SALT LAKE CITY — The day after state court judge issued a temporary restraining order to halt the divestiture of American International School of Utah's assets, its newly installed board of directors resigned en masse Wednesday afternoon.
Royce Van Tassell, who was appointed board chairman after the school's previous directors resigned earlier this month, said the new board resigned after the state declined to buy liability insurance for new board members tasked to complete the school's closure. The school had no funds that could be used to pay insurance premiums, he said.
"Without that coverage, AISU's board members have no choice but to resign. Our preference would have been to shepherd the school to its final closure. However, none of us can assume the personal liability of acting as directors without liability insurance," Van Tassell wrote in a letter to Kristin Elinkowski, chairwoman of the Utah State Charter School Board.
Van Tassell, executive director of the Utah Association of Public Charter Schools, said the events that led to the board's resignation were both "a relief and a disappointment."
"There is a mess here in charter land. I think it's best for those of us in charter land to make sure that we clean up our own messes. It's great not to have the burden but at the same time we would have preferred to shepherd this through to the end," Van Tassell said.
Van Tassell said he appreciated the willingness of three new board members to step up and take on "from the beginning we knew was a no-win situation. There's no positive outcome here. This is trying to just finish up a process that had to be done."
The new board members are "people who have a very deep understanding of the charter school world, with a really rich and varied background, people who could bring different experience to the table and help us see through the challenges," Van Tassell said.
Jennifer Lambert, executive director of the State Charter School Board, said the AISU volunteer board “stepped into a difficult situation and performed admirably by completing a number of important tasks that moved the closure process forward. As the authorizer, the State Charter School Board will continue to oversee the closure of AISU, as outlined in statute and rule.”
Earlier this week, 3rd District Court Judge Royal Hansen ordered the shuttered public charter school and its operator, American International Schools LLC, not to divest the school’s assets unless the transfer is approved by the Utah State Charter School Board.
Hansen wrote, in part, that the "defendants acting to divest the school of its assets without the approval of the Utah State Charter School Board deprives the state of its authority, tantamount to irreparable injury to the public."
The order will remain in place until Aug. 7, when a hearing is scheduled before 3rd District Court Judge Richard Mrazik.
The Utah Attorney General’s Office sought the temporary restraining order and preliminary injunction as part of a larger complaint related to the closure of American International School of Utah.
The school’s then-board of directors voted to close the school in May amid growing concerns about its financial liability. The school’s last day of operation was June 30.
Following the school’s closure, AISU entered into a termination agreement with its operator, American International Schools LLC, to release one another from claims and to transfer the school’s furniture, fixtures and equipment to the limited liability corporation.
According to court documents, the termination agreement “also recites private investors allegedly made investments and loans of $5 million, presumably to the limited liability corporation. On information and belief, these investors represent the other members of the LLC, and are Chinese individuals who are not present in Utah."
The state asserts in the complaint filed in 3rd District Court on Friday that the public charter school has no authority under Utah Code to liquidate its assets and to divest itself of any claim.
The state has asked the court to declare the termination agreement “null and void, and of no legal effect.”
The complaint also asks the court to declare "that only the State Charter School Board has authority to oversee closure of AISU and liquidate its assets and divest or enforce any claim held by AISU.”
According to the Utah State Board of Education, AISU owes the state more than $415,000 in state and federal education funds for the fiscal years 2016, 2017 and 2018. State education officials allege the funds were improperly spent or there is no or insufficient documentation to support the expenditures. The funds have not been repaid, and the federal government insists on repayment of federal education funds.
Assistant Attorney General Alain C. Balmanno said the state’s primary interests are “to protect the authority of the State Charter School Board and to make sure the debt was being taken into account as this charter school was closing.”
The complaint also asks the court to order "that any property so transferred shall be returned to the possession of AISU for proper liquidation and disposal by the Utah State Charter School Board.