Audit: Sacramento-area school wrongly got $180M state funds, violated state law
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- Highlands Community Charter School improperly received $180M in state funding.
- A state audit found uncredentialed teachers, false attendance and misuse of funds.
- Oversight agencies failed to act in 2018 about internal school practices, audit says.
The Highlands Community Charter and Technical School received more than $180 million inappropriate state funds after lax oversight by state and local educational agencies, according to a state audit released Tuesday. Some expenses by the school violated state law and posed conflicts of interest, officials said.
The charter school is a nonprofit which operates both the Highlands Community Charter School, in which students learn in a traditional classroom setting, and the California Innovative Career Academy, offering independent study under Twin Rivers School District. More than 50 locations exist across Sacramento, the Bay Area and Southern California to serve more than 13,700 students who are 22 and older.
Highlands Community Charter School was not eligible for state funds after teachers lacked appropriate credentials, taught scant hours and practiced poor attendance recording policies, the audit found.
In addition, officials found “several questionable financial transactions, including some that violated legal prohibitions against gifts of public funds and conflicts of interest.” As a result, some transactions were an an inappropriate use of taxpayers’ money that “violated state law, best practices and its own internal policies,” the audit said.
The bloated class sizes may have contributed to the school’s poor outcomes, the audit said.. Graduation rates across the charter school “were so low that they dropped the overall statewide graduation rate” for the 2023-2024 school year by “more than half a percentage point,” the audit said.
Reforms are underway to address the audit’s findings, Highlands Community Charter School’s Executive Director Jonathan Raymond said in a statement.
Hundreds of teachers did not have K-12 credentials, which has led to layoffs. About 600 teachers could be let go, causing uncertainty in Sacramento. As a result, about 6,000 students — many of them refugees fleeing war for a better life in America — could be cut off from vital lessons necessary to succeed as the school conducts layoffs of educators to meet state requirements.
The Highlands Community Charter Schools’ student population in Sacramento serves a large portion Afghan refugees who do not speak English.
The Sacramento County of Education authorized a separate audit in 2018 that raised similar concerns about internal practices. However, the Twin Rivers School District, SCOE and the California Department of Education “took insufficient action to ensure the Highlands addressed findings” from the 2018 audit, state officials said.
“If Twin Rivers had conducted more thorough oversight, it could have identified some of the violations we identified as part of our audit and taken action to address them earlier,” California State Auditor Grant Parks wrote in a letter dated Tuesday and sent to the Governor’s Office and the Legislature.
The Twin Rivers School District has implemented or is attempting to improve its oversight capabilities, Zenobia Gerald, a district spokesperson, said in a statement. The statement said state policy should be improved for oversight agencies, which “speaks to the structural challenges of the law” the district “has called attention to from the beginning.”
State auditors began probing the charter school after ABC10 published in January 2024 a nine-part series called the “The Wild West of Education.” That reporting raised questions about “potential falsification of student attendance records, poor student outcomes, conflict of interest, and misuse of state funds,” according to letter dated last year by state lawmakers requesting an audit.
Low instructional minutes
Highlands Community Charter School — which makes up about 30% of the Twin Rivers School District population — reported a $29 million budget in fiscal year 2019 to fiscal year 2020, auditors said. Its budget ballooned to $168 million by the 2023-24 fiscal year.
Educators taught for two to three hours during a six-hour school day, the audit said. Officials observed students “entered and left class at various times — in some cases leaving immediately after signing in for attendance — and teachers did not attempt to enforce any attendance requirement.”
The Highlands charter schools inappropriately collected $177 million in K-12 funding while failing to “meet the legal requirements of the mode of student instruction it claims to offer,” the audit said. It also collected more than $5 million by “misreporting attendance to the California Department of Education,” the audit said.
Highlands charter school officials have said new policies following the auditor’s findings ensure teachers take proper attendance. And, students often left class because they have other responsibilities, such as tending to children, officials said.
The charter schools had some of the lowest graduation rates across the state. It was 2.8% for Highlands Community Charter School and 16.9% for the California Innovative Career Academy in fiscal year 2023-24. The California Department of Education reported a 86.4% graduation statewide.
Highlands Community Charter School’s reported graduation rate was the “lowest of all schools in the State that had at least 100 students included in the calculation for fiscal year 2023–24.”
Bill McGuire, the former executive director of Highlands Community Charter School, said his staff had paid millions to ensure teachers had the appropriate credentials for 10 years, and the Twin Rivers School District never flagged this concern.
The Twin Rivers School District said in a previous statement that the California Commission on Teacher Credentialing provided “new direction” last year which prompted new guidance and the educator layoffs.
‘We’ve done things wrong’
The auditors, in the 30 transactions they reviewed, found 15 expenses with no apparent educational purpose.
In addition to these transactions, the audit identified a “wasteful use” of funds. Through a state grant, the school spent $1.96 million on a three-day “professional development” trip for employees at the Manchester Grand Hyatt San Diego in August 2023, the audit said.
Highlands said the grant “allowed for a unique and innovative way to hold training opportunities.”
In an interview with The Sacramento Bee last month, McGuire called spending nearly $2 million for employees was “probably a bad decision.” The conference was not illegal, he said, and a smaller charter school would skirt by scrutiny.
“We fully admit, I fully admit, we’ve done things wrong,” he said, while later adding “everything that was done was done for the benefit of the students.” McGuire also has denied any misappropriation of funds or fraud.
Highlands charter school bought blankets for students during the holidays. This vendor received $397,960 from 2019 until 2024 — but the business owner was the spouse of a “director-level employee,” the audit said.
School staff also bought $9,000 worth of blankets from this vendor, and gave them to students, during an annual holiday event. The gifts, the audit said, “did not serve an educational purpose” and “violated the prohibition on the gift of public funds.”
Last week, the Twin Rivers School District sent the charter school a letter saying it is in “material violation” of its charter and has “engaged in fiscal mismanagement.”
Among the district’s findings included the charter school taking out a site at “luxury office condominiums” in San Diego for “administrative purposes despite having no students in or near the area.” The location had a balcony overseeing Petco Park, a ball field.
Who is responsible?
Local and state agencies raised concerns about who is responsible for catching errors by local charter schools.
The California Department of Education said it raised concerns with the Twin Rivers School District in its statement to The Bee. The school district said it disagrees with “some assertions” in the audit and referred “challenges” within the law to ensure proper oversight.
The Sacramento County of Education office in a May letter said it “lacked the legal authority to ensure Highlands addressed the findings of the investigation” while calling on the Legislature to offer greater clarity to county education offices.
The California State Auditor recommended a series of reforms for adult-serving charter schools. It included creating appropriate student-teacher ratios in classrooms for charter school serving adults and a fiscal penalty for failing to meet the requirements.
On Tuesday, the Highlands Community Charter School issued a statement detailing reform efforts underway to address the audit’s findings. It includes laying off educators, meeting credentialing requirements and complying with oversight entities, according to the statement.
“We take these findings seriously and will not run from them,” Raymond, the executive director, said in a statement. “We are committed to rebuilding Highlands from the ground up — not just to fix what went wrong, but to build something better. Moving forward, we are entirely focused on our mission to serve the underserved. For the thousands of immigrants, refugees, and adults who depend on this school as a lifeline, we cannot fail. I’m here to ensure we won’t.”
This story was originally published June 24, 2025 at 12:44 PM.
