North Star Charter School gets money to stay open

The board chairman says other measures could provide long-term solutions to its financial problems.

broberts@idahostatesman.comMay 4, 2013 

— The financially strapped institution has secured $133,000 in loans and reimbursements to pay its bills through the end of the year.

School leaders also are in negotiation with trustees to lower what they described as a high 9.75 percent interest rate on $11.75 million in bonds.

North Star submitted a plan to the Meridian School Board Friday outlining how it intends to sustain the school's future and emerge from its financial woes, board Chairman Jim Miller said.

North Star wants 45 days to bring all the pieces of the plan together.

If financial restructuring works as projected, North Star will be in "fat city," said Miller.

"We've been surviving with budget cuts and teacher cuts and not spending," Miller said.

Meridian School District, which authorized the charter creating North Star in 2003, sent a "notice of defect" this spring signalling that district trustees were concerned about North Star's financial stability. They gave North Star until Friday to respond.

North Star asked for a 30-day extension, but trustees voted this week to stick to the original deadline.

Meridian school trustees set a meeting for 7:30 a.m. Tuesday at the district office to review North Star's plan.

North Star's proposal includes several elements.

The charter school received a $13,000 loan from the school's Parent Teacher Organization and a $70,000 loan from a private individual. The Statesman filed a public records request for details on both loans.

The loans will be repaid from the school's May payment from the state, which should be about $300,000, Miller said.

The school also got a $50,000 reimbursement from a fund dedicated to maintenance and improvements and held by the bondholders. North Star is asking for another $100,000. The school would have to be replenish all those funds next year.

Beyond immediate cash needs, Miller said, the school is negotiating to get access to $1.5 million in a reserve account held by the bond holder's trustees. About a half-million dollars of the fund would be used to meet expenses over the summer, such as teacher salaries, which are paid on a 12-month basis.

The school is doing two things to ease the burden of paying the high interest rates on its bond. It's negotiating an immediate reduction in the interest rate for next year. North Star also is discussing permanent interest rate reduction for future years, Miller said.

North Star's money problems began in 2008 as the school broke ground for a new building estimated at $7 million to be paid with bonds at 6.75 percent interest. Changed plans and cost overruns drove the total in bonds to $11.75 million at a 9.75 percent interest rate.

The school's annual debt payment now consumes 28.5 percent of its operating revenue. The public school average is a fourth of that.

In addition, North Star's state funding has fallen 19 percent since 2008.

Bill Roberts: 377-6408, Twitter: @IDS_BillRoberts

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