Meridian school trustees took a first step Tuesday to revoke North Star Charter School’s operating charter — which could place the Eagle school, and its 920 students in limbo.
School Board members voted unanimously to begin the lengthy revocation process. Trustees were not sold on a plan designed to give the cash-strapped school breathing room for the next 12 months — but did nothing to address its long-term financial problems.
The K-12 charter school has been wrestling an estimated $640,000 shortfall. The shortfall is a symptom of the 10-year-old school’s debt problems, resulting from a high-interest building loan that consumes more than a quarter of its overall budget.
Wells Fargo bank officials provided North Star $650,000 to cover this year’s shortfall, and agreed to defer $850,000 in building payments in 2013-14, North Star Board Chairman Jim Miller told trustees. These moves would be sufficient to get the school through 2013-14, and buy time to renegotiate the long-term loan.
Miller also saw this as a sign that creditors wanted to work with North Star to keep the school open.
“I feel enthused that we got this agreement done,” Miller said.
Board members did not share Miller’s enthusiasm. They called the financing deal fragile, since North Star would still have to pay back the $850,000 by June 30, 2014, and had no plan for doing so.
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And this, said trustees, could put the Meridian district in a bind. Trustee Anne Ritter was concerned that creditors could demand the money they are owed, shut down North Star at a moment’s notice, and leave the district to absorb a sudden influx of students.
“My sense is, it’s a huge risk,” she said. “At any point, they can say, ‘This isn’t a good bet anymore.’”
After the vote, Miller said he was surprised and “disheartened.”
“We’ll have to regroup on this one,” he said. “I did not see this coming.”
Miller was unsure how North Star parents would react to Tuesday’s vote, but said it might make parents reconsider their plans for their children. He’s also unsure how the vote will affect negotiations with creditors; school leaders are scheduled to meet with Wells Fargo officials in Minneapolis next month.
The School Board vote sets up an intricate process involving the Meridian district, Idaho’s largest, and North Star, one of the state’s largest charter schools.
North Star will get written notice from the Meridian district, and 30 days to respond. The district must hold a public hearing before actually revoking the North Star charter. After that, the school can appeal to the State Board of Education.