When we last discussed Washington Math Science and Technology PCS, the DC Public Charter School Board had voted in a strange emergency meeting to begin the revocation process against the school. The action was taken because WMST has found itself in exceedingly dire financial straits, illustrated by the findings of a forensic accounting firm that were pointed out during the March 12, 2018 session:
- The school is unlikely to have sufficient cash to meet its March 23 payroll, unless it delays paying many bills due now, such as utilities.
- Even with delaying payables, the school will not have sufficient cash to meet its April 6 payroll.
- The school is forecast to require $833,991 of additional cash between now and the end of its fiscal year on June 30, 2018 to cover all expenses, including payroll, operating costs, mortgage payments, and required debt
repayment. This number grows to over $1,164,853 when adding the payroll due the current teaching staff in July and August for their work over the
2017-18 school year.
- The school has a $300,000 line of credit which is presently fully drawn down.
- It currently has no other source of new cash or financing.
- The school’s largest asset is its building. The school has a Letter of Intent from a buyer, indicating a possible, but not certain sale. However, the net proceeds from the sale, at the current proposed purchase price and after closing costs and repayment of the mortgage, is insufficient to cover the $833,991 projected deficit.
I wrote at the time:
“The PCSB executive director hinted that the charter was going to have difficulty even reaching its current enrollment in the fall, based I believe on My Schools DC data. Moreover, with the vote yesterday it appears that the school’s fate is sealed. I don’t see why parents would not start trying to move their kids now. But if the charter will continue to teach until the end of the year, it seems that this presents more time for WMST to find additional revenue. I have been in similar situations with each of the three charters I have volunteered with as a board member. It is a harrowing and difficult place to be, but there is almost always something that can be done.”
Well this school, on the verge of being vanished out of existence, and as I’ve witnessed on multiple occasions during my more than twenty years of following the D.C. charter movement movement, in a matter of four weeks has pulled out nothing less than a miracle. As reported by PCSB executive director Scott Pearson:
- WMST has secured $97,000 in short term debt and other contributions that enabled it to meet the March 23rd payroll and pay other expenses.
- The school’s staff has agreed to defer the April 6th payroll until the charter receives its fourth quarter annual payment which is due next week.
- It has sold its building for $6.25 million with a July closing.
- The charter has negotiated with the purchaser, Douglass Development, to occupy the building duringTuesday the next school year rent-free.
- WMST has reached an agreement with its mortgage and line-of-credit holders to delay payments of principle dollars until the purchase of the building has been finalized.
- The charter has hired Building Hope to provide back-office financial services.
- Building Hope has completed a financial forecast that shows that the school will have sufficient funds to complete the 2018-to-2019 term.
This effort is simply stunning. Even Mr. Pearson, who is not easily impressed, admitted it was a lot.
But even after this heroic effort by school leaders and its board of directors, the school is not yet out of the woods. It needs another $500,000 to continue operating, and the charter board must assess the projected budget to make sure that WMST can meet its program commitments, especially in the area of special education. In addition, there is still concern that the charter may not meet its projected enrollment target of approximately 200 students next year. It should be noted that the school has received $30,000 from an anonymous donor toward hiring a consulting group to assist the school in reaching this goal.
So here’s what we need. I see that Building Hope is on board, and it has agreed to provide an additional line-of-credit if needed. The school is negotiating with Industrial Bank to cover the $500,000. However, there are a number of fine groups out there that could help this school. You know who you are. Please pick up the telephone today and offer your support.
The charter board is scheduled to take a final vote on charter revocation this coming Monday. Mr. Pearson stated that if the board was convinced that there was a real possibility that WMST could successfully line up all of the needed financing it would move the meeting to Thursday April 12th. Mr. Stephen Marcus, the attorney representing the charter, has requested a delay of a couple of weeks to allow everything to be worked out, especially since the School Reform Act gives the board 30 days to make a decision.
The final vote by the PCSB should be postponed by 14 days and WMST should be allowed to continue to serve its students.