Charter schools have been spending public money with little oversight — or accountability for student performance — and the lack of government monitoring has resulted in "unethical and illegal" spending and employment practices at some campuses, a scathing audit of Hawaii’s system of 31 charter schools found.

"Hawaii’s charter school system has been operating without any real outside oversight since the first charter school opened in 1995," the audit concluded. "The contract that charter schools made with the public to provide great accountability in exchange for greater autonomy is not only broken, it may have never existed."

The state performance audit, released Thursday, singled out Myron B. Thompson Academy in Kakaako as an example of brazen "waste and abuse," saying the school "excessively" increased salaries, leading to $133,000 in overpayments in one year to employees, who also "benefited from irregular employment and procurement practices."

The audit called the spending "possibly fraudulent."

In response to the 75-page report, state legislators, Charter School Review Panel members and charter school officials said the audit should be viewed as a call to action to make substantive, speedy changes to the way charter schools operate.

"The findings in this audit raise some very serious concerns," said state Sen. Jill Tokuda, chairwoman of the Senate Education Committee and head of a legislative task force charged with looking at ways to improve charter school governance.

She said the report’s conclusions warrant "immediate investigation and action."

Tokuda said recommendations for improvements to the governance structure of charter schools are similar to those that came out of the task force, which held its final meeting last week, after agreeing to a set of proposals for the upcoming legislative session aimed at strengthening charter school oversight.

The audit says the Charter School Review Panel focuses on its duties as a charter school authorizer but has delegated "core monitoring and reporting responsibilities to local school boards, effectively removing itself — and outside oversight — from the charter school system." In turn, some local school boards have "ignored their own management responsibilities," leaving their schools with little to no monitoring.

Carl Takamura, chairman of the Charter School Review Panel, said the body has been working to improve governance and to hold schools accountable for how they spend money and how their students perform.

"We all have an idea of where we need to go and what needs to get done. Now we have to make sure we pull together to get it done," he said. "My sense is everybody recognizes the need for these changes."

Takamura and other panel members support changes to state law to give the panel more power.

Ruth Tschumy, a member of the Charter School Review Panel, said the audit’s conclusions "should be a loud call for all of us to be doing a better job," but added that the audit overstates the authority of the panel, a 12-member board of volunteers.

State law says local school boards, not the review panel, are the "autonomous, governing body" of each charter school, Tschumy said.

"We want to do a better job of oversight, but we do need statute changes to give us more tools," she said.

The audit is the latest black eye for Hawaii’s charter school network, which has faced increased scrutiny over the last year, mostly because of questionable management practices and poor performance at a few schools.

The report also comes as more parents are opting to send their kids to charter schools, seeing them as innovative or better able to address different learning styles. This school year about 9,100 students statewide attend charters, an increase of about 900 from last year and up from 7,819 in the 2009-10 school year.

By comparison, some 172,000 students attend regular public schools.

Though charter schools are publicly funded, they are not under the state Department of Education. Instead, they are overseen by local school boards, whose charters can be revoked by the Charter School Review Panel, formed in 2006.

In the 2009-10 school year, Hawaii charter schools received $49.7 million in state funding.

The state audit said much of the money is spent with little oversight, and pointed to several examples of "unrestrained spending." For example, in the 2009-10 school year, Kamaile Academy in Waianae spent $18,000 in state money on trips to an amusement park, an ice skating rink and a pizza restaurant.

Much of that "student incentive" spending — some $15,600 — went for a schoolwide field trip for 951 students to the Wet ‘n’ Wild theme park in Kapolei.

Kamaile no longer spends money on student incentives, school officials said.

Takamura said the Charter School Review Panel has forwarded its concerns about spending at Thompson Academy to the state attorney general’s office and the state Ethics Commission, which are investigating.

Thompson Academy officials did not return a call Thursday seeking comment.

The audit said salary overpayments at Thompson Academy resulted in some employees being paid twice or three times what they should have been earning. For example, the audit notes, the school’s part-time registrar got an "administrative differential" that boosted his salary 212 percent, to $55,200 annually.

The audit also found employees were paid for work they didn’t complete, that nonemployees approved purchase orders and that the academy had "transactions" with relatives without written disclosure to the school’s local school board.

The audit also took issue with Hawaii Technology Academy, the state’s largest charter school, whose head of school is employed by a private, for-profit education company that also provides online curriculum for the school. K12 Classroom Inc. employs the head of school under a provision of its contract with the academy.

The company recently removed its head of school, Jeff Piontek, who had been critical of the setup, and Hawaii Tech Academy is determining how it will search for a replacement. The auditor said the employment of HTA’s head of school by a private entity "raises serious management and ethical concerns."

» The auditor’s full report is available on the state’s website.