Commissioner orders closing of Outreach Academy, school plans to open

Aug. 5, 2011 at 3:05 a.m.
Updated Aug. 6, 2011 at 3:06 a.m.

Just more than a week before Outreach Word Academy is scheduled to start its 10th school year, the Texas Commissioner of Education ordered the school's charter be revoked.

In a two-page decision issued Friday, the commissioner agreed with the July 15 recommendation by an administrative law judge to close down the Victoria school based on financial mismanagement stemming from the school's inception in 2002.

"We're disappointed, but it's nothing that we have not prepared ourselves to hear," Elaine Phillips, the school's founder and business manager said. "But we're still moving forward ... There are too many positive things happening for us to ... just give up."

The commissioner's decision is final unless a motion for rehearing is granted. Phillips said the school will request a rehearing, and should that fail, they will appeal the case to a higher court.

In the meantime, Outreach Academy plans to open for classes Aug. 15, with 301 kids so far enrolled, Phillips said.

The charter school, represented by Houston attorney Joseph Soliz, tried to submit new evidence after the judge's ruling that they said showed the school was on its way to fixing its financial problems.

Judge Prathiba Shenoy stood by her ruling in a final letter sent to the Texas Education Agency Wednesday.

Phillips hopes to get that additional evidence submitted in a new hearing.

"They made this decision based on old data," she said. "My heart is telling me that we can't give up because this is a decision that was made long before today, and once ... the truth is being heard in the proper court ... this will be overturned."

The TEA, led by attorney Chris Jones, presented at the May hearing several arguments for closing down the charter school. The judge found the school responsible for the following:

Failure to submit financial audits on time for six fiscal years

Withholding federal taxes from employees' paychecks, but not submitting the payments to the IRS

Possible misstatement of financial records from 2004 to 2009

Consecutive years of reporting a deficit of net assets

Owing the IRS more than $200,000 after declaring bankruptcy in 2007 for failing to pay employees biweekly

Failure to adequately document $783,093 in federal grants that the academy must now repay

For its part, Outreach Academy blamed its financial difficulties on faulty software, lack of assistance from TEA and issues with auditors.

The judge found the school had a "frustrating experience and suffered setbacks" as a result of their outdated software. However, that argument wouldn't account for late audit reports, deficits and IRS penalties that occurred after software was changed, the judge wrote.

The judge found "numerous" grounds on which the TEA could revoke the school's charter, most of which were based on regulations that were broken for at least three consecutive years.

But Phillips said it's in the best interest of the students to keep the school open because of its academic record and offerings, which serve mostly kids from economically disadvantaged homes.

"We're fighting for our staff, we're fighting for our children, we're fighting for our community," Phillips said.

Of the 289 charters the state has awarded since 2006, Outreach Academy is the 21st school the TEA has ordered closed or refused to renew, said Debbie Ratcliffe, communications director at TEA.

The school has 20 days to request a rehearing, and the state then has 10 days to reply. Within 15 days after that, the state must make a ruling that would be final, according to the Texas Government Code.



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