Tuition Policy Change Could Lead To Bankruptcy in Normandy | St. Louis Public Radio

Tuition Policy Change Could Lead To Bankruptcy in Normandy

Aug 29, 2014

Missouri education officials now say they will pay whatever tuition a receiving district charges for transfer students from Normandy, rather than a lower amount imposed earlier, raising new concerns about the state-run district's ability to survive financially.

When the state board of education in June established policies for the Normandy Schools Collaborative — the state-run entity that replaced the Normandy School District as of July 1 — it set a tuition rate of about $7,200 it would pay for students who chose to attend a nearby accredited district, as allowed by Missouri’s transfer law.

Credit Google Maps screen capture

But many districts have said that though they would keep accepting transfers, they would send tuition bills at a higher rate.

Now, because of a recent court ruling, officials for the Missouri Department of Elementary and Secondary Education say DESE will pay whatever transfer tuition receiving districts charge. Commissioner Chris Nicastro says that the change could lead to insolvency for Normandy as early as October.

“At this point,” she told reporters in a conference call Thursday, “we would say it’s partially dependent of course on how many more students transfer, and it’s also dependent on whether or not the receiving districts will take the lower tuition.”

If they don’t, she added, and if districts that charge the higher tuition see a significant number of transfers, “then we estimate that Normandy will have significant cash flow problems by October. That is going to call into question a number of other decisions that we’ll have to make about the future of the 4,000 children who currently attend Normandy schools or receiving district schools.”

Even if districts accept the lower tuition, Nicastro said, Normandy most likely will have to make more budget cuts and receive additional financial support.

The lower rate, compared with tuition charges last year that averaged about $12,000 per student and ranged up to nearly $20,000, was designed to keep the new Normandy from falling into the same financial hole that the district did last year.

Chris Nicastro
Credit DESE website

Because it had to pay about $11 million in tuition and transportation costs for more than 1,000 students who left the district, Normandy’s budget was headed toward bankruptcy, even with mid-year layoffs and the closing of an elementary school.

Even though the district ended the year without having to dip into emergency funds appropriated by the state legislature, the state board wanted to make sure it did not go through the dire same financial scenario this school year.

The board also limited the number of students who could transfer and gave Normandy a newly established status, accredited as a state oversight district, which was designed to exempt it from the mandates of the transfer law.

But in response to a lawsuit brought by students who had been turned away from the districts they attended last year, a St. Louis County Circuit judge has ruled that the state board’s action in giving Normandy its new accreditation status was done improperly.

Judge Michael Burton’s opinion cleared the way for several students to continue attending other districts, and in return most districts have said they will accept any students from Normandy who transferred last year.

The exception has been Francis Howell, where about 400 students transferred last year once Normandy said it would pay not only tuition but also transportation for students who went there.

But DESE says that because of Burton’s ruling, it now has no choice but to pay whatever tuition the receiving districts charge, according to department spokeswoman Sarah Potter. She said the state can’t be put into a position of having to pay whatever amount over $7,200 a district bills Normandy for, in the event the district goes under financially.

“If we get a bill,” she said, “and we pay less than the bill, and the district goes bankrupt, then the state could be vulnerable to having to pay what’s left over.

“We need to pay the bills in full. We will pay what the bills are. That’s the bottom line. ... The state will not challenge a district’s tuition rate.”

Asked whether that stance means that DESE accepts Burton’s ruling that the change in Normandy’s accreditation status was not done properly and will not appeal it to a higher court, Potter said discussions are still continuing on that point.

During a budget presentation Thursday night to the appointed board that is now running Normandy, Mick Willis, the district’s assistant superintendent of operations, said that for every 100 students who transfer, the district loses the money that would pay for two teachers.

After the meeting, both Superintendent Ty McNichols and board President Charles Pearson said they were not aware of DESE’s shift on transfer tuition.

Charles Pearson, seated, talks with Superintendent Ty McNichols.
Credit Dale Singer | St. Louis Public Radio

“That’s news to me,” McNichols said. “I’m glad you’re telling me that.”

He said Normandy “will have to look at all the districts and what they’re asking for, and then we’ll be able to set our budget appropriately.”

Asked about the prospect of bankruptcy just two months into the school year, McNichols said:
“It’s the same argument we made last year about why there needed to be a tuition fix. We’ll have to look at our numbers.”

Pearson said that the current situation will have “a huge impact on the district.” But, he added, the financial maneuvering can’t distract Normandy from its job of improving the education of its students. In the annual report cards released by the state on Friday, the district ranked last in the state, earning just 7.1 percent of the points possible on its evaluation.

“Whatever happens, happens,” Pearson said. “Our objective is that the instruction is still going to be high quality. The children’s needs are still going to be met.”