Financial troubles force closing of St. Paul charter school

A charter school in St. Paul plans to close next month because of financial problems.

Skills for Tomorrow school has continually lost enrollment in recent years, which has only hurt finances, but officials say the governor's shifts in education funding this summer also contributed.

While Skills is the first school to announce its closure since the shifts, advocates for charter schools worry it won't be the last.

Every time a school's enrollment drops, so too does its state funding. That's been the root problem for the Skills for Tomorrow school in recent years. This year, it's down to just 65 students.

No one from the school returned calls to MPR news for comment, but officials from the charter's sponsoring organization confirmed the school's board voted this week to close December 18, the last day of the semester.

The sponsor is Volunteers of America - a group that sponsors 15 other charter schools in Minnesota.

Katie Piehl is in charge of charter school authorizing for Volunteers. She said her group will work closely with Skills school to make sure all students find another place to go next semester. Their demographic, she adds, adds a certain challenge to the task.

"We are working with some others that are on the bubble, so this might not be the last school you see closed."

"The student body has certain struggles that will cause the student to have to move from school to school - and it might be because of family circumstances, economic circumstances; it might also be because of educational experiences in other schools or challenges that the student has faced elsewhere," Piehl said.

Piehl also confirms the problems had been building. The school had reserves it could dip into for cash flow needs, but this year, enrollment dropped too much for reserves to cover, which created the need for credit. Credit, Piehl said, that they couldn't get.

The cash flow was also hurt by one of the tools Gov. Pawlenty used this summer to balance the state's budget. He shifted 27 percent of the state's budget for schools into next fiscal year. That means the monthly checks that schools get now are smaller than they anticipated.

Charter schools can't access the same kinds of loans that traditional public schools can when there's a cash crunch, and charters make bad loan customers for banks because they don't have much in the way of collateral because they can't own property.

Advocates have worried that the very worst-off charter schools - those that had problems to begin with - could find the shift is a final straw.

Bill Walsh, with the state Education Department, said the agency was aware of problems at Skills for Tomorrow and is monitoring how the shift affects some schools.

"It's true that the payment shift hurts the charter school more than the district school because the district school has the ability to tax and is a better loan risk," Walsh said. "We are working with some others that are on the bubble, so this might not be the last school you see closed."

The head of the main lobbying group for charters - the Minnesota Charter School Association - said they are working with the state to find ways to alleviate some of the problems. But any changes to state law couldn't happen until next year, when the Legislature reconvenes and that will be too late, at least for one school in Minnesota.

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