The cash-strapped North Star Charter School has announced an agreement to restructure its building debts — a move that supporters say will keep the school sustainable for years.
The Eagle charter school has received plaudits for its academic performance — but a $12 million building loan had left the school at risk of a shutdown, and left its 980 K-12 students in a form of budgetary limbo.
The restructuring, announced Thursday, pares down the school’s loan payments, and pushes out much of the school’s debt for decades.
The school is still on the hook to pay $487,000 a year in bond payments. But before the restructuring, North Star was paying about $1.2 million in annual payments, under a financing deal signed in 2009.
“That was never sustainable,” said Bill Russell, a North Star board member.
The restructuring does two things.
First, it gives North Star a more favorable interest rate: 6.75 percent, compared to a 9.45 percent rate negotiated in 2009.
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Second, it allows North Star to forestall payments on about $5.7 million of the $12 million debt. That debt has been set aside in a long-range financing plan — and the school will be allowed to chip away at this debt by putting end-of-year balances into payments. But payment on the $5.7 million balance won’t be due until 2049, and could be renegotiated at that time.
“Nobody expects that it will ever be paid,” Russell said.
The two sides agreed to a restructuring, he said, because they both faced a risk. North Star, established in 2003, was at risk of closing its doors. Creditors, meanwhile, ran the risk of seeing the school go under — leaving them with an empty school buiding with an appraised value of roughly $6 million.
The next question for North Star is one of governance. The school and the Meridian School District have agreed to go their separate ways, allowing North Star to move under the jurisdiction of the state’s Public Charter School Commission. The commission is expected to decide on the request in August, Russell said.
Despite its financial and governance issues, North Star made the Washington Post’s 2014 list of America’s most challenging high schools — based on the number of students enrolled in programs such as Advanced Placement and International Baccalaurate. North Star received four stars on the state’s five-star school ratings last summer, and boasted an 80 percent go-on rate in 2012. (For more statistics, check our Idaho Ed Trends site.)