Assemblymember Al Muratsuchi's Statement on California Auditor investigation and Findings on the Highlands Community Charter and Technical Schools

Torrance, CA – Assemblymember Al Muratsuchi (D-Torrance), Chair of the Assembly Education Committee, issued the following statement on the California Auditor's audit entitled "Highlands Community Charter and Technical Schools: Lax Oversight Allowed Highlands to Inappropriately Receive More Than $180 Million in K-12 Funding." Highlands Community Charter and Technical Schools (Highlands) is a nonprofit corporation operating two charter schools in California, the Highlands Community Charter School (HCCS), a classroom-based school, and California Innovative Career Academy (CICA), an independent study school. Twin Rivers Unified School District (Twin Rivers) authorized the charters for both schools. 

Assemblymember Muratsuchi stated:

"The California Auditor’s investigation and findings confirms what numerous whistleblowers have been complaining about for years, that Highlands Community Charter Schools inappropriately received over $180 million in public education funding just during two audited fiscal years, and engaged in wasteful spending as well as hiring and contracting based on nepotism. These complaints that have been confirmed include Highlands Charter’s practice of receiving a full school day equivalent of public education funding per student despite teachers lecturing for only a few hours, students attending less than a full day, and school staff inflating student attendance numbers. Other complaints of abusive spending of tax dollars include $1.96 million for a 2023 San Diego staff retreat, as well as over $82 thousand in staff travel to destinations like Paris and Maui.

"The California Auditor’s findings underscores the urgent need to strengthen public oversight of California charter schools. I introduced Assembly Bill 84 to crack down on charter school fraud and to strengthen our system of charter school oversight and accountability. Highlands Charter is just the latest example of bad actor charter schools taking advantage of lax oversight of public education tax dollars. In 2021 the operators of the A3 Charter Schools, based in San Diego County, were criminally convicted and sentenced to prison for defrauding over $400 million in public education funding. These cases make clear the urgent need to strengthen charter school oversight and accountability.”

The report found four primary types of violations:

1. Highlands Received More Than $180 Million in K–12 Funds for Which It Was Not Eligible:  

   Highlands collected millions of dollars in K–12 funding for its classroom-based school despite not meeting the funding conditions related to its mode of instruction. By not offering the required amount of instruction at the school site, requiring students to attend class at the school site 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. 

2. Highlands Has Engaged in Wasteful Spending and Inappropriate Hiring Practices:

   Highlands lacked sufficient controls over its spending to prevent waste of the public funding it receives. We found that Highlands engaged in several questionable transactions, including some that violated legal prohibitions against gifts of public funds and conflicts of interest, such as entering into a contract for mentor services with the spouse of a Highlands director.

3. Unqualified Teachers and Large Student Enrollment May Contribute to Poor Student Outcomes at Highlands' Schools: 

   The majority of Highlands teachers we tested did not hold the appropriate credentials for the classes they taught, and some lacked any credentials at the time they were teaching classes. Further, Highlands exceeded the allowable student-to-teacher ratio for CICA, its independent study school. Lastly, Highlands did not offer 11th grade for its students, the year required by California law to administer standardized testing. 

4. Twin Rivers and Other Educational Entities Did Not Provide Adequate Oversight of Highlands:

   Twin Rivers conducted only minimal oversight of Highlands and instead relied heavily on annual audits, which we found to have inaccuracies. If Twin Rivers had conducted more thorough oversight, it could have identified some of the violations we identified during our audit and taken action to address them earlier. Twin Rivers collected $12.9 million in oversight and facility fees from Highlands from fiscal years 2019–20 through 2023–24, but because the district does not track the costs of its oversight, it may have been entitled to less than it received.

Assemblymember Al Muratsuchi represents California's 66th Assembly District, which includes El Segundo, Gardena, Hermosa Beach, Lomita, Los Angeles, Manhattan Beach, Palos Verdes Estates, Rancho Palos Verdes, Redondo Beach, Rolling Hills, Rolling Hills Estates, San Pedro and Torrance. Muratsuchi is Chair of the Assembly Education Committee and a member of the Committees on Budget, Budget Subcommittee on Education, Higher Education, and Natural Resources.