In the construction industry, surety bonds are required by a variety of entities for a variety of reasons. In addition, many other sectors of the economy require a surety bond just to operate their business. These bonds, called license and permit bonds, are used to make sure that the regulated entity pays their respective taxes, fines, etc.
Below is a great example of why surety bonds should be used. In this case, the charter schools did not have to have a bond, which is now causing massive problems for the other schools. A surety bond would have eliminated this risk to the school district.
Broward County schools may have to repay $1.8 million owed by two closed charter schools.
Obama Academy for Boys and Red Shoe Charter for Girls, both in Fort Lauderdale, agreed to close after frequent disputes with the district. But a recent State Auditor General report found the jointly owned schools could not verify their enrollments for the 2013-14 school year and therefore the state is owed $729,000. The district expects to be on the hook for another $1.1 million because the school also failed to keep proper enrollment records this past school year, said Patrick Reilly, chief auditor for Broward schools.
The state will likely withhold that money from future district allocations, even though the charter schools have closed.
"School districts are accountable for monitoring their charter schools. Therefore, any audit finding affecting a charter school is ultimately the responsibility of the sponsoring school district," said Claudia Claussen, a spokeswoman for the state Department of Education.
She wouldn't comment on the actual amount that could be withheld, saying department officials haven't seen the audit yet.
"There's no way to recover anything from the schools," Superintendent Robert Runcie said. "The district is liable for their shortfall. It's going to impact students in the district who will no longer have those funds available to meet their needs."
Angry School Board members pledged to lobby to change state laws so charter schools would be required to have surety bonds or other financial means to ensure taxpayers aren't responsible for school debts.
"We're paying for their fines, and that's wrong," Board member Robin Bartleman said. "They need to put something in place where the schools are personally liable for their own fines. They don't govern appropriately, they waste money and now the state is withholding money from us? It's deplorable."
Charter schools receive public dollars but are independently operated and governed by a volunteer board. A Sun Sentinel investigation last year found state laws not only make it easy to open a charter school but difficult to hold them accountable. Local districts can only immediately close charter schools when they threaten a student's health or welfare.
The district closed the two schools after three years of financial and academic problems, violations of state law and breaches of contract with the district, records show. District officials say the schools failed to give student report cards, did not disclose how they spent tax dollars and failed to provide adequate services to students with special needs.
Enrollment issues were not specifically part of the district's decision to terminate the school.
"The school district laid out a long list of legal and operational things, and we agreed to voluntarily terminate our contract, but questions or concerns about enrollment never came up, This is the first I 'm hearing about them," said Corey Alston, the school's founder.
Reilly said the state audit came out after the School Board approved the termination agreement.
Ralph Arza, a lobbyist for the Florida Charter School Alliance, said his groups supports reforms that would prevent charter schools from misusing money.
"It's completely unfair to take from our traditional schools to pay for the mistakes of adults," Arza said. "We support anything that protects taxpayers."