Palmer charter consultant says finances precarious

As the charter-revocation hearing for the Palmer charter school ended Wednesday, a consultant said he believed the embattled school could continue to operate but indicated that its finances were so precarious, it might not be able to stay afloat through June.

John L. Pund Jr., noting that the school's current budget was based on revenue from 1,250 students, said the charter has made adjustments every day since recent court decisions held it was only entitled to be paid for 675.

The state Supreme Court ruled in June that Walter D. Palmer Leadership Learning Charter School was bound by the enrollment maximum in an agreement it signed with the district in 2005.

"It is an ongoing process because of the extreme duress that the school has been under to reduce to 675," Pund testified in the hearing at School District headquarters. "So, it's literally a daily update that we do to see if we can find a viable path to get to the end of the year."

He added: "I think that we will end up with a way to get there. There is still a cash shortage for payroll."

Pund said "wild cards" were whether vendors would demand immediate payment for outstanding bills, and whether the School District would give the charter time to repay $2.6 million it owes for charging for students it was not supposed to have, and for billing the district for students who had left the school.

"And if they are not given the ability to pay them over time, they certainly do not have the ability to pay them today," he said.

Pund said he was hired in April 2013 by the Palmer board with the approval of bondholders to help stabilize finances, as part of a forbearance agreement when bonds that financed the charter's main campus in Northern Liberties went into default.

In mid-October, the district began the hearing to revoke the charter on grounds including shaky finances and a history of poor academic performance. The school, which opened in 2000, also has a campus in Frankford.

Last week, to comply with the enrollment maximum, the charter abruptly closed its high school and sent 286 students scrambling to find new schools. A few weeks earlier, it held a lottery to trim 250 K-8 students from its rolls.

Michael A. Schwartz, an attorney representing the district, asked Pund whether the charter was insolvent.

Pund said the Supreme Court ruling and subsequent decisions had "made the Palmer school insolvent when it was solvent through May of 2014."

The hearing took place over four days and concluded Wednesday shortly after noon.

Hearing officer Rudolph Garcia said the School Reform Commission is expected to announce a 30-day period for public comment on the Palmer charter Nov. 20.

Garcia will present a report to the SRC, which will later take a final vote on the school's charter.