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1. Superintendent of Direction for the California schools, Jack O'Connell, started an audit more than a year earlier into the financial issues of the Choices for Youth and Opportunities for Learning (OYO) schools. The OYO is a chain of independent research study charter schools within the California schools system, which are independently run but funded by the state. The OYO California schools serve trainees who have actually left of the standard high schools. They currently have about 15,000 students in 40 shop places throughout the state. These California schools students do the majority of their work at house, meeting with instructors twice a week. According to state records, trainee achievement test and high school exit exam ratings are above average, as compared to other alternative high schools within the California schools system. According to a Los Angeles Times article of August 10th, only 11 percent of OYO students finished during the 2003-2004 academic year. The remainder of students that left school that year either dropped out, were expelled, or moved to other schools. The California schools' audit was carried out by the Financial Crisis and Management Help Group, who concluded their analysis and presented their findings in a report that was launched in August 2006. The audit mentions accounting problems, overpayments by the state, disputes of interest, nepotism, extreme compensation, and mixing private service concerns with public schools. The OYO was founded and still run by John and Joan Hall, former instructors from Hollywood High School. They have fully worked together with the California schools' audit, however disagreement the majority of the findings. Some examples from the audit report are: • Accounting Flaws and Overpayments. The Halls count each of their teachers as 1.92 full-time positions. Their representative, Stevan Allen, specified that this is a typical practice for charter schools in the California schools system and is a legitimate technique for compensating school personnel for longer days and year-round schedules. California schools superintendent O'Connell thinks teachers must be counted just as one full-time position each. The auditors disagreed, mentioning that traditional California schools instructors spend much less time working each year than those at OYO. However, the auditors believed the 1.92 amount is inflated. This example, alone, accounts for majority of the $57 million overpayment. Furthermore, the report kept in mind numerous questionable costs. One example of unrestrained costs, provided by the Times was an $18,000 staff party held at Disneyland. Allen defended that occasion as an attempt at relationship building between employee, who are spread throughout the state. He kept in mind that the expenses was less than $50 per team member. • Disputes of Interest and Mixing Private Business with Public Schools. Besides the charter schools, the Halls own and operate a number of personal services that sell materials and services to schools. The Times noted that the Choices in OYO was the nonprofit part of the setup, with the Opportunities part being for-profit. The audit calls this practice and setup into concern. • Extreme Compensation. The audit likewise questions the combined wages for the Halls, which is $600,000 every year. The report specifies that it may be extreme for the amount of time the couple really works. • Nepotism. The Halls developed a different charity with $10.8 countless the California schools' funding, called Pathways in Education. The charity is run by their child, Jamie Hall. Little money has actually been invested towards education so far. The Halls compete that they formerly had actually requested guidance on their operation from the California schools many times, but never ever got any response. Thus, they tried to follow California schools requirements as finest they might with their understanding car donation value of the policies. Even O'Connell yielded that none of

2. the pointed out practices are illegal. The audit recommends the California schools ought to attempt to recover the $57 million in overpayment from the OYO. O'Connell has sent the report to the state's chief law officer's office for evaluation and any essential action.