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State school board OKs $1.4 M in loans to charter schools, writes off $45K loan balance

State school board OKs $1.4 M in loans to charter schools, writes off $45K loan balance

(Jordan Allred, KSL, File)


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SALT LAKE CITY — The Utah State Board of Education on Monday authorized $1.4 million in start-up loans to charter schools and wrote off a near $45,000 loan balance from a now-shuttered charter school.

Loans ranging from $255,000 to $300,000 were authorized for five charter schools, including Ascent Academies of Utah with campuses in Salt Lake, Utah and Davis counties; HighMark Charter School in South Weber; Lakeview Academy, Saratoga Springs; Maria Montessori Academy in Ogden; and Scholar Academy in Tooele.

Charter schools can use the funds to meet school building construction and renovation needs, and to pay for expenses related to the start-up of a new charter school or school expansion.

The board also authorized board staff to seek a write-off of the $45,979 loan balance of Kairos Academy. The State Charter School Board voted unanimously in June 2017 to terminate the school's charter.

Prior to that, the charter school that served pregnant teens and teen mothers had been on probation for two years over concerns about enrollment and qualifications of its faculty.

Kairos officials initially said they would appeal the decision to the elected Utah State Board of Education because they believed the school had met the conditions of probation. The charter school later elected not to challenge the decision and the school closed.

Natalie Grange, assistant superintendent of financial operations for the Utah State Board of Education, said Kairos Academy made payments on the revolving loan balance until October 2017.

"The October 2017 payment was returned for insufficient funds and no additional payments have been made against the loan," according to state school board documents.

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The school closed its bank account and moved its funds to a credit union "and did not notify the USBE, as required in their promissory note," board documents state.

Grange said state education officials have been working with the school and "have ascertained that there's no funds left after they've closed and liquidated everything. There's nothing left to pay off the loans."

Prior to opening, charter school have a "grace period" before they are required to make loan payments. They can use instructional funds or any unrestricted educational funds for the loan payments, Grange said.

"Obviously they can't use federal grant money or restricted state funds. But anything that's unrestricted, that's generally the revenue they use," she said.

They can also use local replacement funds, which were created by state statute, to provide an equalized per-pupil state appropriation to charter schools to replace some of the locally generated property tax revenue they cannot access because they have no bonding or taxing authority.

"Kairos did pay and they were in good standing the entire time they were a school, they were an LEA (local education agency). We don't have anyone who defaults when they're an active school. We actually have access to their bank accounts so we just go in and pull the payments every month," she said.

Utah has supported charter school facilities costs for about 15 years, with the State School Board's administering the revolving loan program about half of that time.

Throughout the history of the revolving loan fund, the State School Board has rarely been asked to forgive outstanding balances, Grange said.

One reason is borrowers enroll in an automatic clearinghouse program that allows payments to be automatically deducted from their designated bank account each month, according to the lending agreements.

If the account information changes, the borrower is obligated to notify Utah State Board of Education staff.

A Kairos Academy representative did not return telephone messages seeking comment.

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