Performance Audit Spotlights Declining Enrollment, Passive Leadership, Insolvency Risk at Steel Academy in Akron

COLUMBUS – Board members of an Akron charter school should abandon their hands-off leadership approach and adopt effective strategic planning and decision-making if they want to remain in operation, state auditors determined in a recent review.

At present, the Steel Academy Board is struggling to effectively govern, and the school faces ongoing academic and budget issues, including a diminishing cash balance, deficit spending and the risk of insolvency.

“The board outsourcing its responsibilities to provide a quality, cost-effective education is not working for its students,” said Auditor of State Keith Faber. “Enrollment is dropping, and the school had more than $450,000 in past-due bills as of its August 2024 budget. Steel Academy will not remain a viable educational option absent immediate action.”

The school is the subject of a new performance audit released Thursday by the Auditor of State’s Ohio Performance Team (OPT), which reviews the operations of public agencies and programs and offers recommendations to improve their efficiency and effectiveness.

Copies of the full report are available online at https://ohioauditor.gov/auditsearch/search.aspx.

OPT launched its performance audit at the request of the Ohio Department of Education and Workforce’s Office of School Sponsorship after Steel Academy was identified as being at risk for closure due to poor academic performance.

The school has served Akron students since 2014, initially covering grades six through 12 but, in recent years, converted to a dropout prevention and recovery school for high school students. The change led to enrollment declines and corresponding decreases in operating revenues, along with lower academic standards.

In fiscal year 2023, the school received nearly $2.5 million in federal, state, and local funding, with 152 students enrolled. It spent nearly $2.6 million and ended the year with a cash balance of $502, down from $95,734 a year earlier.

Also in fiscal year 2023, the school did not meet any of the academic criteria used in the state’s traditional report card measures and was placed on the state’s “At Risk for Closure List,” requiring the development of a corrective action plan and the OPT audit.

The school contracts with an operator to handle day-to-day operations, and Steel Academy Board members have little to no direct interaction with the students, families and staff.

The passive leadership “has contributed to operational deficiencies including poor academic performance and financial distress,” auditors noted, adding, “… We found that Steel Academy has a high rate of students who face barriers to academic performance and that the school historically struggled to meet academic standards set by the state. Given these barriers, the school has to be strategic in its allocation of resources to maximize conditions for student success.”

Also according to Thursday’s report:

• The Steel Academy Board lacks needed expertise, delegates decisions to the school’s operator, and has no long-term strategy to sustain operations, including formal policies or plans for the recruitment and retention of board members.
• The school’s drastic declines in enrollment suggest it may not be completely aligned with the needs of the students and families it serves.
• The school does not have adequate cash on hand to pay its debts and is “extremely vulnerable to closure due to insolvency….”

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The Auditor of State’s Office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,900 state and local government agencies. Under the direction of Auditor Keith Faber, the office also provides financial services to local governments, investigates and prevents fraud in public agencies, and promotes transparency in government.