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Washington Mathematics Science Technology Public Charter High School’s financial woes have existed for much longer than the DC Public Charter School Board let on.
On the night of Monday, April 23, more than four hours into the DC Public Charter School Board’s monthly meeting, its members voted unanimously to close Washington Mathematics Science Technology Public Charter High School at the end of the school year. Founded in 1998, WMST is one of the city’s oldest charters and is also $500,000 short of what it needs to cover its expenses through the end of June.
Under D.C.’s charter law, the PCSB must revoke a school’s charter if it’s considered “no longer economically viable.” While the PCSB is barred from plugging holes in a school’s budget to keep it afloat, it can step in during a charter closure process to ensure that all teachers and other bills get paid.
There are many indications that the PCSB knew WMST was in dire financial straits. Despite sometimes intervening in such situations, in this case it chose not to act.
On March 12, the PCSB made an out-of-the blue announcement that it would hold an emergency public meeting to discuss WMST’s apparent financial crisis, and how to proceed.
At the meeting, Scott Pearson, executive director of the charter school board, shared the results of a WMST audit by StoneTurn, an independent accounting firm. The charter school board hired StoneTurn to look at WMST’s finances in late February. The auditors’ findings were calamitous. They determined the school was so broke it was unlikely to make its March 23 payroll unless it deferred other bills, like utilities. But even if WMST delayed paying those bills, the accountants projected the school would still run out of money by April 6. According to the auditors, WMST would need more than $800,000 of additional cash to cover expenses if it were to operate through the end of the school year.
Stephen Marcus, WMST’s attorney, requested that night that the public charter school board delay revoking the school’s charter so that its leaders could sell their school building on Bladensburg Road NE—their biggest asset—and raise the necessary funds. Marcus added that WMST’s teachers said they’d accept delaying their paychecks for the time being, and Deneen Long-White, the chair of the school’s board of trustees, emphasized that they were “rigorously fundraising” to get through the crisis.
Mark Lerner, a veteran observer of D.C.’s charter school community, called the March 12 meeting “perhaps the most bizarre series of events that I’ve witnessed by the DC Public Charter School Board since I first began observing its activities about 20 years ago.”
To learn what the PCSB knew of this situation beforehand, City Paper filed a public records request for all emails to and from Scott Pearson over the past year pertaining to WMST’s budget and finances.
While the PCSB leadership has publicly framed the situation as one where they leapt into action after receiving troubling reports about WMST two months ago, emails shared in response to our records request show that the PCSB had been aware of the school’s alarming fiscal situation for far longer.
According to the emails, two PCSB school finance specialists, Mikayla Lytton and Mohammad Bashshiti, met with WMST’s head of school, N’Deye Diagne, and its business manager, Mark Addae, in May 2017 to discuss the school’s financial situation. Among other things, they talked about how between 2015 and 2017, WMST exceeded $704,000 in revenue loss as student enrollment declined, while their expenses grew by $440,000.
On June 15, 2017, Lytton, who no longer works with the PCSB, emailed Diagne and Addae writing, “As we discussed over the phone earlier today and as I hope you understood from our [May] meeting, we are very concerned with the school’s financial status and projections.” Lytton wrote that the PCSB would like to work with the school to develop a “Financial Corrective Action Plan,” which sets specific targets to improve a school’s financial health.
The PCSB had established such financial action plans with Ideal Academy in 2016, and Richard Wright Public Charter School for Journalism and Media Arts in 2017. If a plan is established and a school then fails to meet the agreed-upon targets, the PCSB can vote to issue “an instance of fiscal mismanagement.” If a school receives multiple instances of fiscal mismanagement, the charter would face likely closure. (Both Ideal and Richard Wright remain open.)
By August 18 last year, Naomi R. DeVeaux, deputy director of the PCSB, emailed Bashshiti and Pearson to express that “right now the only school that warrants immediate action is WMST.” Leaders continued to talk about intervening in subsequent emails, but never did so.
By December, Bashshiti had emailed seven of his colleagues with “many concerning items” from WMST’s 2017 financial audit that might need to be addressed in a financial action plan. Among them, that auditors voiced “substantial doubt” about the school’s ability to continue, that as of September the school was down to about $79,000 in cash, and that although WMST had claimed its situation would improve with the addition of more kids, the school’s total enrollment stood at 228 students in October, down from 277 the previous year.
The auditors also noted that the school failed to properly account for its payables and for depreciation on its fixed assets. These two errors led WMST to understate its expenses by nearly $400,000. “Payables and fixed assets are very straightforward, so the fact that the school had such difficulties is a poor reflection of its accounting staff,” Bashshiti wrote.
Despite mounting evidence over many months that the charter was in serious trouble, the PCSB did not implement a Financial Corrective Action Plan like it had discussed.
A representative from the PCSB told City Paper this was because “we believed that the value of [WMST’s] building was much higher than it turned out to be—which would have allowed the school to secure an equity line of credit.”
At the April 23 meeting, City Paper asked Scott Pearson to expand on this rationale, since the financial action plan for Richard Wright PCS had involved a requirement to secure a line of credit.
Pearson said the two situations were different because WMST owned its building, while Richard Wright did not. He elaborated, saying PCSB had been under the impression that WMST’s building was valued at $9 million, when really it was worth closer to $6 million. Pearson said the $9 million figure “was what had been represented to us by the school” and that he regrets never getting an independent assessment. “I take responsibility for that,” he said.
Diagne and Addae of WMST did not respond to City Paper’s request for comment.
Back on February 21, Bashshiti had emailed his PCSB colleagues to say he was “not confident” WMST would make it through the end of the year based on the school’s most recent unaudited financials. He also noted “WMST’s history of providing unreliable numbers.” By February 22 the PCSB decided to hire StoneTurn, the auditing firm.
In an email sent to all PCSB senior staff and board members dated March 3, Scott Pearson shared that WMST was insolvent, and outlined how things had escalated to this point. “[Mohammad] Bashshiti on our finance team flagged this concern late last year,” Pearson wrote. “I did not act on it aggressively enough because I believed that the school’s building had appreciated significantly and so in a worst case they could borrow against the building equity (as Ideal PCS just did).”
Board member Don Soifer wrote back telling Pearson he “appreciate[s his] candor regarding what we might have seen an[d] acted on earlier” and noted the shortfalls the board identified in January are “tempting now to see as warning signs.” But, he insisted, the available information back then suggested “any potential default” would have happened after the school year had ended.
Moving forward, the Public Charter School Board has pledged to help all students enrolled at WMST find a new charter or traditional public school to attend next year. While it’s entirely possible that WMST’s leadership had made so many strategic errors that nothing could have saved the school even if a financial corrective action plan had been implemented, students and families will never get the chance to find out.