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Olive Grove Charter School, a nonprofit charter program with locations throughout Santa Barbara and San Luis Obispo counties, is facing scrutiny this month after a former employee filed a lawsuit alleging mismanagement and "unethical and unlawful behavior" by the organization's chief executive.

Filed March 4 by Olive Grove's former controller, Dawn Wilson, the suit claims Executive Director Laura Mudge misused public funds, violated hiring policies by hiring one of her daughters at an inflated salary, and manipulated the grades of a second daughter so she could gain admission to the University of California at Santa Cruz.

Olive Grove officials could not comment on Wilson's allegations due to the pending lawsuit, but in a statement to the Santa Maria Times Mudge said "the school anticipates vigorously defending the lawsuit and proving the allegations baseless."

Wilson's claims

Billed as an alternative to traditional public education, Olive Grove was founded in 2014 as a California nonprofit and chartered by the California Department of Education in 2015. Mudge said roughly 800 students are enrolled in the charter program, which runs resource centers in New Cuyama, Orcutt, Lompoc, Santa Barbara, Buellton and San Luis Obispo.

According to the suit, Wilson was hired on a part-time basis in February 2016 and was promoted to the full-time controller position in March 2018. She served as chief operating officer and managed the school's day-to-day operations until July 30, when she alleges she was fired for raising concerns about Mudge's actions to the school's board of directors.

During her tenure as controller, Wilson allegedly confronted Mudge about "questionable expenses" she believed constituted a misuse of funds, including a $10,000 saltwater fish tank for a marine biology class that was not offered, $6,000 in robotics materials, five-star hotel stays, a $2,000 love seat and $4,400 in camera equipment for a class with only eight students.

Wilson's suit alleges that Mudge violated board policy by purchasing approximately $43,700 in computers without pre-authorization from the school's board of directors.

She also claims that Mudge broke the school's employment policies by hiring her daughter, Anna Mudge, at a salary more than twice the standard amount. Anna Mudge reportedly received $48,000 per year, approximately $37.79 an hour, for her work as a teaching assistant; other Olive Grove teaching assistants earned $15 per hour.

Weeks before her dismissal, Wilson claims she was advised by board president Bill Anaya that a "disgruntled employee" made a complaint that Mudge allegedly changed the grades of her younger daughter, Juliette Mudge. The suit states Juliette's senior year grades were changed to As and Bs, "even though it was mathematically impossible to achieve such grades." The transcripts were reportedly finalized and sent to UC Santa Cruz, where Juliette Mudge "was accepted on falsified grades."

Wilson said she was terminated by Mudge for "violations of school policy and unsatisfactory job performance" after investigating the claims of grade manipulation.

'Checks and balances'

Though she could not comment on the pending litigation, Mudge said the school has "a lot of structures in place" to prevent financial mismanagement.

"There are a lot of checks and balances for every expenditure that is ever made," she said, noting that the school reports its expenses to the state Department of Education for oversight. "I [also] review all the expenditures to make sure nothing stands out."

The school also hires an outside firm to conduct an annual audit of their finances. The most recent audit, dated Sept. 21, 2018, found the district in compliance with standard accounting practices during the 2017-18 school year, and identified no weaknesses or deficiencies in internal control over its financial reporting.

Mudge said the board regularly reviews and approves purchases or expenses during their meetings, but a review of agendas and minutes posted by the school indicates that board members have not approved warrants or expenditures since Sept. 21. The last expenses the board reviewed and approved were from the three-month period spanning June 1 to Aug. 31, 2018. Minutes do not indicate that the board has reviewed or approved expenses for the period between Sept. 1, 2018 and Feb. 28, 2019.

And while Olive Grove's financial policies require one board member (typically the treasurer) to sign off on checks greater than $500, the executive director retains authority to approve or deny most proposed expenditures. Non-payroll purchases made by district employees must be preapproved (in writing) by the executive director. Documentation must be provided for purchases above $500, and any purchase order or check request without documentation should be denied.

Board preapproval is only required if the cost of a purchase is greater than $10,000, except in emergency situations.

State oversight

Wilson's suit comes at a time when lawmakers and teachers' unions across California are pushing for greater oversight and regulation of charter programs. At the beginning of the month, Gov. Gavin Newsom signed Senate Bill 126, which requires charter schools adhere to the same open meetings, public records and conflict of interest laws that apply to public school districts.

"We want to make sure [charter] schools are held to the same standard as public schools, and receive the same oversight as them," said Frank Wells, a regional spokesperson for the California Teachers Association. "These measures do go a long way to making them more accountable."

Mudge said the school currently maintains internal conflict of interest policies and adheres to provisions of the Brown Act and California Public Records Act, but she worries additional state regulation, specifically modifications to the chartering process, could affect the way charter schools operate.

"Transparency is beneficial for all entities," she said, "but once you take away a charter school’s appeal process, or put into law [other regulations,] then you’re taking away options [from] parents and students who may not be getting their needs met in a traditional [school.]"

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Mathew Burciaga covers education in Santa Maria and the surrounding area for Lee Central Coast Newspapers. Follow him on Twitter @math_burciaga

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Education Reporter

Mathew Burciaga is a Santa Maria Times reporter who covers education, agriculture and public safety. Prior to joining the Times, Mathew ran a 114-year-old community newspaper in Wyoming. He owns more than 40 pairs of crazy socks from across the globe.