Unusual framework leaves Utah charter school in financial trouble


    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    If you grew up in Utah in the 80s and 90s then, chances are, you spent at least part of your teenage years at the 49th Street Galleria in Murray — also known, at one point, as the Utah Fun Dome.

    It was the home of laser tag, bowling, and a food court. Over the years, the building was used as a flea market, then eventually was abandoned and fell into disrepair.

    Then, in 2013, the founders of American International School of Utah turned it into a charter school. The founding members had big ideas for the school. Unfortunately, ever since AISU took over the old Utah Fun Dome, finding success has not been fun and games for the new tenants.

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    AISU is in trouble. The school has graduated less than 60 percent of its students and they are more than $1 million in the hole.

    A few weeks ago, the organization that oversees them, the Utah State Charter School Board, placed the school in warning status after a sobering report from the charter school board staff was delivered to the full board.

    The staff had harsh words for the school. One staffer told the board, “Even if the school breaks even going forward, they are still this far in the hole.”

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    Representatives of the school were at the meeting, and were defiant in the face of criticism from charter school board staffers.

    Kent Burggraaf, the new board chair, was quick to turn the tables on the board, saying that the staff did not appreciate the “innovative" way in which AISU was running their school.

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    Burggraaf can’t deny the fact, however, that AISU is $1.1 million in debt. Since 2013, the school has had three executive directors, and our Beyond The Books Unit discovered a 2017 audit of AISU that says the school’s books are a mess.

    The audit discovered that almost half of AISU’s transactions — $125,000 worth — didn’t have backing receipts, purchase orders or invoices. The audit also criticized the school for mixing money between its private and for-profit entities.

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    Part of the problem could come from the school's financial structure. The school has myriad investors and partners that make it difficult to comprehend how the school is financially run.

    In fact, the Charter School Board staff had to bring in an outside auditor last year to try and understand how the school is run.

    Clifton, Larson, Allen says they couldn’t finish the audit because AISU and its associated entities didn’t give them important documents, but based on what CLA did see, they believes the school lacks transparency, may be using public funds improperly, and are likely, “In jeopardy of facing long-term financial sustainability issues.”

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    Beyond The Books Reporter Chris Jones got a change to talk to Burgraaf and ask questions about how the school is run:

    Chris Jones: Is it prudent to have a system in place that’s so complex that nobody understands it? That seems like it’s a breeding ground for problems.

    Kent Burggraaf: I understood it — now, granted, I have a legal background; I get some of that stuff.

    CJ: Well, these guys (Clifton, Larson, Allen auditors) have a financial background.

    KB: Do I fault them for not understanding our innovative education structure? In some ways, yes. Can we blame them because they have too much work to do? Perhaps they need additional resources themselves, rather than pointing fingers saying we’ve done something wrong.

    CJ: Maybe you should just make it easier for people to understand.

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

    Jennifer Lambert is executive director of the Charter School Board. She says AISU has to take ownership of their problems — problems the school says the board is partially at fault for. The school says the board is the one who reviewed and granted AISU its charter.

    Chris Jones: In retrospect, should the charter school board have granted the charter?

    Jennifer Lambert: There are different ways that the charter could have been implemented. As long as they are operation in the law, they have freedom to implement their charter.

    CJ: They’ve had these financial issues for four years, I mean, they’re on warning now, but is it time to close the school?

    JL: If the school is able to show that improvement, that is the best scenario. That’s what we want. If they are not, other action may be considered.

    A Utah charter school is in financial trouble and under scrutiny by the Utah State Charter School Board after an audit revealed its complicated financial framework makes it difficult for those outside the school's directors to make sense of its finances. (Photo: KUTV)

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