MURRAY — Amid growing concerns about its financial viability, the likelihood of further state scrutiny of its operations and the possibility of additional liabilities, the board of directors of American International School of Utah voted unanimously Wednesday to close the K-12 public charter school.
Some board members broke into tears as they voted to close the school no later than Aug. 15.
"I think I speak for all of the board members in stating how difficult it is to make this decision. It has not been reached without great thought and great effort," said board chairman Kent Burggraaf.
"It's not a decision that has been taken lightly, and it is a very difficult one."
A week ago, the board held off deciding if or when to close the school to allow time to study other options, such as contracting with a third party to operate the school. Last week, school officials offered assurances the school would, at a minimum, operate until the end of the school year. The school serves about 1,300 students.
Tasi Young, AISU's executive director, said the school's immediate concerns are to help students make successful transitions to new schools and work to end the school year on a positive note. The last day of school is June 7.
"We are always concerned about all of our students. They all have unique stories. AISU is a place of inclusion where many people found a home that fit them where the did not fit other places. We will provide them with all the support that we can to help them make that tough transition," he said.
Some 150 full-time and 20 part-time employees will lose their jobs, although some educators are already being recruited to teach elsewhere because of the innovative approaches to teaching and learning that have been AISU's hallmark, he said.
Current board members and school officers blame much of the school's current financial problems on previous operators. The State School Board staff's review of special education expenditures focused on the 2016, 2017 and 2018 fiscal years.
Last week, the school appealed the Utah State School Board's demand to repay $514,000 in state and federal special education funds that state officials determined had been used for "unallowable expenditures." The school has asked the State School Board to forgive $360,000 of that total. The State School Board staff's review of special education expenditures focused on the 2016, 2017 and 2018 fiscal years.
The school had operated at a deficit for a number of years but was in the midst of a course correction this academic year, said Young in a previous interview.
However, the school experienced other setbacks, such as an unanticipated $250,000 property tax assessment.
More recently, the state has been reimbursing AISU as it presents documentation for restricted special education funding. Ordinarily, the state automatically disburses restricted funds to school.
This change in procedure brought about concerns over the use of special education funding in previous years so "the school has to front those costs," some $300,000 a month, Burggraaf said.
I think I speak for all of the board members in stating how difficult it is to make this decision. It has not been reached without great thought and great effort.
–Kent Burggraaf, board chairman
Other concerns have arisen. In particular, the school's relationship with a private school partner Realms of Inquiry. The arrangement could mean another $1.5 million liability due to "state and federal funds that were paid to AISU for local students who were in part, or in large part, educated by Realms of Inquiry," Burggraaf said.
That state says it was a "misuse of funds or misuse of the federal government SEVIS (Student and Visitor Information System)," he said. The program is run by U.S. Immigration and Customs Enforcement and monitors all student and exchange visitors.
Even though the structure of the public-private partnership was outlined in AISU's charter agreement, the details were not "and would probably not be approved at this point. So that creates a financial liability for AISU will likely come to bear were AISU to operate next school year," Burggraaf said.
AISU is described on its website as a "public-private hybrid STEAM international charter school in Murray, Utah." Realms of Inquiry is also located at 4998 S. Galleria Drive, the site of the former Galleria Mall.
The state's continued scrutiny of the school's partnership with Realms most likely would have meant the school would have been unable to operate an international program next school year. That would have resulted in cutting 15 jobs and the loss of $1 million in revenue, Burggraaf said.
There are also concerns regarding possible misrepresentations made to international investors early in the school's existence who contributed some $5 million. The investments were made under an employment-based visa program called EB-5.
The EB-5 visa provides a method of obtaining a green card for foreign nationals who invest in a new commercial enterprise, which in this case was American International Schools LLC, a private entity the school has contracted with for management and instructional services.
"These investors bought into AIS (LLC) for the purpose of seeking legal status in the United States through the EB-5 process. It was worked on by the prior AISU administration. There's some concern and some potential risk out there because of the amount of funds that were contributed as capital investments," Burggaaf said.
"There's a lot of evidence the problems were a result of our school being collateralized for a side venture. When that side venture quit working, all the liabilities that were there have now come to roost on our school," Young said.
Young said it is unfortunate that most people know little about the school.
If people heard the stories of the school's teachers and students "you would hear a story of innovation, of success of a model that was emerging that could change lives that did change lives. I want that to be the story of AISU," Young added.
For the remainder of the school year, counselors, coaches and teachers will work to mentor and advise students, Young said.
"We will help them tell their story. We want them to be able to grieve a bit and be able to communicate their feelings and their experiences so that their story can be part of this great legacy of education," he said.
Young said he and other key administrators will work with the state to ensure a smooth closure and provide information the state may need to assist its oversight responsibilities.
AISU is on "warning" status with the State Charter School Board, which authorized its charter. The school is on the state board's agenda on Thursday, although it is unclear what, if any, action it would take after the school's board of directors voted to close the school.
The school was placed on warning status late last year over concerns about its continued financial viability, said Jennifer Lambert, the Utah State Charter School Board's executive director.
The school opened the fall of 2014. State Charter School Board granted its charter in February 2013.
At the time, the charter school's application stated, "AISU will operate in a fiscally conservative and prudent manner so that the school has the resources it needs to support school improvement efforts on a continual basis."