>> Cathy: I LOVE SHELETTA.

LATE FRIDAY AFTERNOON, AS WE SPEAK, GOVERNOR WALZ SIGNED A SPRAWLING EDUCATION POLICY OMNIBUS BILL INTO LAW.

INCLUDED IN THAT PACKAGE ARE NEW OVERSIGHT RULES FOR CHARTER SCHOOL CONTRACTS.

THIS COMES ON THE HEELS OF A SAHAN JOURNAL INVESTIGATION THAT REVEALED THAT MINNESOTA CHARTER SCHOOLS AWARD MORE THAN $100 MILLION ANNUALLY OF TAXPAYER DOLLARS IN OUTSIDE CONTRACTS WITHOUT THE SAME OVERSIGHT PUBLIC SCHOOLS ARE SUBJECT TO.

EDUCATION REPORTER BECKY DERNBACH IS BACK TO DISCUSS HER DEEP DIVE INTO THIS ISSUE.

WELCOME BACK.

>> THANKS FOR HAVING ME.

>> Cathy: NOW FOR FOLKS NOT FAMILIAR, THIS IS ABOUT THE NOBLE ACADEMY CHARTER SCHOOL.

BEFORE WE ACTUALLY TALK ABOUT NOBLE ACADEMY CHARTER SCHOOL, FOR FOLKS WHO ARE NOT FAMILIAR, CHARTER SCHOOLS ARE DIFFERENT.

>> YEAH.

>> Cathy: THAN PUBLIC SCHOOLS FOR A SPECIFIC REASON.

>> RIGHT.

SO CHARTER SCHOOLS WERE DESIGNED TO HAVE MORE AUTONOMY THAN PUBLIC CHOOLS TO INNOVATE AND SORT OF DECIDE WHAT WORKS BEST FOR THEIR STUDENTS, WITHOUT BEING SUBJECT TO ALL OF THE SAME BUREAUCRACIES AND CONSTRAINTS YOU MIGHT SEE IN A TRADITIONAL SCHOOL DISTRICT.

>> Eric: ND YOU FOUND PATHWAYS TO FRAUD, WASTE AND ABUSE, IS THAT FAIR TO SAY, WITH THE LACK OF SUPERVISION OF THE PROCUREMENT PROCESS?

WAS THAT THE -- >> YEAH.

SO THERE'S NOT THE AME OVERSIGHT FOR CONTRACTS IS ONE OF THE LAWS THAT THEY'RE EXEMPT FROM.

THEY'RE NOT CLASSIFIED AS GOVERNMENT ENTITIES, WHICH ARE ALL SUBJECT TO THESE SPECIFIC PROCUREMENT LAWS.

SO IF YOU WANT TO BUY DESKS FOR A PUBLIC SCHOOL DISTRICT, YOU THINK IT'S GOING TO COST MORE THAN $175,000, YOU HAVE TO GO OUT, UT AN AD IN A NEWSPAPER, GET MULTIPLE BIDS OR SOLICIT MULTIPLE BIDS, AND THEN SEE WHO'S THE LOWEST RESPONSIBLE BIDDER AND CHARTER SCHOOLS JUST DON'T HAVE TO DO THAT.

SO, THAT OPENS THE DOOR TO WAYS OF AWARDING CONTRACTS THAT COULD COST CHARTER SCHOOLS MORE MONEY OR COULD BE BASED ON PERSONAL RELATIONSHIPS.

>> Cathy: SO THERE'S ALWAYS A SPARK BEHIND EVERY STORY WHEN YOU START DIGGING, RIGHT?

SO THE ACCOUNTANT, FORMER ACCOUNTANT AT NOBLE ACADEMY EVIDENTLY STOLE THOUSANDS OF DOLLARS FROM THE SCHOOL, AND YOU STARTED TO LOOK INTO, THAT RIGHT?

AND THAT LED TO YOU SOME INTERNAL COMPLAINTS THAT WERE MADE TO THE DEPARTMENT OF EDUCATION ABOUT THESE CONTRACTS AT THE SCHOOL.

>> RIGHT.

AND, SO, THESE ARE UNRELATED ISSUES, TO BE CLEAR.

>> Cathy: YES.

>> BUT WHEN I WAS LOOKING AT THIS ACCOUNTANT, WHO HAS SINCE PLEADED GUILTY TO THEFT BY SWINDLE FOR STEALING FROM THE SCHOOL AND HE'S SENTENCED TO PROBATION, I STARTED LOOKING INTO THAT, I WAS LOOKING INTO A BUNCH OF DOCUMENTS, SOME OF THOSE WERE, YOU KNOW, LEGAL DOCUMENTS, ACCOUNTANCY DOCUMENTS, I WAS LOOKING AT THE CHARTER SCHOOL BOARD MINUTES, AND AT THE SAME TIME IT WAS TALKING ABOUT A COMPLAINT THE SCHOOL WAS FACING THROUGH THE MINNESOTA DEPARTMENT OF EDUCATION.

I HADN'T SEEN THAT, I WONDERED WHAT THAT COMPLAINT WAS ABOUT, I REQUESTED IT, TOOK IT FROM THERE.

>> Eric: WAS THE MODEL FLAWED, YOU WANT TO HAVE FLEXIBILITY AND ABILITY TO DO STUFF BEYOND WHAT KIND OF THE BUREAUCRACY IS IN A REGULAR PUBLIC SCHOOL, BUT THEN HAT LEAVES IT OPEN TO MISCHIEF, I GUESS, OR NEPOTISM OR WHATEVER YOU MIGHT SAY?

>> YEAH, I THINK THAT PEOPLE BEHIND THE CHARTER SCHOOL MOVEMENT BEHIND IT IT'S ABOUT FINDING THE RIGHT BALANCE.

WHAT ARE THE WAYS THAT WE ENABLE CHARTER SCHOOLS TO HAVE THE AUTONOMY TO BE NIMBLE AND FLEX ILL IN A WAY THAT, YOU KNOW -- FLEXIBLE IN A WAY THAT A LARGE PUBLIC SCHOOL MIGHT NOT BE ABLE TO, WHAT ARE THE ACCOUNTABILITY MECHANISMS IN PLACE, HOW DO YOU MAKE THAT BAHL IS -- BALANCE IS IN PLACE.

>> Cathy: I BET POURING THROUGH DOCUMENTS, THERE WAS QUITE A PAPER TRAIL, I'M SURE, BECAUSE HOW MANY CHARTER SCHOOLS ARE THERE IN MINNESOTA?

DID YOU LOOK AT ALL CHARTER SCHOOLS?

DID YOU HAVE TO USE ANY TOOLS TO HELP YOU GO THROUGH ALL THESE CONTRACTS?

>> YEAH.

SO I REALLY HAVE TO GIVE CREDIT TO OUR DATA REPORTER CYNTHIA TU, WHO USED TECHNOLOGY, I DON'T KNOW HOW TO USE, SOME SCRAPING TOOLS TO COLLECT ALL THE FORM 990s, CHARTER SCHOOLS ARE NONPROFITS, THEY FILE 990s, SO THEY PULLED ALL OF THOSE, THEN THERE WERE SOME THAT WERE OUTSTANDING, SO I EMAILED THE CHARTER SCHOOLS TO ASK FOR THEM.

THEN TOGETHER WE FIGURED OUT HOW TO USE THIS OTHER A.I.

TOOL TO GO THROUGH AND TABULATE THE DIFFERENT LARGE CONTRACTS IN THOSE ONPROFIT FILINGS, CHARTER SCHOOLS DISCLOSE THEIR -- OR ALL NONPROFITS DISCLOSE THEIR FIVE LARGEST CONTRACTS OVER $1 THOUN -- $100,000, SO WE WERE ABLE TO TABULATE IT USING ARTIFICIAL INTELLIGENCE.

>> Cathy: WHAT DID YOU SEE?

YOU FIRST DISCOVERED, YOU THOUGHT, WOW, LOOK AT THESE NUMBERS.

>> YEAH, YEAH, THE NUMBER CAME TO -- WE EXCLUDED FOOD SERVICE CONTRACTS, TOO, BECAUSE THOSE USE FEDERAL FUNDS.

SO EXCLUDING THAT WE CAME TO $132 MILLION.

SO, THAT'S A LOT OF MONEY.

>> Cathy: YEAH.

>> Eric: SO THE LEGISLATIVE RESPONSE, IS HAT -- >> I THINK WE'LL HAVE TO SEE.

PART OF THE NEW BILL, AS YOU MENTIONED, IS CHARTER SCHOOLS ARE NOW GOING TO HAVE TO HAVE A PROCUREMENT POLICY FOR STATE FUNDS AND THAT INVOLVES A COMPETITIVE BIDDING PROCESS FOR CONTRACTS OVER $25,000.

BUT ONE ISSUE THAT HAS COME UP IN REPORTING ON CHARTER SCHOOLS AGAIN AND AGAIN IS THE OVERSIGHT PROCESS IS REALLY COMPLICATED.

THE SCHOOL BOARDS HAVE A LOT OF AUTHORITY BUT SCHOOL BOARDS ARE VOLUNTEER RUN, HAVE A LOT OF TURNOVER.

THEY'RE OVERSEEN BY THE AUTHORIZERS, AUTHORIZERS SAY, CONTRACTS ARE NOT OUR RESPONSIBILITY, THAT'S NOT ON US.

MINNESOTA DEPARTMENT OF EDUCATION WILL STEP IN OCCASIONALLY AS WE SEE BUT THAT'S NOT SUPER COMMON SO WITH THE NEW RULES, WE STILL NEED TO SEE WHO'S GOING TO ENFORCE THEM.

>> Cathy: BUT YOUR REPORTING LED TO A BILL THAT WAS SIGNED BY THE GOVERNOR.

>> Eric: GOOD JOB.

>> Cathy: YEAH.

>> Eric: GLAD YOU CAME OVER, THANKS.