Eagle charter school facing serious financial troubles

Credit: KTVB

Eagle charter school facing serious financial troubles

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by Jamie Grey

Bio | Email | Follow: @KTVBJamieGrey

KTVB.COM

Posted on April 8, 2013 at 5:25 PM

Updated Monday, Apr 8 at 6:12 PM

EAGLE -- The North Star Charter School in Eagle is facing problems with both short and long term financial concerns.

Now, the charter's authorizer, the Meridian School District, is giving the school a month to sort it out.

The school board's chairman sent a letter to stakeholders, including parents Monday.

He says the board is confident they will finish this school year, and says they're working with the banks in hopes of doing some restructuring to keep going beyond that.

For North Star Charter School to ultimately stay open for its more than 900 K-12 students, the Meridian School District says it needs a financial fix.

In the short-term, the school reported to the District Board of Trustees it would likely be short $30,000 this month, then be OK for a month with a scheduled state payment, then be down $640,000 in June.

Beyond that the financial forecast shows more debt on the horizon.

According to an independent review of the school, there were three causes:

 

One -- The "annual debt service obligation is too high" -- the school uses almost 28 percent of its operating budget just paying interest and principal on facility bonds.

 

Two -- State funding cuts since 2008.

And Three -- Budget forecasts at the school have over-estimated revenue and under-estimated spending.

The school says its problems mainly stem from the facility bonds' interest rate and is trying to renegotiate to stay open long term.

In March, the bond's trustee, Wells Fargo, sent a letter to the school criticizing the school's ability to manage money.

But then Wells Fargo later sent a letter to the school and district expressing support for the school to keep going and existing efforts to help the school address its financial issues.

For now, the district says it's waiting to see what the school comes up with.

"They will come back and present their resolution to our notice," said Meridian School District spokesman Eric Exline. "The board could simply accept that, and they would go forward. The board could reject that plan, at which case they would actually get referred to the State Board of Education and could become a charter school under the State Charter Commission. Ultimately, they need to come up with a plan so that their finances work so that they can continue to operate."

And at least immediately, he says parents probably don't need to worry about finding a new school.

"I don't think anybody has any imminent need," said Exline. "At this point, we have a 30-day window before the next step in this process really even happens."

North Star says it's had previous financial problems, including another Notice of Defect in 2010, which it was able to fix.

The board chairman also says with previous issues, they've already cut teacher salaries and positions like custodians and nurses.

Now, he says there's not much left to cut, so this really relies on an interest rate modification.

DaVinci Charter School in Garden City also had financial problems and closed in February.

Idaho lawmakers approved a bill this past session to give more money to state charter schools in the future to help cover a portion of their facilities and maintenance.

According to the independent reviews, this law would give North Star more than $100,000 next fiscal year.

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