‘Fiscal mismanagement’ cited in closing 2 Magnolia charters

Magnolia Science Academy logo LAUSDLA School Report has learned that ‘fiscal mismanagement’ and a host of other irregularities are the reasons behind the sudden closure last month of two LA Unified charter schools, Magnolia Science Academy 6 and Magnolia Science Academy 7, according to a letter sent from LAUSD’s Charter Division.

Both are considered high-performing schools; MSA-6 is a middle school in Palms serving about 140 students, and MSA-7 is an elementary school in Van Nuys which serve 300 students.

The document was sent by the district on June 27, to the schools’ non-profit parent organization, Magnolia Public Schools (MPS) which operates 11 schools across the state, some of which have also been subject to scrutiny.

Mehmet Argin, Chief Executive Officer of MPS says the decision by LAUSD to rescind their charters came with no warning, leaving families with few options. “Shocked. I was just shocked and surprised,” he told LA School Report.

In the letter, the district outlined the results of its recent audit that found ‘significant’ problems including what it said was a state of financial insolvency, accounting and reporting irregularities, and governance issues. In all, the district says the schools were “unlikely to successfully implement program[s]” and therefore did not meet the bar for their conditional renewal.

According to the letter, the audit revealed that:

  • The parent company, MPS, met the IRS definition of being insolvent as of June 2013 and owed money to its schools. One of the schools Magnolia 6, also met the definition of insolvent, the other, Magnolia 7, operated in a deficit mode.
  • The parent company did not document what the letter calls ‘inter-schools borrowing.’ The district said it was “not aware of any other CMO (Charter Management Organization) that borrows substantial money…from its schools.”
  • The parent company paid more than $206,000 in immigration fees and lawyers in the past four years for non-employees.
  • The parent company paid another non-profit called Accord $3 million dollars to carry out services, what it says is a third of its budget, and which has overlapping responsibilities with the charter operator such as accountability, curriculum development and professional development.

In response to the closures, MPS filed for an injunction last week in LA Superior Count to block the closures of the schools. A hearing is scheduled for July 24.

LAUSD would not comment on the letter due to the pending court hearing, and would not make the actual audit available to LA School Report for review.

Argin, Magnolia Public Schools CEO, said he was surprised that the district acted so swiftly in shutting down the schools. He says the district issued the notice of non-renewal just a day shy of the deadline, leaving the schools with no opportunity to discuss or appeal the decision.

“It was impossible for us to respond. To explain that they are wrong,” he said.

Argin categorically disputes all of the district’s material findings as they have been reported to MPS. In a letter to the district, MPS refutes the findings, arguing:

  • The parent company is financially solvent, has nearly $5 million in net assets and expects to have $7 million by the end of the year. MPS contends the district is mistaken in evaluating the financial health of the individual schools because the parent company files a single consolidated tax return that includes the eight charter schools in LA Unified. With that understanding, a consolidated audit that was commissioned a year ago by Magnolia “clearly demonstrates that there is no danger of insolvency.”
  • As for the the practice of inter-school borrowing, MPS does not classify the exchange of money as “loans,” but rather as “advances.” As such, it maintains there is no need for documentation.
  • MPS does not deny that the non-profit Accord, provides instructional support and curriculum development for its schools. But MPS says the $3 million it paid Accord represents only 2.75 percent of the organization’s $110 million consolidated revenues, not the 30 percent the District alleges.
  • The district’s allegation that the two charter schools paid more than $206,000 in immigration lawyers and fees in the past four years is completely unfounded. “To state or imply immigration related expenses were paid with school funds for non-school related activities or costs is factually incorrect”.

“We have no idea how they arrived at these numbers,” says Kim Onisko, MPS’s accountant, expressing frustration over not being able to access LA Unified’s internal audit. “Nowhere in their books and records could they tie out to that number.”

“These are not schools that are on the verge of shutting down. This is a company that is doing very well,” he said.

The abrupt nature of the closures is “highly unusual,” according to Ricardo Soto, general counsel of the Charter School Association. While both schools had been awarded charter renewals in a March meeting of the LAUSD school board, those renewals were contingent on one ‘condition’: that the schools undergo and pass a fiscal audit.

In recent memory Soto says he has “never seen a charter school have their renewal rescinded base on district staff determining that a condition hasn’t been met.”  If a district finds reasons to close a school it would typically start the process of revoking its charter, a sometimes lengthy process that allows feedback and is overseen by state law.

 

18 thoughts on “‘Fiscal mismanagement’ cited in closing 2 Magnolia charters

  1. Dear. Mr. E,

    While some of your allegations about the governing body may or may not be correct, please do not discredit the students and the teachers at these schools. The majority of the subjects taught at MSA schools (English, Social Studies, etc.) are taught by fully CA credentialed teachers who have attended credential programs at American colleges. How do I know? I am a teacher at an MSA school. I’ve seen the long hours that both our teachers and students put in on the day-to-day and the extra dedication that we all have. We often work longer hours, do more extracurriculars, and play bigger roles in our small schools than the typical LAUSD teacher. Why do we continue to work for these charters? Because we love our students. Underneath all of the politics, controversies, and conspiracies are parents and students looking for a better option. Alot of the times, a better option is a place where they feel safe and confident, knowing that the students are there to learn and the teachers care. Each school really is like a small little community where everyone knows each other and supports each other. This can’t be said about most of the non charter LAUSD schools.

    • No wasting time with this Ahmet Esekogloglu folk. I searched his name online and also talked to some of my good Armenian friends. As I am told, his last name “Esekoglu” means “SON OF A DONKEY” in Armenian/Turkish. He even can’t spell it and has an extra “og” in his last name. This guy is FAKE!!! He must be a Turkish-hater Armenian diaspora radical. It seems he spends all his time online making allegations and defamation and earns his life that way. What a way to spend a life!!! He is probably well-paid by his feeders. I bet he never ever stepped a foot on a Magnolia campus. This guy is FAKE. No need to respond to him. He won’t understand. We are all emotional and worried about our school and he-who has never set a foot on the campus but hired to write defamatory remarks by some political diaspora-is here only to spread hatred and venom. It’s just better to stay away from his venom.

    • Dear Amber;
      I am sorry I didn’t catch the school you were a teacher at? I called the 2 schools that are under court order to comply with injunction criteria and they said there was no teacher there by that name.
      Magnolia Public Schools advertised for American teachers and staff on Craig’s List.
      They look for distinct qualities
      1st year teacher.
      A single parent financially struggling.
      A employee that would have a hard time finding employment at other schools.

      I would be curious what you gauge your comparison and assessment with other schools within LAUSD.

      No conspiracy theories your parent management company MERF (no longer Accord Institute by court injunctive orders) has some serious issues.
      As well as obvious and well known ties to the Gulen Movement in the USA and in Turkiye.

      But I appreciate your meager attempt to state your case. The advertising, PR, and marketing of the schools is the same “Award Winning” “Great education without tuition” “Science Festivals” “Math Festivals” “Home visits with the students” (in Arizona they have sleep overs at the schools- Now that is potentially a really liability)
      “International Festivals” “Trips to…

  2. It’s only fair to announce that since this article came out the investigation into these schools and this “group” are now statewide. It now incudes 2 schools in northern California (santa clara, and Oakland) and 2 south of the LAUSD (Santa Ana and San Diego)

  3. It is a shame on LAUSD to not renew such high performing charter schools. First Aspire, now Magnolia, who is next? Can’t you see the animosity against charter schools? Local schools are failing and charters are providing a choice to parents. If they are academically successful, you keep them open. Simple. I don’t understand what all the fuss is about. My niece attends a Magnolia charter and according to my sister it’s been the best school experience ever. LAUSD has done a horrible job with the renewal process. You just can’t wait until the last day of June to tell hundreds of parents their high performing school is closing. Do you guys see the “real world” from Beaudry? If you do, you will find hundreds of students and parents in shock with your decision. I want to believe LAUSD can do better than shutting down high performing schools. Or does the district have a political agenda against charters?

    • “high performing” oh that is funny. These schools are operated by non credentialed teachers here on h1-b Visas to take jobs from qualified American teachers that actually speak English.
      Teaching Turkish culture and language is hardly necessary for these kids to get ahead in America. They need teachers that will help them speak proper English and learn our constitution and US History. Not the Kolbasti or trips to the Turkish Cultural Center (which was really the Pacifica Institute) The only thing high performing about this schools is the keen way they suck out American tax payers money and have nothing to show for it. Building janissaries for the future Gulen golden generation shouldn’t be put on the American tax payer’s shoulders.
      You taught the American kids to say “Merhaba” which is welcome in Turkish. Next you should teach them to say “good bye” as your days in the USA ripping off the American taxpayer are soon over.
      This is what you get for lying. Telling parents their kids are taught by Turkish scholars (snicker giggle) when Turkey’s education on OCED Rankings is below standard at 32 out of 34 countries. Hope you have your exit visas ready.

      • Sweet Lord you are so full of hate is not even funny, again please provide EVIDENCE that the schools are not high performing. Every single comment posted by you is full of HATE, your reasons? I don’t know and honestly I don’t care, that is your problem between you and Turkish people, but when you start attacking the performance of the students than it becomes a personal problem with me. My son studied and work very hard to obtain his grades. Again I DEMAND that you show evidence that the students of Mangnolia Science Academy 6 have cheated on their test or that the teachers ( which at my school non is turkish by the way) have also cheated. Until you provide such evidence and not just YOUR personal opinions I recomend that you stop vomiting venom with your comments.

        • More Gulen plant food ..Maria er Mehmet. You had your chance to be honest with Americans and you were not.
          It’s amazing how many parents had kids there were getting “D’s” then remarkably turned around when they came to the magical school of Magnolia and were now “Honor students” and winning all of these awards. First of all, most of the awards: I-Sweep, Science Olympiad, Math Matters, etc., is Gulen Organizations that own and sponsor the contests. It is largely a marketing tool for the schools.
          The science projects are the same at all their schools coast to coast, and worldwide (yes, they are worldwide but are closing in many countries) if you ask a kid that attends these schools comprehensive questions they are unable to answer about their science project but they do memorize tag lines and verbiage to spew out.
          Evidence how about American teachers that have actually seen you gather the tests go into the other room and physically saw teachers filling in the tests before submitting which is inproper testing.

          • Let me tell you something my LEGAL NAME IS MARIA HUEZO you can google me, I am not Mehmet. After reading all your comments I realize you are a SICK person full of HATE.
            Again write a non-fiction book I will buy it.

  4. These schools knew well in advance that the school district had concerns about their historical operational shortcommings. They only had a conditional approval based on the outcome of a fiscal audit. This audit was not a simple audit but a forensic audit, that dug much deeper into the typical operational fraud of a Gulen managed charter schools. Look farther into the layers of Gulen NGOs around the schools to find the American Tax money intended for education instead is used to lobbying for Gulen, Turkey and other countries with state and federal legislatures. Pacifica Institute (who shared an office with Accord is their political lobbying that you and I are paying for) MERF- Magnolia Educational and Research Foundation, Willow Education, Gulen Institute and more.
    Mehmet Argin is a mistaken, he is confused maybe he still thinks he works for their schools in Arizona (Sonoran Science Academy) and Umit (Matt) Yapanel came from their operation in Colorado (Lotus School of Excellence) where he was denied an expansion.
    These schools are not high performing that is the marketing hype they try to give all their schools. They are also known for their cheating.

    • EVIDENCE of the cheating, please!!!!!! it seems your entire life is dedicated to “investigate” Magnolia Schools, which makes me wonder WHY????? my recommendation to you is to write a non-fiction book, you have a very good imagination put it to use in a positive way.

      • I challenge any of these kinds at MSA 6 or 7 to go against another school instead of against itself and see how these kids stack up.
        In a non biased setting with a third party, I can tell you they will fail miserably.
        The fact they are non Turkish is irrelevant as the board, is ALWAYS Turkish Male and in control of the decisions and always in control of the money. .
        BTW use spell check your post shows you are ESL not that that is a problem but if you are teaching at the school, I am really concerned with your sentence structure.

        • I am ESL, ME? hahaahahahha why don’t YOU check your sentence structure????? Please get a life, that is what you must do. Are you getting paid to vomit venom? since I am a “low class” office manager as you called me before and they are closing the school, I will need a job, tell whomever is paying you I am available also. You are a JOKE, a cheap and hateful JOKE!!!!!!!!!

          • Maria, Mehmet or Mekan
            Capital letters and excessive use of punctuation is a sign of your poor English skills. But then, you indicated you were not a “teacher” but merely an office worker. So I will forgive you for the poor grammatical errors.

            I don’t hate you Mehmet/Maria, I actually am very worried about you and your wife. I am hoping this forensics audit ordered by the OIG doesn’t end up producing criminal charges for you like it has for Salim Ucan, Sedat Duman et al of your sister schools Horizon Science Academies which were raided by the FBI, FCC, and DOE

            You do know that Salim has left the country? He could very easily be brought up on federal racketeering charges like Gulen money man Adem Arici who is now sitting in Federal Prision and singing like a canary (American expression)

            WikiLeaks has indicated that many members of Hizmet are fleeing to Canada for fear of reprisals in Turkey and their lack of extradition laws. Erdogan is out for blood, he wants no less than to dismantle Cemaat.

            A friendly warning about opening up a can of worms that is now expanded to include your entire California operation.
            Are u willing 2b sentenced to prison for…

  5. I agree it is a shame. Now these parents will have to send their kids to schools with all the defiant delinquents, roaming ditchers, and gang-bangers that occupy the regular schools (which must, unlike charter schools, admit such students on the pretext of equity).

    • “regular” schools? Dear Michael or Mekan,
      Magnolia is part of the LAUSD and is held to the same standards as a traditional public school.
      The only problem is charter schools have private management and there is very little if any oversight.
      Your schools have been having financial issues from the get go.
      It’s time to move on and leave education to the American professionals that are licenses and board certified. The management and finances out of this group and into the hands of responsible accounting at LAUSD with checks and balances.
      I just hope that the State of California collectively is not out more than $10 million now that these schools will be looked at on a statewide basis.
      You are wrong being that charter schools are public schools you are not suppose to cream out special needs students or low performing students. But we know you do this to make your API appear higher. Those parents at that school are gullible and only see the trips to Turkey, telling them their kids are going to college, and that their kids are geniuses.

  6. What a shame! They announced the closure on June 30th? What would you do if you were one of the parents of those schools? These are the greatest STEM schools like all other Magnolia schools in LA, there’s no reason to shut them down. LAUSD did not even give a chance to appeal, what a mess? They probably knew that if MPS goes to the state for appeal they’d win it, and have those 2 school become a state-wide benefit charters! These are two high performing charter schools with the APIs over 800 (MSA7′s is over 900!). I am hoping that the court will give a legitimate decision on the 24th!

    • Always pushing the blame and never assuming responsibility for your professional shortcommings. What would I do if I was a parent of these schools? I would have been questioning a bit more closely who the hell they were this shadowy non-transparent groups. I would have asked to see the financials at the board meetings and a business plan.
      But when you ask such things at a school operated by Gulencis they mark you, if you are an American teacher you are fired. If you are a parent, your child is marked and they manage them out of the school.

      So you ask what I would have done, I wouldn’t have sat back feeding my face with all the free baklava without looking deeper and fact checking.

      Don’t be so sure you have your facts correct about an appeal or the date of the announcement of closure 6/30. Had the schools been responsible and working with the forensics auditor, OIG, legal counsel and their board representative instead of robotic responses, their financial insolvency would not have fallen so far behind.
      When did you become an official STEM school? We know you have been re marketing the schools nationwide for this but who is teaching the Engineering part?

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