Editor’s Note:聽This story has been updated to reference聽the report聽as a study, rather than an audit, a distinction the State Auditor’s office wanted to make clear.

While charter school leaders are pushing back against what they say is too much oversight by the , a state report聽released Tuesday criticizes the聽commission for just the opposite.

聽by the Hawaii Office of the Auditor, which delves into the financial collapse and closure of Halau Lokahi Charter School,听faults the commission for not being aggressive enough in monitoring charter school finances and compliance with state regulations.

It聽also identifies聽possible financial problems at several聽other schools.

The study聽did not find any schools in immediate financial danger, but did find “potential risk” that needs monitoring.

The findings come at a time when the commission already is getting pushback from charter schools over reporting requirements聽and what some charter school leaders view as unnecessary red tape.

According to the study, charter schools聽had more than 50 compliance tasks in the last school year that involved providing reports or information to the commission.

“However, the commission staff鈥檚 inconsistent enforcement of some but not all compliance requirements does not fulfill the commission鈥檚 statutory responsibilities,”聽the report聽states.

The commission was created in 2012, when lawmakers made significant changes to the state charter school law in an effort to improve oversight and accountability.

The study聽also criticized the聽commission聽for relying on self-reporting by schools and not doing enough聽independent verification on issues like employee background checks and appointments to school governing boards.

Tom Hutton, the commission’s executive director, said the study聽offers a lot of constructive criticism. He attributed some of the issues it raised to how new the commission was when Halau Lokahi started showing signs of trouble. He also said the commission faces a challenging political climate.

“We are getting criticized here聽about being regulatory overkill, and on this side for not being regulatory enough,” Hutton said. “That’s the path we navigate. That’s what authorizers do.”

Problems at Halau Lokahi

Halau Lokahi Public Charter School in Kalihi closed its doors for good at the end of May after the state revoked its charter.

One of the first charters to open in Hawaii, Halau Lokahi was beloved by many parents, but struggled financially in recent years.

When聽the commission began reviewing the school鈥檚 finances, it came across roughly $100,000 in questionable expenditures that it referred to the Attorney General鈥檚 office.

But the possible misappropriations weren鈥檛 enough to cause the school鈥檚 financial problems on their own, Hutton said. The bigger issue was that the school was living beyond its means.

Rent for the school facilities reached $33,000 a month 鈥� far beyond what the school could maintain. At one point in the last school year, the charter was unable to make payroll.

The reports the commission received from聽Halau Lokahi were detailed enough to show early signs of trouble, according to the repot; but the commission wasn’t aggressive enough in its intervention efforts.

The study also聽found that “human error and inexperience among commission staff contributed to their inability聽to recognize and interpret the available information early enough to possibly help avert the school鈥檚 financial collapse.”

Hutton contends that the commission recognized the problem, but gave too聽much leeway to the school to address it.

“We were getting assurances from the school that they were on top of it,” Hutton said. “It was one of our oldest schools. They said ‘We’ve lived through enrollment fluctuations before. We will adjust to that.’ Our issue was we gave them the benefit of the doubt, not that we didn’t see the issue.”

颁耻谤谤别苍迟听笔谤辞产濒别尘蝉

Auditors examined records at multiple schools聽as part of聽the study聽process, and identified several potential problems.

in Waianae obtained a $300,000 line of credit from a bank聽“without proper authority” and聽“for purposes not allowable by law.” The commission also failed to follow up with the school to see what cash flow problems it was having that made a line of credit necessary.聽The school owed $200,000 as of June and had paid roughly $6,000 in interest.

Enrollment has been declining for several years at on Molokai, which could lead to financial instability, the report聽says.

Enrollment at Kualapuu dropped from聽398 students in 2011-12 to 349 in聽2013-14. That decrease is reflected in the school’s shrinking cash reserve, which fell from more than $4 million in 2008-2009 to roughly $1.1 million in 2013-14. The school board told auditors it planned to hire outside consultants to help develop a five-year sustainability plan.聽

, which offers a blend of online and classroom-based聽learning at multiple sites throughout Hawaii, is burdened by lingering debts from a 2008 contract it entered into with K12 Classroom LLC, a for-profit online education company.聽

In聽聽2013-14, HTA paid K12 $4.5 million聽鈥� a significant chunk of the school’s operating budget. The school signed聽an聽agreement last year to make monthly $20,000 payments to K12 until 2019 to pay off the聽$1.1 million it owes the company. Because charter schools in Hawaii are government entities, if the school defaults on its debt for any reason, 聽taxpayers could be responsible for paying it off.

In addition to financial monitoring, the study聽noted that eight out of 10 randomly surveyed charter schools failed to post governing-board meeting minutes聽鈥� despite聽being required by law to do so.

Moving forward, the auditor’s office聽suggests that the commission review its school contracts to improve clarity, that it more consistently聽enforces compliance with the contracts, and that it work to create additional ways for verifying that schools are meeting requirements such as conducting employee background checks.