June 20, 2018 CUSD BOT Meeting Agenda Item #44 NOTICE OF INTENT TO REVOKE OXFORD PREPARATORY ACADEMY CHARTER PURSUANT TO EDUCATION CODE § 47607 (e) (ENCLOSURE)

Board Meeting Agenda page 838

Board Audio at 35:18

Board Audio at 36:49 Presentation by Dr. Susan Holiday

Board Audio at 40:29 17 Public Comments (All Speakers were heard at the full 3 minutes)

Board Audio at 1:28:15 Superintendent Clarification on $4 million dollars and the timeline over the last 18 months. Questions re: Families having openings in CUSD if the Charter is revoked.

Board Audio at 1:29:49 Dr Susan Holiday clarifies Superintendent Vitals points.

Board Audio at 1:33:12 CUSD lays out its options for recovering the $4 million dollars:

OPA has reserves

OPA's Legal Counsel can take the case on a contingency fee basis

OPA can assign the claim to CUSD to pursue.

Board Audio at 1:33:35 Superintendent Vital asks Dr Holiday to address the timeline if the Charter is Revoked. 

If the Board approves in intent to Revoke on July 25, 2018, the Charter can appeal to OCDE in August. The School remains open until the appeal process is complete.

Board Audio at 1:34:35 Trustee Comments

Board Audio at 1:34:40 Trustee Amy Hanacek - re: Can OPA Chino Valley Reserves harm OPA CUSD.

Attorney Hanna Lee's Response: If OPA Chino Valley Reserves run out then yes OPA Saddleback Valley and OPA CUSD will be liable. OPA CUSD pays 60% - Saddleback Valley will pay 40% 

Board Audio at 1:37:30 Trustee Amy Hanacek - re: WASC Accreditation - thats HUGH

Dr Susa Holiday responds: CUSD provided OPA with a notice of concern when they did not receive the accreditation. OPA chose not to re-apply. Many K-8 do not have the WASC accreditation.

Board Audio at 1:38:31 Trustee Jim Reardon - Liabilities

Who is governing OPA? Chino is closed so it is this new Board that will be governing all OPA. There is no Phantom in Chino that has the power to reach in and take money from OPA. There may be some unknown liability, but there is no person taking actions in Chino Valley.

OPA Chino Valley is closed.

The remainder of OPA is a single corporation operating on two campuses under two charters. The 60% -40% split is due to the size of the two schools.

Board Audio at 1:40:30 Dr Susan Holiday- Staff was concerned that the funds being received for our kids would not go to OPA Chino Valley liabilities.

Board Audio at 1:40:50 Trustee Reardon not having access to the Chino Fund Balances is a concern.

Board Audio 1:42:10 Timeline if the Board votes to approve Staff Recommendation to approve CUSD's Notice of Intent to Revoke OPA CUSD's Charter.

Special Board Meeting July 11, 2018 which is the PUBLIC HEARING

July 25, 2018 CUSD BOT Meeting Final Vote to Revoke OPA CUSD Charter.

Board Audio 1:43:58 Trustee Martha McNicholas comments Re: Timeline and Revocation

Board Audio 1:44:55 Trustee Jim Reardon- if we approve Revocation the next step for OPA is to appeal to the County. If the County denies CUSD's Revocation then CUSD remains under CUSD and OPA would file a Charter Renewal. Under this timeline, the school would potentially be Revoked in the middle of the second semester. 

Board Audio 1:46:30 Dr Susan Holiday - that would be within our school of choice window.

Board Audio 1:46:30 Trustee Jim Reardon - Assignment of Liability if OPA CUSD is closed and CUSD assumes the claim for $4 million against Sue Roche.  If we Revoke OPA CUSDs' Charter aren't we just letting Sue Roche go? Discussions re Options

Board Audio 1:49:01 Attorney Hanna LeeOutlines CUSD Options:

(1) OPA has $2 million in reserves + $1 million in cash that could be used to pursue litigation is OPA CUSD is closed.

(2) The Legal firm could take the matter on a contingency basis.

(3) OPA CUSD could assign the liability to CUSD and CUSD could fund the litigation. 

Board Audio 1:50:16 Trustee Gila Jones via telephone - can't hear she is 5000 miles away. Speak into the microphone.

Board Audio 1:50:50 Trustee Jim Reardon- Bottom line- Revoking the Charter does not put OPA out of business it puts OPA CUSD out of business. If we approve this, history will show we acted irrationally. OPA is an educationally sound institution.

Board Audio 1:52:12 Trustee Martha McNicholas - We all applaud the educational aspects of OPA. It is the fiscal mismanagement that is of concern.

Board Audio 1:52:47 Trustee Amy Hanacek - Still Concerned about the WASC accreditation. CUSD has expended an enormous amount of resources to help OPA over the past 16 months. She brought up past cheating scandals. 

Board Audio 1:55:29 Trustee Patricia Holloway - back to the money- $3 million in cash and reserves. Can OPA pursue the case against Sue Roche and still operate the school.

Attorney Hanna Lee's Response: Without knowing the full cost of litigation we do not know. We will never have an answer because OPA Chino litigation costs are privileged.

Board Audio 1:57:08 Trustee Jim Reardon - WASC Accreditation - No K-8 school in CUSD has WASC Accreditations. WASC failed to renew because of the governance of OPA Chino.

Board Audio 1:58:15 Trustee Gila Jones - Concerns over financial issues and the responsibility of Trustees not to allow gifting of Public Assets. That is not the responsibility of the students or parents but it is the responsibility of students and parents to ensure that their school board is operating within legal bounds.

Board Audio 1:57:08 Trustee Jim Reardon - Misconception. OPA is a non-profit corporation. The members of the Board are not elected.  Parents and students have no control over the actions of the Board. You cannot hold the parents accountable for the behavior of the OPA Chino Board- they had no control over that and no knowledge of it.

Board Audio 2:01:33 Trustee Judy Bullockus - On the fence. Expresses concern for students, then moves on to management. Despite all the changes, still has no confidence in management. 

Board Audio 2:03:42 Trustee Amy Hanacek - Trustees are stewards of public funds. If we are not prudent Trustees are bounced.

Board Audio 2:05:15 Trustee Holloway - School of Choice and Alternative Schools. Admits OPA is academically excellent but has no faith in fiscal management. The $4 million is to much. She cannot support OPA within CUSD

Board Audio 2:09:08 Superintendent Kristen Vital asks Attorney Hannah Lee to go over options to recover funds if Charter is Revoked. 

Attorney Hanna Lee Outlines CUSD Options:

(1) OPA has $2 million in reserves + $1 million in cash that could be used to pursue litigation is OPA CUSD is closed.

(2) The Legal firm could take the matter on a contingency basis.

(3) OPA CUSD could assign the Clain to CUSD and CUSD could fund the litigation. 

Board Audio 2:09:08 Superintendent Vital - I understand that an Executive Director was introduced at the last Board meeting and I understand that he has since resigned. 

Staff confirms that that is correct.

Board Audio 2:10:53 Superintendent Vital - The issue is the Back Office of OPA not the Academic Program. Can OPA start a brand new Charter ie OPA 2?

Attorney Hanna Lee That is an option

Board Audio 2:12:23 Trustee Hanacek makes a motion to accept Staff Recommendation to approve the Notice of Intent to Revoke OPA CUSDs' Charter.

Second by Trustee Bulluckos

NOTE: Trustee Pritchard walked out of the meeting. He is unwilling to participate in a vote because he has a child in a Charter School.

Roll Call Vote

Hanacek Yes

Reardon No

Bullockus Yes 

Hollow Yes

McNicholas Yes

Jones Yes

Pritchard - Left the Room to avoid the vote

Passes 5-0-1-1 (Trustee Reardon No-  Trustee Pritchard Left the Room to Avoid the Vote)

Next Step: Public Hearing July 11, 2018 then Final Vote 7-25-18

CUSDWatch Comment

Sue Roche; founder of OPA, turned public school tax dollars into private profit aka "Money Laundering" through Edlighten Learning Solutions. see: Fiscal Crisis and Management Assistance Team. The Amount $4 million.

The result of the closure of OPA Chino Valley meant that OPA Saddleback and OPA Capistrano Unified had to restructure under a new Board if they were to stay open. OPA CUSD has been working for the past year to restructure its governing body and to make material Revisions to its Charter in order to remain open after the closing of OPA Chino Valley. Despite their efforts, CUSD intends to Revoke Oxford Preps Charter.

There will be a special Board meeting Wednesday July 11, 2018 for a Public Hearing. A final decision will be made on July 25, 2018.

If the Revocation is final. Oxford Prep will be able to appeal to the Orange County Department of Education.

Notice of Intent to Revoke

July 11, 2018 CUSD Special Board Meeting

page 5

Basis for Revocation: Presentation by Dr. Susan Holiday

Board Audio at 36:49

A. Violation of Charter - Governance 

There has been great turnover in the area of Top Management.

There is inconsistent Leadership

* CUSD has tremendous turnover in Principals across CUSD, and in fact Tesoro is going on its second school year without a Principal.

The Governing Handbook is a template without any substance and att the time of submission had not been Board Approved.

page 9

Board Audio at 37:13

B. Violation of Charter - Administrative Services 

Fiscal Policy was not in place at the time OPA submitted its response

No fiscal plan with milestones creates uncertainty

Increases in Administrative Salaries

No documentation of OPA Chino Valley (now closed) finances. Also appears to be a template and at the time of submission was not Board approved.

Staff requested OPA Chino Valley Reserves and Outstanding Liabilities

There is no mention of outstanding debts or penalties.

page 14

Board Audio at 

C. Evidence of Charter Violations 

page 16

Board Audio at 38:28

D. Engagement in Fiscal Mis-management

OPA plans to increase revenue by increasing enrollment in its independent study program. 

OPA has declining enrollment and this is its only strategy to prevent further decline.

* CUSD is engaged in the same thought process. CUSD has declining enrollment and is in the process of making"material revisions to its own Capistrano Connections Academy. Changing Capistrano Connections Academy into California Online Public Schools and serving online independent study programs to students across California as a means of generating revenues.

Over All the theft of $4 million dollars is a transgression that cannot be remedied.

* CUSD has engaged in fiscal mis-management of Public Funds manytimes as CUSDWatch has documented. One of the most aggregious was the gifting of $13 million in taxpayer dollars to the Rancho Mission Viejo Company by agreeing to value the Esencia School site as if it had entitlements to 100 homes... there were no entitlements granted with the purchase of this land. Based on Dr Holidays criteria- CUSD should be closed as well. 

A Zero Tolerance Policy for misappropriation of $4 million in funds leaves District Staff no choice but to recommend the revocation of Oxford Preparatory Academy's Charter.

* If this is truly the case, Why did CUSD waste a year and a half pretending to work with OPA CUSD to make material revisions to its Charter?