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A state audit released Thursday found that Alliance College-Ready Public Schools did not divert public funds intended for students on a nearly $1 million campaign to counter efforts by United Teachers Los Angeles to unionize its more than 600 teachers and counselors.

The attempt to unionize the city’s largest charter management organization began more than two years ago when 67 teachers and counselors said they wanted to join UTLA. Since then it has morphed into a lengthy legal battle between Alliance and UTLA. The teachers union has filed several complaints with the California Public Employee Relations Board accusing Alliance of violating state laws that allow teachers to organize without interference.

The audit was requested by state Sen. Tony Mendoza, D-Artesia, and approved last year by the Joint Legislative Audit Committee. At the time, Alliance characterized the audit as being politically motivated.

“We are pleased that the results of the state audit confirmed today what we have always known – that all public funds Alliance receives go where they belong, into the classroom, where we are working with more than 12,500 students to not only graduate high school, but to be truly prepared for college,” Alliance CEO Dan Katzir said in a statement.

Mendoza, a former LA teacher, said in a statement he has asked the state auditor for additional information.

“I am glad that his audit has been completed, but additional clarification is needed,” Mendoza said. “I would like more information on the reimbursement of school employees, specifically if anti-unionization activities took place during school hours.”

The audit found that Alliance created a special account to separately track any expenses related to its response to the unionization effort. The CMO raised more than $1.7 million in private donations for the fund and has spent about $915,000, including $426,000 on consulting fees, $31,000 for flyers and letters to parents and teachers, and $107,000 on legal fees, which does not include more than $2 million in pro bono legal services.

“A critical reason that Alliance was able to avoid using public funds to pay for its response to the unionization efforts is that it tracks revenue and expense accounts separately for the home office and the charter schools using distinct resource codes with public and private designations,” auditors wrote.

Alliance’s 28 charter schools are directly funded by local, state and federal governments and private grants and donations, and each school pays a management fee to Alliance’s home office.

Auditors said Alliance reimbursed schools for principals’ wages for time they spent on the unionization efforts, for example, on conference calls.

The audit found that Alliance wasn’t following federal laws regarding sharing confidential student information with third parties, and auditors could not confirm whether the wishes of parents who signed opt-out request forms were honored. Alliance shared alumni student information with the California Charter Schools Association, which conducted outreach about the union organization efforts.

The audit also made recommendations about changes to the CMO’s procurement and contracting policies and procedures.

Alliance spokeswoman Catherine Suitor said the recommendations have either been implemented or will be fully implemented within the next couple of months.

Teachers who support the unionization effort and UTLA President Alex Caputo-Pearl released a statement highlighting the amount spent by Alliance to counter the unionization effort and the finding that showed proper protocols weren’t followed when it shared student information with the CCSA.

“Charter schools are substantially funded by public taxpayer dollars with additional private contributions,” Alisha Mernick, a teacher at Alliance Gertz Ressler High School, said in the statement. “Whether public or private, that money should be used in our classrooms, helping students learn. I’m offended that my employer solicited money for a propaganda campaign to misinform, manipulate, and silence teaching professionals who are organizing a union to improve the quality of our schools.”

“While educators across Los Angeles and California are standing together to improve funding for public education, Alliance is spending resources to run a campaign against their own teachers and counselors,” Caputo-Pearl said. “Raising funds for a war chest to fight your own employees is just plain wrong. Operators of publicly funded schools should be working to see that every available dollar is spent to further quality education for students.”

Alliance’s CEO told auditors that some of the funds were spent responding to UTLA statements that Alliance deemed incorrect or misleading.

“Specifically Alliance expressed its opinion that UTLA has been funding and supporting efforts to interfere with the freedom and flexibility that charter schools like Alliance have in tailoring programs for the needs of their students,” auditors wrote. “Alliance also produced a document stating the benefits of its charter schools remaining independent and nonunionized to ensure that students receive a high-quality college preparatory education.”

Last year a PERB judge said these communications were permissible, but UTLA is appealing that decision.

The mixed ruling faulted Alliance for blocking UTLA emails to its employees through spam filters, interfering with UTLA access to school campuses and that a principal made a threatening statement to a teacher. (The principal no longer works for Alliance.)

Suitor said UTLA is “very active” on their campuses, which are located in South LA, central and east LA, Pacoima, and San Pedro.

“The campaign continues quite assertively,” she said, but so far a majority of teachers have not agreed to join the union.

There are several outstanding PERB complaints that have not been decided.

“We are confident they, too, will be ruled favorable, sort of like this audit looking for a smoking gun and there’s no there there,” Suitor said. “Our goal again is to stay focused on educating kids, running great schools and making Alliance a really great place to work for our educators.”

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*This story has been updated with a statement from state Sen. Tony Mendoza.