Utah auditor resigns from leading troubled charter school — after 3 days on the job

(Courtney Tanner | The Salt Lake Tribune) The American International School of Utah will close on Aug. 15, 2018, after years of financial struggles.

Less than one week after being appointed to oversee the closure of a financially troubled charter school and recover hundreds of thousands in misspent funds there, Utah State Auditor John Dougall has resigned from the position.

In a letter dated Monday and sent to the charter, Dougall wrote: “It has been an honor to work with you during the past 3 business days.” He will step down, he noted, now that a new board of directors has been put in place to run the process instead.

That board met Monday — and at the start of the meeting, consisted of only one person, Royce Van Tassell, the executive director of the Utah Association of Public Charter Schools. An item on the agenda was to appoint three new members: Allison Sorenson, Gerry Hassell and Tina Smith, who all have experience managing charters or portfolios.

“And with that, we now have a semblance of a public board. And we can close the school,” Van Tassell said after he picked those individuals and then moved to accept their positions on the board. The new members then unanimously voted to accept Dougall’s resignation letter.

All of the original members of the board left suddenly last week when the auditor was chosen by the Utah State Charter School Board to lead the school Tuesday and replace its executive director, Tasi Young. Those board members met after that and chose Van Tassell to join the group. They then immediately disbanded.

That has been just one part of the messy and chaotic process to shutter the Murray charter, American International School of Utah.

AISU will officially be out of business on Aug. 15, though the school year has already ended and the more than 1,300 students there have been displaced. The institution was placed on “warning status” late last year for the money it owed. And in May, its board of directors voted unanimously to close under the pressure.

The school is indebted to the state and federal government for funding that was supposed to be used for special education. AISU, according to a scathing audit published by the Utah State Board of Education, spent that money instead on salaries and health benefits and didn’t properly document it.

Originally, the state calculated that the charter owed nearly $515,000. But the school appealed in May, and the total was reduced to $415,689. That amount, the state board noted, was due on June 26. It was never paid.

The school also faces potentially millions of dollars in other unspecified debt, according to its previous spokesman.

The charter school board voted to put the state auditor in charge in an attempt to recoup some of that money. It was a strong move — the first time it has ever happened in Utah — and comes as some in the education community have questioned in recent years the leniency given to charters for spending.

“We are trying our best to move forward in a way that protects taxpayer funds,” said Jennifer Lambert, executive director of the charter school board, after the vote Tuesday.

Dougall was in the position then for Wednesday, Thursday and Friday before stepping down. In his letter, he wrote: “We have been able to advance key aspects of the AISU liquidation plan and to protect key assets on behalf of the taxpayers.”

He started an audit of the school last week, too, and that is anticipated to be done in December.

“We’ll be complying, cooperating with that investigation as it proceeds,” Van Tassell said. “Subpoenas have been issued for the school. We’re working to fulfill some of those.”

At the meeting Monday, Van Tassell then went through what remains for the final steps and the leftover debts.

He said another $185,000 is owed to the landlord. And he found in the mailbox outstanding requests for $20,000 to various creditors. Unemployment requests could add an additional unspecified amount.

And there are still millions owed to other investors. According to its own budgeting, AISU’s liabilities potentially include $5 million owed to companies overseas and $1.5 million for violating the terms of its charter.

“Anything they get at this point, is all they’ll get. There’s no additional money,” Van Tassell added. “We have no dollars at all. There are no cushions to even look under. And it’s frankly impossible to repay them what they were owed.”

The hope is to squeeze money out of the charter’s remaining assets, which include desks and chairs and computers. An overestimate of how much they could recover from those, he noted, would be about $600,000. But he plans to prioritize repaying money owed to the state and federal government and to the landlord.

When looking into the school’s bank accounts, Van Tassell said, he found $107,000, but it was all restricted funding meant for special education, so it was returned to the state and could not be used for the debts.

The issues at AISU began almost as soon as the school was founded five years ago. Its first executive director set up the charter as a unique public-private hybrid with students in kindergarten through 12th grade — free for Utah children but requiring international attendees to pay tuition. The idea was to teach students about different cultures and provide a level of diversity not seen anywhere else in the state.

In the first three years, funds were severely mismanaged. Then director Michael Farley stepped down. He attended the Monday meeting and said, “There have been several misconceptions.”

Farley, who set up AISU, said he didn’t receive a lot of direction from the state on how to set up the school, but he wanted it to “have a unique structure.”

Young, the executive director of AISU who stepped into the position in 2018, was also at the meeting. He has called his removal from leadership of the charter “inappropriate and very questionable." But he has helped the board — and for a short time the auditor — move forward in closing the school anyway.