HARRISBURG – Auditor General Jack Wagner said that he was forwarding to the Monroe County district attorney a copy of his recently completed performance audit of the Pocono Mountain Charter School after his auditors uncovered questionable financial transactions that may have violated Pennsylvania’s charter school law.

Wagner said that more than $3 million in taxpayer-funded education dollars flowed to a related party founded by the charter school’s chief executive officer, through rental payments from the Pocono Mountain Charter School during the audit period July 1, 2006 to Aug. 20, 2010.

Charter schools are public schools created under the Charter School Law. The Department of the Auditor General has established in prior reports that the overall funding formula is flawed because it is not based on the true cost of educating a child at the charter school, but based on the actual cost to educate the child at the sending school district.

"This audit report further highlights that our 2010 charter school funding report is even more relevant today than when we issued it given the huge funding shortfalls of our school entities,” Wagner said. “Last year, the General Assembly took the important first step of eliminating the reimbursement to school districts that have lost students to charter schools. However, the failure to take action to eliminate the flawed and inequitable funding formula has harmed school districts and charter and cyber schools, and taxpayers are not paying the true cost of educating students. Therefore, I again call upon the General Assembly to fix the charter school funding formula.”

The Pocono Mountain Charter School was created by a local church in violation of the Charter School Law. Moreover, the church’s pastor and his wife simultaneously held positions as the charter school’s chief executive officer and assistant chief executive officer, thus blurring the line separating the public charter school from the private religious entity.

Wagner said he also was forwarding copies of his audit to the State Ethics Commission, the Department of Education, Gov. Corbett, and leaders of the General Assembly. Wagner’s audit recommended that the Department of Education seek to recoup $500,000 it had approved for the charter school.

"As a supporter of alternative education initiatives, I have long championed charter schools as a way of empowering families and giving parents a greater role in their children’s education,” Wagner said. “But this choice must not come at the expense of taxpayers. The Department of Education should seek repayment of taxpayer funds from the Pocono Mountain Charter School and any other school that deliberately and willfully violates state law.”

Wagner’s audit, which is available to the public at www.auditorgen.state.pa.us, concluded that the charter school and the church entered into a landlord/tenant agreement in 2003 for building space that is co-occupied by both parties. Auditors found that the church had raised the annual base rent for the charter school from $396,000 for the 2006-07 school year to $964,996 for the 2009-10 school year.