Horizon Charter School site upgrades add to $2M budget problem

Despite loss of 300 students, CEO optimistic about enrollment
By: Jon Schultz, Journal Staff Writer
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The midyear closure of a popular Horizon Charter Schools program in Placer County displaced hundreds of students, angered parents and sparked questions about what led to the sudden problems with one of the longest standing charters in California.

The Journal and its Gold Country Media partners launched an effort to shed light on the state of Horizon and charter schools in general.

Part 1: How Horizon’s $800,000 investment, other facilities went awry

Part 2: A snapshot of Horizon’s finances; a closer look at its CEO

Part 3: Horizon issue reveals oversight is a delicate balancing act

Part 4: A charter success story

Part 5: Comparing charter schools to traditional public schools

As a parent who had a student in Horizon Charter Schools’ now-shuttered Accelerated Learning Academy, Treva Saini said she sees a number of problems with how the program in Lincoln and Rocklin closed midyear.

But there is one issue that pertains to not only those who had been vested in the school, but any resident who ultimately invests in education through paying taxes.

Permitting problems and ensuing traffic safety issues for Horizon’s facility on 290 Technology Way in Rocklin forced it to shut down in October 2012 – little more than a year after the public charter school invested more than $800,000 in tenant improvements for the building.

The closure ultimately amounted to losing about 300 students as well as that sizable investment made in a time when funding had been at a premium.

“As a tax payer, and any other taxpayer, if I was to find out the amount of money that ALA, as a publicly funded charter school, had lost, I would be outraged,” Saini said. “Especially if they are explaining it based on a lease or mismanagement of a property management company.”

In the Journal’s first story of a five-part series on Horizon and charter schools, it detailed how and why 290 Technology Way is being reclaimed by Wells Fargo. The series runs through Tuesday.

Today’s story looks at the scope of Horizon’s finances; Friday’s will address oversight.

In January, Horizon hired an outside fiscal analyst to investigate its finances in the wake of the ALA closure, and Western Placer Unified School District, which oversees Horizon, said its outcome will be weighed when reviewing the charter’s petition for renewal this spring.

From July 2004 through June 2011, Horizon received $137.6 million in public support funding, or 99.4 percent of its total revenue stream, according to tax records.

Average Daily Attendance, or ADA, funding makes up a majority of Horizon’s revenue, said Yvonne Allen, Horizon’s fiscal coordinator.

ADA funding comes from a variety of public sources, such as local property taxes and the state general fund, said Karyn Moore, California Department of Education school fiscal services administrator.

On average, about 52 to 55 percent of the state’s general fund budget is spent on K-12 and higher education, according to the California Department of Finance. The general fund gets 62.7 percent of its revenue from personal income tax and 23.6 percent from sales and use tax.


Bridging a $2 million gap

When Craig Heimbichner became Horizon Charter Schools CEO in October 2011, he found the prior administration’s decisions to add to sites in Rocklin and Auburn put a “strain” on finances, because Horizon does not receive additional funding for facilities, he said.

“It was a major investment by Horizon to do that,” Heimbichner said.

Its bill for improvements to 290 Technology Way topped $800,000. It also signed up for an expansion to its Auburn location on 11641 Blocker Drive for an additional 2,999 square feet of classroom space, though Auburn principal Maria Blix said work had been on hold as of January.

Horizon faced a $2 million budget gap because of those added facility costs, the state budget crisis and losing some enrollment to nearby competitors, Heimbichner said.

Horizon Charter Schools technically consists of two charters: the one of its namesake and Partnerships for Student-Centered Learning, or PaSCL, which was created and authorized in July 2010 to allow for Horizon programs outside of Placer County. Both are authorized by Western Placer.

A majority of the school’s “facility, site-based programs” are carried by the PaSCL charter, including the former ALA program, Heimbichner said.

PaSCL “comes in the red,” and Horizon in the black, so shifting money from one to the other, as well as some organizational moves, allowed Horizon as a whole to balance its budget, Heimbichner said.

“What I did is a combination of major frugality in terms of internal spending on things. I did the most massive administrative reductions Horizon has ever seen, eliminating administrative positions,” he said. “We cut out close to … $700,000 or $800,000 out of staffing.”

Heimbichner’s vacated position for curriculum instruction had not been filled and special education coordinator duties were absorbed by Chief Academic Officer Cynthia Wood; some jobs had been made part-time, some people were “stretched” between two campuses, he said.

Organizational changes started even before Heimbichner took the reins.

Tax records show Horizon spent $13.8 million on personnel costs such as salaries, benefits, pensions and payroll taxes for the fiscal year beginning July 2010 and ending June 2011 – a decrease of about $740,000 from the previous year.


Dipping into the reserves

Since 2004, Horizon had the most annual revenue in 2008-09 when it took in $23.5 million and added a $2.6 million surplus to its net assets, or fund balance, bringing its total reserves to $7,514,724. Enrollment had been healthy as well, with ADA reaching 3,041 in April 2009 – its highest level of at least the past five years.

The state fiscal crisis had also been in full swing with massive cuts to K-12, and schools received federal bailout dollars to make up for budgetary shortfalls, said Cliff Bautista, Horizon chief business officer.

He did not specify when that federal money was received, or how much it contributed to the surplus experienced in 2008-09, but after that year, Horizon’s fund balance experienced a reverse of fortunes.

It had another, smaller surplus of $99,173 in 2009-10, before the fund balance declined by $9,389 in 2010-11 and then by $1.3 million in 2011-12.

Horizon had been in deficit spending in 2011-12, and that is why it saved some of the federal bailout money anticipating a future bad budget year, Bautista said.

“These were one-time funds only, so we didn’t want to spend it on on-going expenses,” he wrote in an email. “We knew the state budget and per pupil funding was tanking, so during the last three years, we made some significant budget cuts to deal with it, while at the same time … we were very conservative with our dollars as we know from prior history how volatile enrollment and (charter school) funding can be.”

Allen said Horizon’s forecast for the 2012-13 fiscal year is uncertain due to legal expenses and the outcome of those matters.

In 2010-11, Horizon spent $17,609 on legal expenses, according to its tax records.

The charter school and Group Access – the third-party management company Horizon uses to administer its leases in Auburn, Elk Grove and formerly Rocklin – have been in a dispute over rent and though litigation has been threatened, Placer County court records show neither party has filed a lawsuit.


Attendance highest since 2010 before ALA closure

Horizon had 2,788 ADA in December 2012 – its highest mark since 2,918 in April 2010.

That recent December ADA figure does not reflect Horizon losing 305 students from its ALA program, and a clearer picture of how the closure affected the school’s ADA will not emerge until the April counts. Heimbichner remains optimistic.

“We picked up a lot on the independent study side,” Heimbichner said. “Did I know that would happen? No. Actually, I was quite prepared for it to plummet downward by upwards of 400 students – it would be a tremendous blow to the budget – but we haven’t really seen that.

“We didn’t have the calamitous hit to the ADA that I thought we would, and that would be the only real disaster for Horizon, and it didn’t happen.”

A year earlier, Bautista reported to Horizon’s governing board on Dec. 15, 2011 that enrollment was not going well at that time, according to minutes from the meeting.

He reported Horizon was losing independent study students and the recent ADA count came in 200 short of projections, amounting to a funding difference of about $1.4 million.

Bautista also reported that it had been overstaffed for its current enrollment at that time.

Horizon’s total ADA count of 2,585 in December 2011 entitled it to $15,975,054 in per-pupil funding, according to state records.

Though tax records for the most recent fiscal year are unavailable, a picture of how significant ADA funding is to Horizon’s overall revenues can be seen by looking at 2010-11, when the school reported a similar enrollment.

In the fiscal year ending June 2011, Horizon brought in $19,038,446 total revenue when it had a December 2010 ADA count of 2,556, according to tax records.

“We look very strong in terms of our enrollment, and I see no problems there whatsoever. We are still delivering all the programs that we did with the exception of that one,” Heimbichner said. “Up in Auburn, we’re going strong. … Elk Grove we’re going strong. We’re still in our six counties, and I would say that we look poised for charter renewal on both our charters this spring.”


Jon Schultz can be reached at Follow him on Twitter @Jon_AJNews