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Kristin Murphy, KSL

State auditor named interim director of shuttered Utah charter school

By Marjorie Cortez, KSL | Updated - Jul 16th, 2019 @ 5:37pm | Posted - Jul 16th, 2019 @ 12:16pm


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SALT LAKE CITY — Utah State Auditor John Dougall was appointed interim director of the now-shuttered American International School of Utah Tuesday.

The Utah State Charter School Board, after meeting in closed session for more than two hours, voted unanimously to remove AISU Executive Director Tasi Young and appoint the Utah State Auditor's Office to see through the closure of the public charter school.

Utah State Charter School Board Executive Director Jennifer Lambert said the decision to appoint the state auditor is a first for the board.

"We felt that was the best tack to take to be able to get the information to uncover things. If there's potential problems that arise, he has maybe a little more clout to be able to handle some of the issues that they're dealing with at the moment. AISU is dealing with a number of very difficult issues, so we felt maybe he was better poised to handle those issues," Lambert said.

Young, who oversaw the school in its final year of operation, declined to comment on the decision.

Earlier in the day, Young told charter school board members that he felt the school did the best it could do and strived to make sure the interests of the school community and educators were served and the "dignity of public charter schools (was) preserved."

"I fully understand this may have disappointed people, that other people may have been able to do this better. But I believe we have settled all claims in a way that satisfies all claims in a better position than any court could have allowed if we had to go through a legal process," he said.

AISU's board of directors voted in May to close the school amid growing concerns about the school's financial viability, the likelihood of further state scrutiny of its operations and the possibility of additional liabilities.

Just eight months ago "it seemed like AISU was … making strong progress and then relatively quickly we became aware of other things, other findings, and it became devastating to us. There were financial obligations that caused the school to eventually close," Young said.

Since then, the school has worked to ensure student records were properly transferred to the state, he said. The school provided a list of all its creditors and searched for all the records of claims for secured assets.

"To this date, the only security interests we were able to discover was the security interests of the landlords," he said.

There were some obligations the school could not meet, but they "were negotiated and settled for less than 10 cents on the dollar. Of our obligations to the state, we made a proposal for more than 25 cents on the dollar. We feel we are still attempting to put the state and the taxpayers in a more favorable, prioritized position over the other obligations we’ve tried to meet," Young said.

Young assured the board that AISU plans to return all assets to its authorizer, which is the State Charter School Board, "once all of our obligations have been discharged."

One unresolved issue is repayment to the state of more than $418,000 in federal and state special education funds that officials say were inappropriately spent or there is no documentation to support the expenditures.

This spring, the Utah State Board of Education ordered repayment of the funds, which AISU appealed.

Young said the appeal was "denied in part and reduced in part. AISU continues to dispute or would like to continue to dispute those costs were unallowable and will do so (if it can) but it has also made a proposal to make a settlement with the state for those findings."

It is unclear how that issues will be addressed now that a new director is in place at the school.

Tuesday morning, the Utah State Board of Education's Finance Committee deferred action on financial issues related to the school closure.

"The full board may consider this item in executive session under the exception of reasonably imminent litigation," said committee Chairwoman Laura Belnap, reading a prepared statement.

The statement continued: "It is vital to ensure that our limited public education funds are carefully used and accounted for and that the board recovers unallowable expenditures of state and federal funds by taking advantage of any and all legal remedies."

The state has, in the past, forgiven expenditures of some charter schools that have closed, the federal government insists on repayment of special education funding. School closure is not an acceptable reason to seek forgiveness, according to one court decision.

The Finance Committee's agenda also indicated concern over liquidation of the school's assets.

A letter to AISU by the Utah Attorney General's Office says "AISU's 'plan' to not liquidate the assets of this public school is no plan at all. AISU's 'plan' to leave the public school assets in the sole possession of its former landlord, a private entity, who is one of evidently several creditors, smacks of favoritism, is not authorized by the State Charter School Board."

Moreover, the letter signed by assistant attorney general David C. Jones, attorney for the State Charter School Board, said "it is in violation of … (state) statute which clearly envision the assets will be liquidated."

The letter says "AISU's immediate remedy is to liquidate the assets and not sit on them nor store them/give them away to your former landlord."

The school's landlord is Schoolhouse Development LLC, whose partners include Scott Brand, Corey Brand and Glenn Way, a former Utah state lawmaker. AISU is one of many schools on the charter school development firm's website.

AISU has vacated the building due to nonpayment of its lease, said Scott Brand. The school has a current 20-year lease with Schoolhouse Development but it was in the building less than five years, he said.

Schoolhouse Development received no payment for the school's last two lease installments totaling nearly $400,000, Brand wrote in an email.

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