Charter schools have changed the landscape of public education in North Carolina. Charters receive taxpayer money, but have a lot more flexibility than traditional public schools. There are now 127 charter schools and 26 more are set to open next year – including 11 in Mecklenburg and Cabarrus counties. But when charter schools have financial challenges, they can go away very quickly. The recent closing of a charter in Kinston, North Carolina, illustrates that point. WFAE education reporter Lisa Miller took a closer look at that situation to get a better idea of what can happen when a charter shuts down – in this case, after the school year had already started.
Kevin: First of all, why did Kinston Charter Academy close right at the beginning of the school year? The state and school must have been aware of financial problems for a long time.
Lisa: That’s right. In fact, the school had been under what’s called disciplinary financial status since 2010. And by last spring the school had even stopped paying some of its employees’ health and retirement benefits. But Kinston’s CEO and principal told the state’s Department of Public Instruction the school was close to re-financing its mortgage and would be able to pay off all its debts. Well, that never happened. In the end, state officials say Kinston wasn’t able to provide evidence of a loan and Kinston accuses the state of deliberately trying to thwart its efforts to secure one…So, anyway, a few weeks before school started, state officials told the school they would move to close it and urged the school to surrender its charter before school started. Kinston finally did so ten days into the school year.
Kevin: So what happened to all of Kinston Charter’s students?
Lisa: The school had about 190 students in kindergarten through eighth grade. Pitt and Lenoir County Schools had to absorb most of them. In Lenoir County’s case, we’re talking about 100 students spread between five schools. The district’s superintendent Steve Mazingo says at least one or two schools will have to add teachers to handle the extra students. Here he is:
"It is traumatic to students if after 10 to 20 days of school, you reconfigure the classes and you move some students to a different teacher and you change the composition of the class. That’s not something we like to do."
Lisa: And then, of course, you have all those Kinston charter kids in completely new schools, with new teachers and classmates. Lenoir County Schools may even have a leaky building on its hands, if Kinston Charter can’t sell the property….since all of the charter’s assets that don’t go back to debtors goes to the school district where the charter is located.
Kevin: I imagine Kinston Charter Academy still has debts to pay off. Who’s responsible for them?
Lisa: They do. And it’s the charter school who must bear the burden. I asked Joel Medley about that. He oversees charter schools for the state.:
"The law is very clear that in situations like this that the state and the local education agency are not part of any credit situation between the school and its debtors [creditors]."
Lisa: Now some of those are the teachers who didn’t receive paychecks for the beginning of school. And the state is another…not just because the school still owes retirement and health benefits, but also because the state’s department of public instruction gave Kinston Charter Academy nearly 670-thousand dollars in July to cover the school’s expenses into October when more state money would arrive. That’s the state’s payment schedule for all charter schools.
Kevin: But state officials knew Kinston Charter was on very unstable financial ground, why did they give the school all that money?
Lisa: The bottom line is they didn’t have a choice. As long as the school is open, the state has to give them that money.
Kevin: Will the state get any of that 670-thousand dollars back since that was supposed to last into October?
Lisa: It’s not clear. What is clear is the charter school spent all of that money. The school’s former principal and CEO Ozie [O-Z]Hall says they used some of it to pay debts, including the health and retirement benefits the state was on the school’s case about.
Ozie Hall: "They actually basically pressured us to pay those things, so we did pay those things. All the money is accounted for and then there’s still some things that are owed."
Lisa: "So are you saying all the money is gone?
Ozie Hall: "All the money is gone, yes."
Lisa: The state is trying to determine if the school spent that money on what it calls “reasonable expenses.” That would be the school’s mortgage for the first month of school, employees’ salaries. Things like that. And another interesting thing to note…Kinston only started the school year with about 190 students. But the state paid them for 366 students because based on last year those were the enrollment estimates. Usually, the state takes care of that by deducting the difference from the school’s October payment. But obviously, in this case, that can’t happen.