Santa Ana Unified district tells charter schools they owe $40 million for special education services

Santa Ana Unified School District has sent invoices totaling $40 million to five Santa Ana-based charter schools.

Charter school officials said they only first heard they might owe the district for special education costs when they received the invoices in March. Until now they’d worked well together, officials said.

The schools – whose charters are authorized by Santa Ana Unified – are questioning the district’s demand for “fair share” payments retroactive to the early 2000s. One, the 2,200-student Orange County School of the Arts, got a restraining order on Thursday, May 9, that blocks the district from withholding state funding for school operations to cover the purported debt.

The other four schools – NOVA Academy Early College High School, El Sol Science and Arts Academy of Santa Ana, Orange County Educational Arts Academy and Edward B. Cole Sr. Academy – said in a joint written statement they also plan to file a similar legal challenge.

“The loss of funds of this magnitude would be an enormous challenge for the charter schools moving forward,” the statement said.

The Orange County School of the Arts, which was billed $19.49 million, provides special education services on its campus and has considered any extra state grant dollars beyond what it actually spends as its contribution to those services district-wide, Chief Operating Officer Steve Wagner said. The leftover funds retained by the district since the mid-2000s total $11 million, he said.

“I have no idea what the motivation was for them to initiate this whole sequence of events,” Wagner said, noting that Santa Ana Unified reviews the school’s annual budget and quarterly financial reports.

Tom Stekol, the district’s deputy superintendent of administrative services, said the apparent underpayment by the charter schools was discovered by an audit last year.

Hired in November, Stekol said he didn’t know how it went unnoticed for more than 16 years.

After sending the initial invoices, Stekol said he approached the schools to discuss options.

He said school of the arts officials told him they had a handshake agreement with the district that they didn’t need to pay what state law calls “an equitable share of its charter school block grant funding” to support services and instruction for students with disabilities.

“It’s not something that we have the discretion to waive,” Stekol said. “Why they felt that it was OK to avoid that legal obligation is something you’d have to ask them.”

The dispute looks likely to be decided by a court, but it’s unclear whether it could have further repercussions for the district or the schools.

Stekol said the charter schools have the right to withdraw from the special education planning area that the district oversees and either join a different one or provide special education services on their own with no outside support.

Wagner said the Orange County School of the Arts must seek renewal of its charter from Santa Ana Unified next year, and he doesn’t know if the funding dispute would affect that.

“We’re hoping that there’s no kind of collateral damage to the relationship,” he said. “We’ve tried to be good neighbors here in Santa Ana.”