Superintendent of Instruction for the California schools, Jack O'Connell, started an audit more than a year earlier into the fiscal concerns of the Alternatives for Youth and Opportunities for Knowing (OYO) schools. The OYO is a chain of independent research study charter schools within the California schools system, which are privately run but moneyed by the state.

The OYO California schools serve students who have actually dropped out of the conventional high schools. They presently have about 15,000 students in 40 storefront places across the state. These California schools students do most of their work at house, conference with teachers two times a week. According to state records, trainee accomplishment test and high school exit examination scores are above average, as compared to other alternative high schools within the California schools system. According to a Los Angeles Times post of August 10th, just 11 percent of OYO trainees finished throughout the 2003-2004 school year. The remainder of students that left school that year either left, were expelled, or moved to other schools.

The California schools' audit was performed by the Financial Crisis and Management Help Group, who concluded their analysis and provided their findings in a report that was released in August 2006. The audit points out accounting problems, overpayments by the state, disputes of interest, nepotism, excessive compensation, and mixing private business concerns with public schools.

The OYO was founded and still operated by John and Joan Hall, former teachers from Hollywood High School. They have totally cooperated with the California schools' audit, however dispute the majority of the findings.

Some examples from the audit report are:

• Accounting Defects 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 genuine technique for compensating school staff for longer days and year-round schedules. California schools superintendent O'Connell believes teachers ought to be counted just as one full-time position each. The auditors disagreed, citing that standard California schools instructors spend much less time working each year than those at OYO. Nevertheless, the auditors believed the 1.92 quantity is pumped up. This example, alone, accounts for over half of the $57 million overpayment.

In addition, the report noted several doubtful expenses. One example of unrestrained spending, given by the Times was an $18,000 personnel party held at Disneyland. Allen safeguarded that occasion as an effort at relationship building between employee, who are scattered throughout the state. He noted that the costs was less than $50 per team member.

• Conflicts of Interest and Mixing Private Company with Public Schools. Besides the charter schools, the Halls own and operate a number of personal services that sell products and services to schools. The Times noted that the Alternatives in OYO was the not-for-profit part of the setup, with the Opportunities part being for-profit. The audit calls this practice and setup into concern.

• Extreme Payment. The audit also questions the combined salaries for the Halls, which is $600,000 yearly. The report states that it may be extreme for the quantity of time the couple really works.

• Nepotism. The Halls created a separate charity with $10.8 million of the California schools' funding, called Pathways in Education. The charity is run by their daughter, Jamie Hall. Little money has actually been spent toward education so far.

The Halls car donation without title compete that they previously had actually requested assistance on their operation from the California schools lot of times, but never got any response. Thus, they attempted to follow California schools requirements as finest they could with their understanding of the policies. Even O'Connell conceded that none of the cited practices are illegal.

The audit recommends the California schools need to attempt to recuperate the $57 million in overpayment from the OYO. O'Connell has sent the report to the state's lawyer general's office for review and any necessary action.