CA charter school that blew millions on Hawaii trips, luxury ballparks and trips to Paris files for bankruptcy

A California charter school accused by state auditors of improperly receiving more than $180 million in K-12 funding has filed for bankruptcy after a stunning list of questionable spending — including a $1.96 million San Diego getaway, an $80,000 Maui conference and a Paris trip for an employee whose mother sat on the school’s board.

Highlands Community and Technical Schools filed for Chapter 11 bankruptcy in federal court Sunday, seeking protection as it fights a massive state funding claim and attempts to keep its schools operating.

The Sacramento-area charter system serves thousands of adult students seeking high school diplomas, career training and other programs.

The bankruptcy filing comes more than a year after a California State Auditor report found Highlands had received more than $180 million in K-12 money for which it was not eligible, while also identifying millions of dollars in questionable spending, conflicts of interest, hiring concerns and weak oversight.

Highlands disputes the state’s findings.

“Highlands is taking this step to protect our students and preserve the future of our schools,” Executive Director Jonathan Raymond said in a statement announcing the bankruptcy this week.

“The reorganization process gives us the best opportunity to remain open and continue serving students while we address the disputed financial claims through an orderly, court-supervised process.”

Despite filing for bankruptcy, the school says it will remain open and is instead planning to rebrand.

“The doors remain open. The lights remain on. Class remains in session,” Highlands said.

Auditors described the spending habits in their review as “unlawful and wasteful spending of public funds.”

Among the auditors’ most eye-popping findings was nearly $2 million spent on a three-day professional development event at the Manchester Grand Hyatt San Diego in August 2023. Highlands said the grant allowed it to provide training in what it characterized as a unique and innovative setting.

The spending spree did not stop in California.

The audit found Highlands paid $80,000 for seven employees and a consultant to attend an Independent Voter Project conference in Maui. Highlands said the attendees were there to hear concerns from legislators about constituents and determine how the school could better support those needs.

Auditors questioned whether that amounted to a traditional educational or professional development purpose.

Then there was the $2,600 flight to Paris for a technology conference for an employee whose mother was a Highlands board member.

Highlands said the trip was intended to promote the school’s internal technology at the conference.

Perhaps the strangest finding involved a professional baseball stadium that appeared on Highlands’ list of school sites.

During an oversight visit, auditors found no classes and no students at the stadium.

Highlands later told officials it had terminated the lease but had agreed to keep making monthly payments totaling more than $33,000 through April 2026. The arrangement also included VIP tickets to games.

The state auditor specifically flagged the stadium arrangement as part of its concerns over Highlands’ spending and oversight. 

The audit also identified $1,900 for one employee’s hotel stay at the Hilton Waterfront Beach Resort in Huntington Beach for a conference in Long Beach — about 15 miles away.

Highlands said the on-site conference hotel was sold out.

Auditors also questioned $137,900 spent on 6,000 beanies, scarves and gloves as holiday gifts for students.

Highlands defended the purchases as an effort to increase student engagement during the holiday season and show appreciation to students.

Another $8,750 went toward holiday blankets purchased from a vendor whose spouse was a director-level Highlands employee.

The auditor classified both transactions as gifts of public funds.

And in another conflict-of-interest finding, a director-level employee initiated a $1,500-a-month contract with his wife for mentor services for two months.

The employee told auditors he was unaware the arrangement violated the law. In one case, a current executive director told auditors he believed an employee obtained a job at least partly because the employee’s mother sat on the school’s board.

Overall, auditors identified 11 employees who had at least one relative hired by Highlands during their tenure.

Highlands was not eligible for $177 million in K-12 funding it received in 2022-23 and 2023-24, and received another $5 million-plus in overpayments because of problems with its attendance calculations.

Auditors said some attendance data lacked supporting documentation and was of “undetermined reliability.”

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The audit also flagged questionable spending, including $147,500 for an internal education game with unclear deliverables, a $60,000 student recruitment contract and $25,860 in high school athletics sponsorship that auditors said lacked evidence of promised marketing. Highlands also donated $50,000 to a legislative caucus foundation, saying it supported training and student outreach.

Auditors found widespread teacher-credential problems, a 51-to-1 student-teacher ratio and a graduation rate of just 2.8% in 2023-24, compared with 86.4% statewide.

The audit also found about 200 employees donated roughly $101,000 to an affiliated foundation, with 109 survey respondents saying they felt pressured to donate.

Highlands says it has since overhauled its leadership and addressed 18 of 19 recommendations.

The school is now seeking bankruptcy protection while fighting the state’s claims and says its campuses will remain open.