STEP Academy wins reprieve from regulators while Athlos Academy of St. Cloud faces loss of its charter

STEP Academy has won at least a temporary reprieve from its state-approved regulator and the Twin Cities charter school is no longer facing the immediate loss of its contract after staffing cuts helped STEP, one of the state’s largest charters, avoid a financial meltdown.

But in St. Cloud, Athlos Academy is on the verge of shutting down, notified by its regulator that its contract would not be renewed when it expires in June because of poor academic performance and snowballing financial problems that are “compromising the school’s viability,” according to a Jan. 15 letter from the authorizer, Volunteers of America-Minnesota (VOA). The letter was obtained this week through a public records request by the Minnesota Star Tribune.

Altogether, 10 charter schools have been threatened with the loss of their contract by their state-approved regulators in the past year, and at least nine others have been warned about significant contract violations, records show. In 2024, nine of the 181 charters operating in the state at the beginning of the year closed, the most in Minnesota history.

There are broader oversight problems with Minnesota’s charters, as an ongoing Star Tribune investigation revealed.

Athlos has appealed the termination and will have a chance to make its case for a new contract at a one-hour hearing at 1 p.m. Monday at VOA’s office in Minneapolis.

Athlos has struggled to meet its contractual obligations since the school opened in 2016, according to a review of contract evaluations and correspondence obtained through a public records request from the Minnesota Department of Education (MDE). The school’s enrollment plunged from a high of 651 in 2018 to 248 last year and the school is now expected to finish the year with a deficit of nearly $800,000.

Heather Ebnet, executive director of the St. Cloud school, declined to comment on VOA’s actions. In an previous email to the Star Tribune, Ebnet said Athlos was “turning things around” and invited a reporter to visit the school. She later rescinded the invitation “after consulting with my legal team.”

“I am well aware of the challenges we face and the position we are in,” Ebnet said in the email. “We have improved and made over $1.6 million in cuts.”

The contract dispute does not involve Athlos Leadership Academy of Brooklyn Park, which is part of the same network of schools run by Athlos Academies of Idaho. Both Athlos schools in Minnesota are overseen by VOA.

Enrollment at Athlos Academy of St. Cloud began to fall after a 2018 incident in which several students were allegedly stabbed in the back with a sharpened medical device called a blood lancet in the school’s lunchroom by an unidentified assailant, according to a complaint from one of the parents filed with MDE.

The parent said the attack was witnessed by a paraprofessional who failed to report the incident to the principal. The parent also expressed concern about her child’s safety in the school bathrooms, noting several students had been attacked there, according to documents.

VOA later told MDE that Athlos officials correctly followed their procedures but noted that the school agreed to create stronger procedures for bathroom security as well as the handling of medical devices.

Falling enrollment has put a squeeze on the school’s finances, records show. VOA put Athlos on probation early last year when the school fell behind on paying its vendors and “exhausted all cash borrowing options.”

The St. Cloud school has consistently fallen short on its academic performance requirements, but scores dipped sharply in recent years, with reading proficiency levels falling from 27% in 2021 to 14% in 2024. Overall, the school met just 63% of its performance standards in 2024, well below the 70% threshold required to qualify for a new three-year contract with VOA, records show.

In the Twin Cities, the picture is somewhat brighter at STEP Academy, where board members learned earlier this week that the school is now projected to finish the year with a fund balance of about $200,000, a significant improvement over the $800,000 deficit the school was facing earlier in the school year.

Paul Scanlon, STEP’s chief operating officer, said the district cut nearly $800,000 in salaries by laying off 16 people, including nine teachers, four administrators and three paraprofessionals. The school also elected not to replace its executive director, Mustafa Ibrahim, who resigned under pressure in October, saving the school another $170,000 a year.

STEP, which enrolls 760 students at its campuses in St. Paul and Burnsville, got into trouble after the school overspent on its expansion into Burnsville, which wiped out more than $2 million in financial reserves. Innovative Quality Schools (IQS), which oversees the school on behalf of the state, blamed Ibrahim for the bungled expansion, claiming he violated procurement rules by entering into budget-busting deals without first obtaining board approval.

Though dozens of parents protested on behalf of Ibrahim, enrollment did not plunge in the wake of his departure, as top administrators feared was possible. Instead, enrollment is down about 20 students since October.

“We are on the right track,” Scanlon told board members Monday night. “Understatement: We still have some work to do. ... I don’t mean to scare anybody.”

The Burnsville campus continues to be a drag on STEP’s finances, with overall enrollment falling far short of the 1,000-plus students Ibrahim predicted would show up at the two campuses this year. Though STEP’s oversight board has not publicly endorsed closing the Burnsville campus, some teachers have been pushing for such a move, saying the extra campus will never generate enough enrollment to justify its expense.

The biggest unknown, however, is what IQS will do when the school’s contract expires this summer.

“We are still bleeding but I think this place will be open next year,” said one middle school teacher. “I don’t think our authorizer will close us down unless we are completely bankrupt and our student numbers have completely cratered.”

Altogether, four of the seven schools that have closed while being supervised by IQS were terminated or had their contracts nonrenewed for performance issues, most recently in 2022, said Laurie Schroeder, managing partner of IQS.

Schroeder declined to answer questions about STEP’s status.

“We are continuing to work with school leadership and have made no determinations at this time,” Schroeder said in an email, noting IQS would have to give the school 60 days notice of its intent to not renew its contract.