FREMONT — With a week left to implement 42 corrective measures recommended by a state auditing team or face having her school shut down after June, the founder of FAME Public Charter School said she is confident the school will meet its obligations.

FAME, which serves predominantly immigrant families from the Middle East and Southeast Asia, has come under heavy scrutiny after a state audit found numerous questionable business practices — from using the wrong funds to pay bills and failing to report full wages on tax forms to using taxpayers' dollars to pay her speeding ticket.

Because FAME agreed to implement the corrective measures listed in the audit, the Alameda County Board of Education voted 5-2 last month to conditionally approve renewing the school's charter another five years. But the school must fulfill the 42 recommendations by March 1, or it could be ordered to shut down after this academic year.

Aside from filing amended income tax statements with the government — which the executive director said she's in the process of doing — Maram Alaiwat, also the founder of FAME, said the school has completed the other recommended actions and has submitted documents to the Alameda County Office of Education for review.


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"We have not finished reviewing all of the materials, but we're feeling very positive about FAME being able to fulfill the requirements," Sheila Jordan, superintendent of the county office, said Friday. "We're seeing significant improvement, and staff and I are feeling positive about FAME's intentions and their actions."

Despite their conditional approval of a charter renewal, some members of the county board of education have continued to express concern about the school's business practices and the executive director's compensation.

The audit by the state Fiscal Crisis & Management Assistance Team, or FCMAT, found that not all taxable income was reported on Alaiwat's W-2 forms for 2006 and 2007. A $74,820 Mercedes-Benz GL 450 that the school purchased for her should have been reported in her 2007 tax statement as a leased vehicle, with a portion of the car's value listed.

In addition, a housing allowance, mileage and grant-writing stipends, vacation payouts and in-lieu benefits totaling $109,200 over two years were not reported.

These benefits were paid through the school's accounts payable system rather than through payroll, which is why the amounts weren't reflected in W-2 forms. Alaiwat said difficulties in getting the county Office of Education, which at the time handled the school's payroll, to disburse checks in a timely manner forced the school to draw money from its accounts payable fund.

Alaiwat said she was not aware until the audit that her W-2s did not reflect her full income.

"I'm not an accountant and am not a human resource specialist. Until FCMAT came in, I had no idea. Just like everybody else, I get my statements, I file them," she said.

In addition to concerns about underreporting her income, some county board trustees have questioned whether the executive director is overcompensated. Her base salary during the 2007-08 fiscal year was $165,000. That, combined with additional stipends and benefits, brought her total compensation to $279,600.

"FAME has (1,400) students. The school is about the size of an average middle school (in the county). ."‚."‚. How can you rationalize paying this amount of money?" county Board of Education Trustee Eileen McDonald said earlier this year.

FAME officials say that while the student population has grown nearly 80 percent in the five years since its opening, the organization's administrative staff has remained largely the same size. As a result, Alaiwat's workload has increased, and, in previous years, she doubled as the school's grant writer, a duty for which she received extra pay. Her current compensation package is worth $240,000, Alaiwat said.

Although the school's charter is approved by the county board of education, FAME has its own board of directors, which determines Alaiwat's contract.

In 2007, the president of the FAME board, Robert Chisholm, approved paying a $958 traffic citation for alleged speeding, driving without evidence of insurance and having a vehicle registration address that didn't match Alaiwat's address, according to the audit report. The school has agreed not to pay any future citations.

"I agree that traffic citations should not be paid for by the school. The first citation was an extenuating circumstance with regards to the school's insurance that has long since been addressed," Alaiwat said.

The report also mentioned a possible conflict of interest violation by the executive director, who, shortly after receiving payments from an employee who moved into her condo, promoted the person, thereby increasing her income.

Alaiwat said she was helping a colleague, who at the time needed a place to live.

"I offered her my condo rent free. However, at the time, my condo was under renovation. She offered to help pay for some minor renovations in order for the condo to be livable," Alaiwat said.

She added that FAME employees have opportunities to change positions within the organization. The person who lived in her condo was promoted from an office secretary to an administrative assistant because "at the time she was the most qualified for the position."

Auditors also found that thousands of dollars in reimbursement requests for business-related expenses, including meals and gas, often were not accompanied by receipts. Additionally, the school entered into loans with private lenders who set higher interest rates than traditional commercial lenders. Some of the private lenders were employees of the school or their relatives.

FAME officials said banks often won't issue loans to start-up charter schools, forcing them to seek loans from private individuals or other lenders with even higher interest rates.

The entire FCMAT report is under review by the Alameda County District Attorney's Office. Jeff Stark, senior deputy district attorney, said he has not decided whether to pursue legal actions.

FAME is the only countywide charter school in Alameda County. It has campuses in Fremont and San Leandro and serves more than 1,400 students in the Bay Area.

Although its school year is designed to accommodate major Islamic holidays, students also are off on major Christian and Jewish holidays, and school officials maintain that FAME does not preach religion. The school plans to launch the country's first Arabic-English immersion program next year.

FCMAT Report
To view the full FCMAT report, and FAME's responses to the findings, visit www.insidebayarea.com/argus.