Ethel Hedgeman Lyle Academy (two campuses)

SEIZED CHARTER SCHOOL'S DEBT TOPS $5 MILLION (St. Louis Post-Dispatch, May 13, 2010)
ST. LOUIS — A downtown charter school so deeply in debt that it had to be taken over by the city school district late last month now owes nearly 100 creditors more than $5 million, according to school ledgers, invoices and claims filed in court.

Hundreds of delinquent bills totaling more than $1.6 million are stuffed into an accordion file inside the main offices of the Ethel Hedgeman Lyle Academy, at 1881 Pine Street — from cab companies and coffee vendors to landlords and lawyers.

In addition, four companies have sued the academy, alleging the school owes them over $4 million in unpaid services, fees and penalties. Paying off the debt, in full, would take half the school's $10 million annual budget…

The school's bookkeeper says she has been told not to pay most of the bills. And the board of the nonprofit school is moving to dissolve itself as soon as next week, the board's attorney said.

Normally, money either left in bank accounts or raised by selling possessions would go toward paying off debts.

But the board's lawyers said there is no money in district accounts.

At the end of April, the St. Louis Public Schools took over the day-to-day operations of the charter school's campuses at 1881 Pine and 1509 Washington Avenue.

It also emptied out what relatively little was left in academy coffers, said Tom Mickes, attorney for Lyle.

St. Louis Public Schools leaders insist that they are not legally responsible for Lyle's debt. They answered the state's call to help so the charter school's 800 students wouldn't have to move to other schools with just a few weeks left in the year…

But all this leaves state education department officials increasingly worried about accountability among charter schools.

Charter schools are paid by the state per student, much like district schools, but independently run, outside of district control. Only the schools' state-required sponsors — usually a university — have oversight authority.

Lyle, however, isn't the first charter school to close and leave questions about its finances.

In 2005, Thurgood Marshall Academy closed, with a midyear balance of $1.9 million. Before that, Westport Charter, in Kansas City, shut down, again with cash left over. State officials said they never learned what happened to the remaining money at either school…

And Lyle was supposed to have paid $300,000 as this year's portion of a $1.5 million settlement with Imagine Schools, the Virginia-based national charter school chain that managed the academy until 2008. If Lyle paid on time, according to the settlement, the school would have avoided interest fees. But it defaulted, and Imagine has filed paperwork to take the school back to court this week — and charge 9 percent interest.

Other creditors, too, have sued, or say they plan to.

Yet the accordion file at the academy's main offices shows that school employees continued with life as usual in the final days last month.

They approved $6,000 in air-conditioning repair even as landlords were suing for months of back rent. They ordered $700 in staples, copy paper, tape and tissue as St. Louis Public Schools was preparing to take over. They billed for cold packs, hand sanitizer and three flavors of cough drops the week before the school collapsed…

Dougherty [owner of a cleaning service] said he's puzzled now. If the state was sending the school money per student, where did it all go?

"I guess," he said, "we need to start thinking about a lawsuit."
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The Ethel Hedgeman Lyle Academy charter school will stay open through the end of the school year, but will be run by the St. Louis Public Schools, city schools Superintendent Kelvin Adams said this afternoon.

The charter school’s sponsor, Missouri Baptist University, sent the school a letter today saying it had determined that “continued operation of the Academy presents a clear and immediate threat to the health and safety of the children enrolled at the Academy’s schools.”

The school, the letter said, was so behind in payments to vendors that key services — security, busing, and food service, for instance — could be ending as soon as today.

Superintendent Adams said, however, that St. Louis Public would step in tomorrow morning, and ensure that services would continue.

The school has not responded to numerous requests for comment.
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Ethel Hedgeman Lyle Academy’s two city school campuses will close as soon as tomorrow, according to an attorney for Missouri Baptist University, the charter school’s sponsor.

Chris Nicastro, state commissioner of education, sent an e-mail this morning to state legislators, saying that the charter school “is unable to meet financial obligations and unable to continue operations for the remainder of the school year.”

St. Louis Public Schools, Nicastro said, will serve the 800 students left at the Academy.

“Missouri Baptist has revoked the charter of EHLA effective immediately,” Nicastro concluded. “Children currently enrolled in EHLA will have all the options available to resident students for the 2010-2011 school year.”

Doug Copeland, outside counsel for Missouri Baptist, said students could be in St. Louis Public schools as soon as Monday.

“There’s only a month left of school,” he said. “They need to be educated someway, somehow.”

Copeland said he didn’t immediately have all the details, but that the academy just ran out of money.

“Apparently, they’re just in a financial crisis, to the point of not being able to keep the doors open.”

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