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AISU must refund more than $400,000 in special education funds by Wednesday, state says

FILE - The American International School of Utah in Murray is pictured on Friday, May 3, 2019. The now-shuttered American International School of Utah has until Wednesday to repay more than $400,000 in special education funds to the State School Board, bu
FILE - The American International School of Utah in Murray is pictured on Friday, May 3, 2019. The now-shuttered American International School of Utah has until Wednesday to repay more than $400,000 in special education funds to the State School Board, but the school's executive director said the issue remains in dispute.
Kristin Murphy, Deseret News

SALT LAKE CITY — The now-shuttered American International School of Utah has until Wednesday to repay more than $400,000 in state and federal education funds to the State School Board, according to newly released correspondence.

Earlier, the school was given until June 26 to pay the state, but after that date passed without payment, assistant Utah attorney generals who represent the Utah State Board of Education and the Utah State Charter School Board notified the school by letter that the payment is due "no later than the end of business, July 3, 2019."

"Your urgent attention to this matter is not only appreciated but required," wrote Utah Assistant Attorney Generals David C. Jones and Bryan Quesenberry, attorneys for the Utah State Charter School Board and Utah State Board of Education, respectively. The joint letter was dated June 27, 2019.

According to state education officials, repayment was sought because the funds —$170,438 in federal special education funds and $248,251 from the state — were improperly spent or there is insufficient or no documentation to support the expenditures.

AISU's executive director Tasi Young told the school's governing board Tuesday that he had later found documentation for three teachers that had not been considered, including "a file full of student work done that year."

When State School Board employees visited the school this spring, Young said they did not look at those documents then, either "which also begged the question 'Why not? What was the standard that they were using?'"

The issues are still in dispute, Young said, suggesting that the July 3 deadline may also pass without repayment. Initially, the school was asked to repay more than $500,000, but the total was reduced by about $90,000 after further state review, he said.

The letter written by Jones and Quesenberry notes State Superintendent of Public Instruction Sydnee Dickson rejected the school's appeal over repayment of the special education funding and the payment is due.

Young shared some good news with the governing board. As of Tuesday, "all of our employees have been paid out their contracts. I believe all of our obligations to our employees have been filled, except for a few minor things that still need to be wrapped up," he said.

Most former AISU educators and staff have been hired by other schools, he said.

"All of our significant contracts have been ended. That includes our contract with Charter Solutions," Young told the board, although the school or the State Charter School Board may re-engage the school management firm to facilitate school closure activities.

AISU contracted with Charter Solutions as its business manager for the now-ended school year. The firm's president is state Sen. Lincoln Fillmore, R-South Jordan.

The school's governing board met in a conference room at the Murray City Library because its lease at the former home of the Galleria Mall has ended, Young said.

In other business Tuesday, Young sought and received authorization from the school's governing board to negotiate settlements with the school's creditors and obtain releases from them.

A June 28 letter signed by Jones directs the school to "immediately provide" a list of current assets "identifying all assets that are security interests; the most current list of creditors of the charter school and which ones are secured creditors; and all bank accounts or other asset account information of AISU and any entities of which AISU holds a majority interest … with running daily balances, if possible, for the past 60 days."

The State Charter School Board has statutory responsibility for oversight of the assets and the payments of debts, the letter states.

"Therefore, before any assets are liquidated or payments of debts made, AISU needs to have the State Charter School Board provide oversight of such liquidation and payments," it states.

Young said the letter was somewhat puzzling because state officials have real-time access to the school's electronic list of assets.

Liquidation of the assets is complicated because other creditors may have claim to them, he said. Young said he is seeking advice from legal counsel to better understand the school's options.

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.

The closure displaced some 1,300 students and 170 full- and part-time employees.

While the state board has, in the past, forgiven expenditures of some charter schools, the federal government insists on repayment. According to one court decision, school closure is not an acceptable rationale to seek forgiveness of repayment.

Earlier, State School Board staff reviewed the public charter school's special education expenditures for the 2016, 2017 and 2018 fiscal years and found numerous record-keeping and documentation problems.

Current board members and school officers blamed much of the school's current financial and records problems on previous operators.