STEVE GOLDSTEIN: Several Republican leaders in Arizona — including Gov. Doug Ducey, State Senator Kate Brophy McGee and Attorney General Mark Brnovich — have spoken out about the need for charter school reform in recent months. There are calls from both sides of the aisle for charter schools to be more transparent about their finances that follow the same conflict of interest and procurement laws that district schools already do. Those reactions came after reporting from the Arizona Republic’s Craig Harris that uncovered insider deals that have allowed charter school owners to make millions.

MARK BRODIE: And this month a new report from the Office of the Inspector General for the Department of Education highlighted Arizona for having the highest number of charter schools closed down. So how are charter schools responding? Our co-host, Lauren Gilger, sat down with Eileen Sigmund, president and CEO of the Arizona Charter Schools Association. Sigmund says they hear the criticism and are taking it very seriously.

LAUREN GILGER: What kinds of financial transparency issues are you open to addressing right now? There have been many calls to increase that kind of transparency especially.

EILEEN SIGMUND: Sure. What we're doing right now is we're certainly talking with our charter leaders daily with policymakers at the Capitol, with the attorney general with the governor's office. And what we're looking at — some areas we're looking — is transparent financial issues, the governing boards of our charters and then working with the state agency that regulates our charters. Right now they're in the middle of doing their rule-making — and we're working with them to make sure that they understand the severe mismanagement — and have the proper tools to address those and close schools that are severely financially mismanaged.

GILGER: When it comes to school closures that seems like something that needs to be addressed. The Office of the Inspector General at the Department of Education just released a report that highlighted Arizona as having the highest number of close charter schools from the same school authorizer. What are the procedures now for closing a charter school here and do you think they need to be changed?

SIGMUND: Well, certainly that report lagged a couple of years. And what happened is in 2010 charter schools came up for their first reviews. And then in 2012, 2013 and 2014 there was a number of schools that either were closed or surrendered their charters which are considered closures. And the main reason there was the academic accountability — there was also operational accountability. There was a lag as we changed tests and we changed our letter grades. Then you saw in 2017 we received letter grades. All F-rated charters were either told you're going to close or you're going to improve, and in 2018 none of those charters were F-rated. And you don't see that with our district schools because they can fail their students year in and year out. Our charters simply cannot because our charters are different.

GILGER: They also receive more public money per student than district schools though right?

SIGMUND: No, that's actually incorrect. If you look at all sources of funding from the joint legislative budget, our charters on average receive $951 less per child. And the reason is, is that we don't have any access to property taxes — which are considered local sources of funding — because our charters don't have boundaries. We only receive state dollars, not access to any of the local property taxes which are about $2 billion annually.

GILGER: So, you're saying you can't go for a bond or an override something like that the district schools often do to try and supplement funding, but isn't that why state funding is a little higher for charter schools per student?

SIGMUND: That is, and then for example — there's also about $120 million in buckets for teachers that are charters simply can't access even though we fall under the same rules and regulations. And we all agree that school finance is broken, and we need to look at school finance because, in Maricopa County, one out of two families exercised choice by either open enrolling or attending a charter school.

GILGER: What do you think should change?

SIGMUND: So, we last updated school finance in 1980, when we had one fax machine in all of state government. Now what we're looking at is we should be focusing on students’ needs not system’s needs, and moving forward in an overhaul to keep pace with the robust movement of our students — because we still are hearkening back to a time when we had set closed district boundaries instead of this porous environment that policymakers enacted and families have utilized.

GILGER: So, you're saying essentially that the state money should follow the students?

SIGMUND: Absolutely.

GILGER: I want to talk more about the oversight accountability changes you mentioned that you're working with state lawmakers and the governor's office to change. So state Sen. Kate Brophy McGee has said she's uncomfortable with some of the nepotism that exist on charter boards in particular. We're hearing this also from the Republican candidate for superintendent of public instruction, Frank Griggs. He has said he thinks a majority of charter boards should be "disinterested individuals." Is that the kind of change you're talking about supporting here?

SIGMUND: Absolutely. So we're looking to develop a proactive policy response with our lawmakers and our schools to address the key criticisms of governance, financial transparency and regulatory authority. And we're making sure for financial transparency that any of the criteria you just said are disclosed and the public is informed and has visibility into what is going on with our public charters' finances.

GILGER: Any details you can give us on what that might look like at this point? This would be legislation, I'm assuming.

SIGMUND: Right. And certainly we are going to have this before the legislative session starts working with lawmakers, but at this point we're just looking at some key areas to make sure we're addressing the criticisms and having these conversations, and the areas that we've discussed and which were outlined already.

GILGER: So you said you know you're hearing the criticism from the community. I wonder if this surprised you in any way. These people who are making millions off of charter schools — the insider deals that were going on — that have been uncovered by people like Craig Harris of the Republic.

SIGMUND: Yeah, so I want to be clear about what charter schools are and are not. They're public schools operating as a public-private partnership. No different than the contractor for our roads, the hospital contractor to provide care for people needing medical care,. And really what we're looking at — the most important part of this— is the academic accountability. That's the reason charters were created and were showing results. Two out of three charter schools are earning an A, where if you look at the nation's report card, Arizona charter sectors would be number one an eighth-grade math, number two in eighth-grade reading. And out of every socioeconomic status demographic, our charters are outperforming. So what we're looking at is that our leaders, who have set up this enterprise to provide public education, decades later, if they're receiving a benefit from the enterprise they started — that's not a bad thing — because we want to make sure success is being replicated. But again, we also want to make sure our tax taxpayers have visibility into what's going on. So we are definitely looking at different things, but it's not a perfect model and we're continuing to evolve the charter sector.

GILGER: So, if you want the taxpayers — the parents who are sending their kids to these schools — to be able to see what's going on on a financial level, would you support something like the law that was passed for district schools this year that they have to post their budget, their audit information online, that charters were exempt from at the time?

SIGMUND: Certainly we're looking at every angle right now. Are charters already — because the majority, 95 percent, are nonprofits — they do file with the IR so their IRS documents are already public. Again we're evolving, but what is the right balance for our public charters to succeed and not be wrapped up in red tape is a balance we're trying to strike. Because charters are not district clones. That's not why they started, that's not how they operate, and we want to continue to make sure that charter schools — public charter schools — are successful for families and students.

GILGER: So, I asked if any of this surprised you, because there has been less oversight over charter schools and district schools and that's part of the model like you said. I wonder if there's any sense among the complaints that you're hearing from people that, why didn't anything change before this came out? Why were these things allowed to happen to begin with?

SIGMUND: Well, what I would tell you, Lauren, is we worked proactively to allow the state agency that oversees charters to have a financial tool to close down for mismanagement of finances. We worked on that before any of these stories began. Likewise, academic accountability was something we worked on proactively, and when I say we, I'm talking about the 500 plus charters. We want to make sure we're good stewards of the public trust for academic outcomes and financial transparency.

GILGER: Do you feel like you've lost some of that public trust?

SIGMUND: Well, Lauren, if you look at parent demand for charter schools, it's increasing. We're showing increased numbers for this school year. So it depends by what measure, but if you're asking if parents are still demanding public charter school options — then the answer is yes. So that's why I wanted to come here with some areas we want to address — and know that we're working with the lawmakers, and the governor's office, the attorney generals and then our state regulatory. And these are my school leaders coming up with solutions, because there's hundreds of thousands of students that are receiving a quality education, and we want to be able to speak to their issues — and to gain the public trust because, yes, we have some concerns.

GILGER: OK, Eileen Sigmund, the president and CEO of the Arizona Charter Schools Association. Thank you so much for coming in.

SIGMUND: Thank you.