COVINGTON -- Challenge Charter Academy owes about $165,000 to local and state groups.
The Georgia Department of Community Health, which provides state health insurance benefits for employees, notified the school and Newton County Board of Education on Monday about the school's delinquency of $116,477.57. The department also notified the state Board of Education and the Georgia Charter School Commission about the matter, according to a letter sent to the school.
The letter notes that if the Georgia Department of Community Health doesn't receive the full payment, plus any additional contributions due, within 10 business days, the state Board of Education will be formally notified to withhold future appropriations until the receipt is confirmed. However, health officials said Wednesday afternoon that coverage will continue until the school closes later this year or until it stops paying the current cost of insurance, whichever comes first.
Pamela Keene, Media and Public Relations manager for DCH, said the notice sent to the school was to verify the prior outstanding amount due and the process going forward.
"It is a preliminary step to stimulate a resolution before withholding is imposed," said Lou Erste, Charter Schools Division director for the Georgia Department of Education. "Until the formal request for withholding is received, the State Board cannot act on this."
Shanta Wilson, CFO of the Academy, wrote an email to Peggy Bullard, business manager at the Newton County School System, on Wednesday, saying CCA has been paying $7,000 per month since September towards the outstanding debt, as well as its monthly premium, so that the liability doesn't increase.
"Project Adventure was the management company for Challenge Charter Academy and as of the 2010-11 school year, the company is no longer affiliated with Challenge Charter Academy. As part of Project Adventure's departure, the academy was informed that our state insurance was not paid by the management company," Wilson's letter reads. "Stunned by this, Challenge Charter Academy has incurred a liability of $178,277.64 that is owed to the state health benefit plan."
To take care of the liability, Wilson said in the letter that the school has contacted its general liability insurance company in hopes to be able to file a claim against Project Adventure. She said the school plans to notify the state about its intention and will continue to pay monthly until they are otherwise notified.
Erste said that the school initially worked out a payment plan with DCH but the person who handled the payment plan at DCH apparently left, and the remaining staff apparently didn't know what was agreed.
Additionally, the school owes $48,000 for eight months of rent to the Cousins Community Center, which is a nonprofit entity that was established to preserve the former Cousins campus, from which it rents its building on Geiger Street.
Denny Dobbs, who is on the board for the Cousins Center, said the school has kept promising to pay once certain revenues come in, but "they never catch up."
"I think what they're trying to do over there is good, but they've got two months left in the school year," he said. "We are sensitive that there are students there and we certainly care about the children."
Dobbs said the Cousins board has no other assets, and the rent is collected to pay debt that was borrowed to refurbish the Center.
The Cousins board continues to pay the school's city of Covington water bill, so it is not delinquent, since it was part of the original lease that the Center furnish water for the entire campus, which also houses other offices and organizations.
The school's electric bill with the city was last paid on Feb. 26 to bring its account current, so now its only balance is $39.80. Disconnect notices were sent to the school in December and January, but payments were made to prevent that, according to the city of Covington.
Dobbs said he didn't know what the Cousins board's next step will be to recoup the unpaid rent.
Erste said the state BOE cannot step in regarding the late rent payments.
"This is purely a private matter between the school and its landlord," he said.
The Challenge Foundation's board of directors released a statement Wednesday after being contacted by the Citizen, saying they are "working with" the state and landlord on the delinquencies.
"For the past years, we have received the facilities grant from the Georgia Charter School Division of the Department of Education which was allocated for our rent. Due to the current economic state of the U.S. and deductions in the government budget, we were notified in November 2012 that we would not receive the funding for this year," the statement reads.
According to the Newton County BOE-approved contract with Challenge Charter Academy as of 2008, neither the local school board nor state board assumes any liability for any debt incurred by the school. NCSS previously reported that it supports Challenge Charter Academy with about $300,000, while the state funds the school at about $800,000 annually.
"Neither NCSS nor the state are liable for the charter school's liabilities -- those are solely the responsibility of the school," Erste said.
The school opened in 2008 with funding from Project Adventure and a grant from the U.S. Department of Labor. Some Newton County BOE members previously said they felt was unfair that they lost the Project Adventure funding, thus the local school board was set to approve the charter school for another three years.
The Newton County School System's financial department had brought up concerns with the school last year, when it noted that the school has not budgeted for an increase in retirement and health insurance coverage over the next five years, and that it relies on Title I and priority school program grants over the entire next five years, even though they are contingent funds.
Additionally, the school reported that it does not hold any funding in reserves. Also, the financial department noted that there was no budgeted item in any year for computers, instructional equipment or classroom furniture for the school.
In October, school Principal Ernetta Dailey-Worthy told the Newton County school board that her staff would work to incorporate changes, and she hired a new chief financial officer for the school to develop a strategic plan and help better promote the school.The charter school is expected to close at the end of this school year, after officials with the school decided earlier this month to withdraw the school's petition that would have renewed the charter school for the next three years. In February, the Georgia Department of Education notified the school's foundation that the school's petition would be submitted to the state Board of Education with a recommendation for denial.
The school was open to all Newton County students in grades six through 12 and enrolled about 100 students this school year. The school had projected an enrollment of more than 300 students over the next five years.