SALT LAKE CITY — American International School of Utah is asking the Utah State Board of Education to forgive $360,000 of $514,000 in special education funds state officials say must be refunded because the money was used for "unallowable expenditures."
The full State School Board will consider the appeal during its June meeting. The board’s finance committee on Friday referred the matter to the state's full school board without addressing the appeal or making a recommendation.
Following a review of the school’s special education expenditures for the 2016, 2017 and 2018 fiscal years, State School Board staff notified the public charter school in late March that it must repay more than $500,000 in state and federal special education funds plus interest.
The appeal comes as the charter school's governing board is contemplating the future of the K-12 public charter school that serves 1,300 students amid growing concerns about its financial viability.
"Every effort is being made to keep the school open until the end of the year. There's a whole lot of work going on to try to make sure that happens," said Kent Burggraaf, chairman of AISU's governing board.
Still, "it's a dire circumstance," and it remains uncertain whether the school will remain open until the end of the academic year, he said. Earlier this week, the school's governing board voted to postpone a vote on the school's future.
Repayment of the special education funding is just one of the school's challenges.
Given state reviewers' findings with special education funds, instead of automatically disbursing restricted funds to the school, the state is reimbursing AISU as it presents documentation for those expenditures.
"The school has to front those costs," some $300,000 a month, Burggraaf said.
Earlier this year, the school received an unanticipated $250,000 property tax bill from Salt Lake County. Burggraaf said the school pays property tax as a condition of its lease.
It had no grounds to appeal the assessment so it wrote a check to the county, Burggraaf said.
"This SPED (special education) funding issue takes it over the top," he said.
According to state officials' letter to AISU, the state review determined that both state and federal special education funds were “used to pay for expenses not supported by proper documentation.”
The letter, dated March 28, said the funds need to be repaid "out of unrestricted funds within 90 days of receipt of this letter." The school had 30 days to appeal the state's findings, which it did.
The review by state special education staff found that during the 2016 fiscal year, "it appears" AISU incorrectly allocated more than $157,200 of federal special education funds to pay for "unallowable health insurance premiums and salaries and benefits of teachers."
A review of account records and supporting documents such as invoices, teacher contracts, schedules, payroll time cards and personnel activity reports did not contain sufficient information to support the allocation of these expenses to the Individuals with Disabilities Education Act special education fund, the letter states.
The review also found that in the 2017 fiscal year that "it appears that American International School of Utah has incorrectly allocated $154,197.44 of state special education funds to pay for unsupported salaries and benefits of school administrators, teachers, social workers and health insurance premiums."
The letter goes on to say the review of document and records "did not contain sufficient information to support the allocation of these expenses to the state special education fund."
In an earlier interview, the school's executive director Tasi Young said about 25 percent of AISU students receive special education services.
Burggraaf said the school has submitted additional documentation to the State School Board to support its position special education funds were spent appropriately.
AISU is described on its website as a "public-private hybrid STEAM international charter school in Murray, Utah." It has a partnership with Realms of Inquiry, a private school also located at 4998 S. Galleria Drive, the site of the former Galleria Mall.
The public charter school was placed on warning status by the Utah State Charter School Board in December 2018. It is a formal action taken by the state charter board after a school has not resolved deficiencies previously identified by regulators.
"Warnings require the school to take action," the state charter board's annual report explains.
The process includes developing a timeline to address the deficiencies and can result in "possible removal of board member, director or business manager."
AISU contracts with Charter Solutions as its business manager. The firm's president is Lincoln Fillmore, according to its website. Fillmore is a Utah state senator. He did not immediately return telephone messages seeking comment Friday evening.
Charter Solutions was selected as the school's contract business manager through a request for proposals in 2017 and "was fully in place by January 2018," said Burggraaf.
Speaking during a governing board meeting at AISU Wednesday night, Fillmore urged the school's directors as they weigh the future of the school to keep in mind "it's not your money that you're spending. It's taxpayers' money. That taxpayers' money is a trust that the taxpayers of Utah have given to you to spend but they're wanting it to be spent on the education of students."