ENC Features
9:22 am
Mon April 22, 2013

Kinston Charter School Faces Closure

A charter school serving close to 200 students in an economically depressed area of Kinston is facing closure.  The North Carolina Department of Public Instruction has recommended Children‘s Village Academy’s charter be revoked because of cash flow problems and increasing school debt.  Find out what Children‘s Village Academy is doing to stay open.

In Kinston, one school that serves about 200 students is under review to close.  Today, we talk about the charter school Children’s Village Academy.  Charter schools are tuition-free and are exempt from most rules and regulations applicable to public schools.  They’re funded like public schools with federal and state dollars as well as grants.  The amount of money allocated to a charter is based on the number students.  The Department of Public Instruction recommended earlier this month that the charter for Kinston’s Children’s Village Academy be revoked because of financial concerns. 

Children’s Village Academy began operations in 1997 in Kinston, and was one of the very first charter schools to open in the State.  Today, the charter school serves nearly 200 students from a three county area in preschool and Kindergarten thru eighth grade.  Chairman of its Board of Directors Mike Parker says Children’s Village Academy is located in east Kinston, the poorest section of the city.

 “I would say somewhere between 97 and 98 percent of our students qualify for school lunch.”

The geographic location and student make up of Children’s Village Academy could be reasons why the school has struggled with cash flow problems and increasing in debt. 

 “This is not in a rich neighborhood, so nobody is reaching in their pockets pulling out tens of thousands of dollars to help bail us out.”

In 2010, Children’s Village Academy had a negative fund balance of $80,339 dollars.  Two years later, the amount of debt increased by almost 100,000 dollars.  It’s the trend in mounting debt that concerns state education officials.   According to the Director of the North Carolina Office of Charter Schools Joel Medley, Children’s Village Academy was placed on financial disciplinary status in ­­­­­2012. 

 “That is the highest level of a financial warning that can be given to a charter school.  Children’s Village Academy had been placed on financial disciplinary status.”

Medley says the number one reason charter schools are closed is because of financial concerns.  In fact, 35 charters in North Carolina cited money problems as at least one reason for closing.  The Division of School Business became concerned with the budget instability of Children’s Village Academy when an auditor labeled the financial situation in 2011-2012 fiscal year as a “going concern.”

 “A going concern was due pretty much to the negative fund balance, it was due to the decline in their assets as well as some cash flow problems. And that going concern is a pretty big red flag that the auditor waves.  Once we saw that that information had been provided by their auditor, we went back and examined and saw that they had an increasing number of students as well as an increasing financial deficit.  We needed to move forward to initiative revocation.”

Chairman of the Board of Directors with Children’s Village Academy Mike Parker says a number of reasons have contributed to the charter school’s financial woes, including increased energy costs, grant money drying up, and storm damage from Hurricane Irene in 2011.

 “Our school took a tremendous hit.  We had somewhere in the neighborhood of $300,000 worth of damage. Some of our celling caved in, we had some water inside our building, so we had to do extensive amounts of repair as well as replace things that were inside the building that were damaged.”

Shortly after the hurricane, Parker says they discovered the building owner they’re renting from didn’t have enough insurance to cover the cost of repairs.

 “so we had to come up with out of our local funding we had to come up with enough money to get all the repairs done so our children could come back to school.”

At the end of fiscal 2012, an audit report showed a deficit of 229-thousand dollars. However, Parker says there was about a 50,000 dollar mistake in that report, making the real deficit of 179,000 dollars. 

 “The same auditor came in and she did what’s called a compilation letter, and she found out that we have reduced our deficit now from 179,000 dollars to roughly as of July 31st, we have brought it down to about 50,000 dollars. And we are projecting that by the end of the year, we will have most of our debt taken care of.”

Parker says they’ve been paying off their debt by generating money through fundraisers and budget cuts but admits more stringent accounting practices are needed.

 “There’s no hint, no indication that there’s been any misuse of funds, it’s more like we haven’t done a good job of keeping within our budget.”

Since, the School’s Board has made a decision to turn over financial responsibility to an independent manager.

 “We’re working with Acadia NorthStar which serves about 70 charter schools in North Carolina and they are now managing our money. And that has added another level of accountability and I think that’s going to really help us solve our spending and deficit problems.”

As a way to ensure financial stability in the future and fulfill a need for the community, Parker says they plan to open a thrift store by next year. 

The state board of Education was due to vote on whether or not to go through with revocation during their April meeting.  The STEAM Academy of Winston Salem was also on the chopping block with Children’s Village Academy, but their charter was revoked.  The School Board decided to collect more information on the Kinston school and voted to table any action until their next meeting.

 “I think that the real concern that DPI had with our solvency are really over with and I think when the state board votes in May that they’re not going to revoke our charter.”

While Parker remains optimistic, Director of North Carolina Office of Charter Schools Joel Medley says a decision by the Department of Public Instruction could play out a couple of different ways.  Either the State Board will dismiss the case or they will revoke Children’s Village Academy’s charter.

 “And the state board of education in June would convene an appeal panel of the state board that would hear the department’s side, would also hear the side from the charter school itself, and they would ultimately make a recommendation to the full board that could be not to revoke the charter, it could be to revoke the charter, it could be to come to some type of settlement agreement in between, but this would just begin to initiate the process so their vote at the state board meeting in May will determine whether or not we continue down this path, or whether or not we stop.”

If the State Board decides to revoke their charter in May, Children’s Village Academy’s Parker says they plan to appeal. 

 “We would show up at the next board meeting and present our case to them on why they should not take our charter away. But like I say, I really don’t think it’s going to come down to that.”

The Department of Public Instruction will meet May 1st and May 2nd.  Jared Brumbaugh, Public Radio East.