The state Court of Appeals today ruled 7-0 in favor of the charter school position that the Office of the State Comptroller lacks state constitutional authority to audit charter schools.

Yes, folks, the New York State Constitution means what it says. The Comptroller's Office has limits as to which entities it can audit, and charter schools are not among them. Article V of the Constitution limits that office's auditing power to political subdivisions of the state, which are governments and their agencies. By contrast, charter schools are established as non-profit educational corporations carrying out a public purpose. Importantly, the Court also held that audits of charter schools are not "incidental" to the auditing powers of the Comptroller, which became the main legal argument of the Comptroller's side.

This is an important case that should remind everyone that there are limits to governmental and bureaucratic power, and that auditors cannot do anything or audit anyone they please. Whatever one thinks of charter schools, this case translates to any other non-profit or for-profit entities doing business with the government or carrying out a public purpose, be they a social services organization or construction contractor.

Charter schools have plenty of oversight, including the Regents via the state Education Department, and SUNY and the NYC Department of Education. They get regular monitoring visits, submit numerous reports (including financial), and face an extensive renewal process at least once every five years. There is no oversight void by striking down Comptroller audits.

Today's High Court ruling reverses the Appellate Division decision from January and reinstates the initial Supreme Court ruling in favor of charter schools, issued back in April 2008. To the credit of the Court, they weren't buying the vapid argument of the Appellate Division, which largely took a pass on the constitutional issues involved.

How This All Started
This case may never have been brought had the Comptroller's Office not overreached. After conducting audits of several charter schools, often the findings were trivial and embellished. That approach under Comptroller Thomas DiNapoli was not unique; his predecessor Comptrollers approached auditing the same way, regardless of the entity, to justify their function, pose as the protector of the taxpayer, and elevate their role in public. That's what elected officials do, after all.

By the summer of 2007, the Comptroller's office decided to conduct so-called "performance" audits of charter schools that went beyond financial issues that the Comptroller was charged with carrying out. The 2005 law directed the Comptroller to conduct fiscal audits of school districts, charter schools and BOCES. No such performance audits were envisioned by this law, which was sponsored by the Comptroller himself when he was a Long Island Assemblyman. More galling was that the Comptroller's office admitted that only New York City charters were getting this additional performance audit treatment, not school districts or BOCES.

That was too much. Charter schools (or school districts, for that matter) do not need the Comptroller's office passing judgment on their academic performance, teacher quality, attendance rates, or any other programmatic issue. There are plenty of others to properly do so. No matter. The Comptroller's folks were uninterested in reconsidering their position and dismissive of the concerns of charter schools.

So charters turned to the courts. In reviewing the legal options, it turns out that the Comptroller didn't have constitutional authority to audit charter schools, financial or performance related. This limitation on the Comptroller was most recently upheld by the Court of Appeals in a 1996 case involving the auditing of Blue Cross/Blue Shield, and was used as a key precedent in the charter school case.

NYSUT on the Wrong (Losing) Side Against Charters
It should not be forgotten that the New York State United Teachers (NYSUT) once again opposed the charter school position and sided with the Comptroller, in another example that contradicts its shopworn sound-bite of supporting charter schools. NYSUT was the only outside entity to file an amicus brief in the case, taking the Comptroller's position against charter schools. No surprise there, and a reminder of the anti-charter school politics of that organization, supported in part by the sweat equity of many dues-paying charter school teachers.

Charter schools won an important state constitutional case today that reaffirms the proper balance of governmental oversight and accountability envisioned by the writers of the state Constitution. It also should be a reminder to government officials in any bureaucracy to understand and appreciate their legal limits and proper role.

Peter Murphy
for The Chalkboard