Utah settles lawsuit against financially troubled charter AISU

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

The state school board will drop its lawsuit against a now-shuttered charter school after accepting a settlement Thursday that will include repayment of funds misspent by administrators there.

The deal was announced after a brief deliberation by the Utah Board of Education that started in an executive session closed to the public. When the meeting reopened, members voted unanimously to work with the American International School of Utah on the debts, effectively ending the court challenge.

The board, along with the Utah State Charter School Board, had originally filed its motion in August. AISU in Murray has owed the state and federal government $418,689 in funds that were meant for special education but were instead illegally misused to pay for salaries and health benefits or otherwise weren’t properly documented, according to an audit of its books.

That money was due on June 26. But it was never paid.

And the school’s board voted to close this summer in the face of the mounting debts.

Specific terms of the settlement were not disclosed Thursday, pending acceptance by the judge, said board spokesman Mark Peterson. But the deal will also include working with the landlord, who was also owed money separately.

“At this point, dollars aren’t being discussed,” he added.

Besides the repayment to the state, though, it’s likely the remaining money AISU owes to other investors will never be paid back. The school also faces potentially millions of dollars in other unspecified debt, according to its former spokesman, including funds spend on stock overseas and flashy incentives for students.

The issues with AISU began almost as soon as the school was founded five years ago. Its executive director set up the charter as a unique public-private hybrid with students in kindergarten through 12th grade — free for Utah kids 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.

But in the first three years, funds were severely mismanaged.

It also struggled to gain its footing academically. Last year, the state said it was below average in its test scores and graduation rates. Before that, in 2017, the charter received an F grade.

The chaos has followed the school as it has tried to close, too.

In July, the Utah State Charter School Board voted to forcibly remove the institution’s current director, Tasi Young. Members unanimously decided, too, to replace him with state Auditor John Dougall to finish out the process of shutting down the school.

After less than a week, Dougall stepped down from the position.

At the same time, every member of AISU’s board of directors resigned. A second board appointed to replace those members resigned en masse shortly after when the charter no longer had insurance coverage.

Shortly after, the Utah attorney general’s office filed a lawsuit, too, asking that the school terminate a contract it had to sell off all its assets, including chairs, computers and desks, to the for-profit business that owned it — which attorneys worried would continue to benefit financially when AISU owed money.

That lawsuit will likely also be dropped now that the Utah Board of Education has reached a settlement on the debts. But a federal suit remains open from a company trying to recoup money the charter owes it.