In an early courtroom victory yesterday afternoon, Orange County School of the Arts temporarily halted Santa Ana Unified School District from withholding monthly funding in an ongoing dispute over special education money. The district ordered an independent audit and discovered that “fair share” special education fees from five charter schools hadn’t been collected in years. By March, OCSA received an invoice for $19.5 million in retroactive payments before filing a lawsuit.
“We’re relieved that we can expect the state funding that we had budgeted for at the beginning of the year without interruption,” Steve Wagner, OCSA’s chief operating officer, tells the Weekly. “It’s nice that we’re not going to have to scramble at the end of the year to figure out how to make it all work.”
Four other charter schools in the district–NOVA Academy Early College High School, El Sol Science and Arts Academy of Santa Ana, Edward B. Cole Sr. Academy, Orange County Educational Arts Academy–also released a joint statement noting their intention to file a lawsuit against the district. Together, they’ve been billed $20 million in retroactive special education funds.
“These contributions are required by law,” Tom Stekol, the district’s deputy superintendent of Administrative Services, tells the Weekly. “It’s not like we could possess the discretion to wave a legal requirement.”
On the job for less than a year, Stekol’s not entirely sure of how Special Education Local Plan Area (SELPA) funds went uncollected for the past 16 years. Once made aware, the district reached out to its five charter schools and asked them to attend meetings over the matter. “At no time did we threaten to do anything,” says Stekol. “OCSA’s intention all along was to never have to pay anything.”
By April, the district sent a letter informing OCSA that it intended to offset the costs by withholding monthly transfers to the school starting May 15. The charter school filed a lawsuit this week to prevent that from happening and gained a temporary restraining order.
“It’s always been our understanding that because the charter language allows the district to retain any excess special education funds that are received on the school’s behalf, we have considered that to be our fair share contribution,” says Wagner. “Everybody is for providing quality special education for kids. That’s not the issue. This is an issue of notifications, timelines and following the language we negotiated in the charter.”
OCSA’s suit claims that an agreement has allowed the district to retain more than $11.2 million in state funding from the school since 2000. As part of it, OCSA also employs its own special education staff, personnel costs reimbursed by Santa Ana Unified. This year alone, that tally is $1.16 million, according to the district. “By no stretch of the imagination is there an $11 million windfall,” says Stekol. The deputy superintendent also deems the agreement to have been a “handshake” one with no supportive documentation provided when asked for.
“That’s one of the areas where we disagree,” says Wagner of the calculation.
With a student body of about 2,200, OCSA is the largest charter school in Santa Ana Unified. The district accuses them of transferring a funding balance of $25 million to claim an inability to pay, a charge Wagner decries as categorically false. The plan to withhold monthly funding, he says, would amount to 10 percent of the charter school’s annual budget, more than enough to eclipse any windfall after all operating budgets are accounted for. OCSA gave the district notice that it’s seeking to leave its SELPA by as early as 2020 and is already exploring other options.
The spat comes at a time when the district says there’s been a decrease in state funding for special education while the number of identified students with disabilities is on the rise. Santa Ana Unified takes in all students. The American Civil Liberties Union of Southern California released a report in 2016  that accused OSCA and other charter schools across the state of limiting enrollment based on academic performance.
‘We don’t want to bankrupt anybody,” says Stekol. “We have this statutory obligation. It’s not only a legal imperative. One could argue it’s a moral imperative.”