LOS ANGELES - On June 27, 2014, the District issued findings indicating that Magnolia Charter School Academy (MSA) 6 and 7’s conditional renewal were rescinded based on material fiscal and operational findings and fiscal mismanagement based on a forensic review of the schools and Magnolia Educational and Research Foundation (MERF). Magnolia sought a preliminary injunction to block the District from implementing the nonrenewal of the two schools.
At the hearing, Judge Luis A. Lavin stressed that he took the fiscal issues seriously and to protect the public interest and public funds, the Court granted the injunction and ordered tighter financial controls and reporting pending the determination of the merits of Magnolia’s petition.
In granting the preliminary injunction, the Court stated that the findings for not meeting the conditions of the renewal should have been adopted by the Board of Education but that “LAUSD had presented evidence establishing financial mismanagement by the Charter Schools.”
The District views Judge Lavin’s protective orders as affirmation of the serious conditions the District faced with Magnolia. “Our primary concern has always been the students who attend Magnolia,” Superintendent John E. Deasy said. “While it is never an easy decision to disrupt a school community, Magnolia’s fiscal mismanagement and serious fiscal issues gave the District no choice. Now that Judge Lavin has provided these additional protective measures, the schools can remain intact while the administrative appeals process reaches its inevitable conclusion.”
Throughout the hearing on the preliminary injunction, Judge Lavin repeatedly indicated that the preliminary injunction is in no way a ruling on the merits of whether Magnolia should continue to operate. A trial setting conference will be held on October 14, 2014, and a hearing on the merits will be set sometime in January 2015.
In the meantime, Magnolia must comply with the following conditions:
• Magnolia shall provide LAUSD with a copy of the Magnolia 2009,13-14 audit report by July 28, 2014;
• Every 30 days thereafter, Magnolia shall provide LAUSD with updates of Magnolia’s profit and loss statements, balance sheets, cash flow and bank statements, check registers, and expense reports;
• Magnolia shall not engage in deficit spending after maintaining reserves of 5 percent;
• Magnolia shall not make any further expenditures to Accord, or for immigration-related expenses;
• Magnolia shall provide LAUSD with copies of its vendor agreements; and
• Magnolia shall, in timely fashion, cooperate with any inquiry by LAUSD concerning Magnolia’s finances.
If Magnolia fails to comply with any of the conditions outlined above, the District can petition the court on an ex parte motion to dissolve the preliminary injunction.
Contact: Lydia Ramos (213) 241-6766