates a conflict-of-interest investigation into Linda Fowler. * **February 2016:** The Sacramento County grand jury commences an investigation into the charter school. * **July 2016:** The grand jury report attributes blame to Twin Rivers Unified leadership for failing to intervene when Fowler held dual roles as a paid consultant and board member for the charter school. * **December 2016:** The Sacramento County Office of Education requests an investigation by the state's Fiscal Crisis and Management Assistance Team (FCMAT) into potential illegal fiscal activities at Highlands. * **May 31, 2018:** The FCMAT report finds no intentional fraud but identifies issues such as enrolling ineligible students, hiring staff with felony convictions, and paying employee bills. * **July 1, 2019:** Twin Rivers Unified renews the charter for Highlands Community Charter School and grants initial approval to its California Innovative Career Academy (CICA). * **July 2019:** The Fair Political Practices Commission concludes its investigation, finding that Fowler intentionally influenced board decisions to hire her consulting firm and imposes a $3,500 fine. * **May 14, 2024:** The California State Legislature requests the State Auditor’s Office to investigate Highlands Community Charter and Technical Schools. * **December 23, 2024:** The Commission on Teacher Credentialing informs Highlands that its teachers must hold K-12 credentials. * **April 14, 2025:** The Highlands school board approves a plan to lay off teachers and staff and limit student enrollment due to a shortage of credentialed teachers. * **June 24, 2025:** The California State Auditor’s Office releases its report, detailing the $180 million in ineligible K-12 funding, improperly assigned teachers, and the elimination of 11th grade. * **July 7, 2025:** Jonathan Raymond, former Superintendent of Sacramento City Unified, begins his role as Executive Director of Highlands Community Charter and Technical Schools.

The entire charter school board resigns at his request.

The "Cozy Relationship": Conflicts of Interest and Questionable Partnerships

The relationship between Highlands Community Charter and its authorizer, Twin Rivers Unified, was marked by instances that raised concerns about conflicts of interest and undue influence.

The shared board member, Linda Fowler, exemplifies this complex dynamic.

Her dual role as a Twin Rivers Unified board member and a founder of Highlands, coupled with her consulting firm's contract with the charter, created a situation ripe for scrutiny.

Although the contract was eventually rescinded, the initial awarding and the subsequent fine from the Fair Political Practices Commission highlight the importance of stringent conflict-of-interest policies in educational governance.

Furthermore, the hiring of Bill McGuire, Twin Rivers Unified's former deputy superintendent, as an executive director for Highlands after he left the district, also points to a close-knit network.

While such transitions can sometimes be beneficial, in the context of the ongoing audit and previous concerns, it underscored the need for transparency and robust vetting processes to ensure that all appointments serve the best interests of students and public funds.

The Fallout and the Path Forward: Lessons for Educational Reform

The repercussions of the audit were immediate and significant.

Many of the 700 employees at Highlands Community Charter and Technical Schools faced layoffs, and numerous smaller school sites were shuttered due to the lack of credentialed teachers.

Only a fraction of the school's former student population could re-enroll, with thousands placed on a waiting list.

The case of Highlands Community Charter serves as a critical reminder of the essential need for: * **Robust Authorizer Oversight:** Charter authorizers must move beyond perfunctory annual reviews and implement comprehensive, proactive oversight mechanisms.

This includes regular site visits, in-depth financial analysis, and a thorough review of academic performance data. * **Clear Funding Guidelines:** Educational institutions, especially those operating under innovative models like charters, must adhere strictly to funding eligibility criteria.

Ambiguities in funding streams, particularly those involving K-12 funds for adult education programs, require clear interpretation and enforcement. * **Teacher Credentialing and Professional Development:** Ensuring that teachers possess the appropriate credentials for the students they serve is non-negotiable.

Investing in ongoing professional development and adhering to state credentialing requirements are fundamental to effective instruction. * **Transparency and Accountability:** All stakeholders, from school boards to authorizers and state agencies, must operate with the highest levels of transparency and accountability.

This includes clear reporting, open communication, and swift action when issues arise. * **Conflict of Interest Policies:** Strict policies and diligent enforcement are necessary to prevent conflicts of interest, especially when individuals hold positions on multiple governing bodies or have financial interests in the entities they oversee.

The situation at Highlands Community Charter, while concerning, has also spurred legislative action aimed at strengthening charter school oversight.

The ongoing discussions and revisions to charter school bills reflect a commitment to learning from these challenges and implementing reforms that safeguard educational integrity and public trust.

For institutions like Mentofy, this case underscores the importance of providing comprehensive learning resources that equip educators, administrators, and policymakers with the knowledge and tools to navigate the complexities of educational governance and ensure equitable and effective learning opportunities for all.

Conclusion

The story of Highlands Community Charter and Technical Schools in Sacramento is a complex narrative of ambitious goals, significant challenges, and critical lessons learned.

The extensive audit revealed substantial financial improprieties, academic deficiencies, and lapses in oversight that impacted the educational well-being of its students and the responsible use of public funds.

This case highlights the vital importance of rigorous accountability, transparent operations, and proactive oversight within the charter school system.

By examining the timeline, the audit findings, and the roles of various stakeholders, we gain invaluable insights into the mechanisms that can prevent similar issues from arising and ensure that charter schools fulfill their promise of providing high-quality educational alternatives.

The ongoing efforts to reform charter school governance are a testament to the commitment to improving the educational landscape, ensuring that every school serves its students effectively and ethically.