Schools’ shutdown troubles community

BONNERS FERRY, Idaho – Employees of CEDU Educational Services’ three schools in Boundary County filled out unemployment forms in droves Monday while a straggling handful of students packed their things to leave Idaho.

Brown Schools Inc., CEDU’s parent corporation, filed for bankruptcy Friday, the same day employees learned they were losing their jobs. About 300 people in North Idaho are out of work, and about 300 students in CEDU’s seven schools across the country were abruptly sent home.

Emotions over the schools’ sudden closure ranged from resignation to “beyond angry” in the unemployment queues and at the schools for troubled teens.

“This is a relationship-based program, and they closed this like it was a factory,” said Boulder Creek Academy counselor Silas Thompson. He and many other employees volunteered to stay around the clock at the school over the weekend to safeguard students until they could be turned over to their parents.

They haven’t been paid for three weeks, and they have no guarantees they’ll get their back wages. With the bankruptcy filing, they take a place in line with other creditors.

“This is devastating to our community,” said laid-off staff member Norm Aldridge. He also worries about the impact on the students, many of whom are emotionally fragile. Some students “went ballistic” Friday when they learned they had to leave, he said.

Diane Stock Kern said she had been traveling since 1 a.m. Texas time to come pick up her nephew, 16-year-old Jason Stock, who was one of the last students to leave Boulder Creek.

Stock’s mother is a single working mom in St. Louis. His dad died five years ago. He’d been at the academy less than two months.

“I felt like Jason was finally in a stable position here,” Kern said. “We don’t know what our options are now.”

Other parents worried they won’t be refunded for tuition. They were offered a 7.5 percent discount on the $5,950 monthly tuition if they paid several months in advance.

April Moore of Fairbanks, Alaska, recently cut a check for $74,000 to pay for the rest of her son’s schooling. She was in tears Monday, fearing she’d lost it all.

“My husband just died, and that’s the only reason I have it,” she said. “Apparently there are other parents who are trying to get their tuition back and can’t.”

As parents scrambled to get their kids home, former employees started looking for work. If they don’t find it, Boundary County’s unemployment rate will jump from 6.5 percent to 12.7 percent, said Dave Darrow, manager of the Idaho Commerce and Labor office in Bonners Ferry.

The opening of Rocky Mountain Academy in 1982 helped diversify Bonner County’s timber- and agriculture-dependent economy, said Kathryn Tacke, Idaho’s regional labor economist for the Panhandle. Through payroll, CEDU pumped about $9 million annually into the local economy in 2004. Even after the closure of Rocky Mountain Academy in February, the three remaining programs tied with the Boundary County School District as the county’s largest employer.

“It’s going to be very hard for a small community like that to make up the loss of those 270 jobs,” Tacke said. “It doesn’t help that this was sudden, that there wasn’t the usual 60-day notice.”

In a petition filed with the U.S. Bankruptcy Court in Delaware, Brown Schools listed debts of $10 million to $50 million, and assets in the $1 million to $10 million range. In a statement accompanying the bankruptcy filing, the board of directors said the Chapter 7 filing was in the best interest of the company, its creditors and stockholders. Company officials did not return phone calls.

The bankruptcy filing includes 63 pages of creditors. A listing of the 40 largest creditors includes a $1.5 million arbitration settlement, and $1.2 million for other legal settlements and fees.

CEDU paid a $300,000 settlement in 2002 to the families of two former students who alleged that the staff at Northwest Academy was poorly trained and abusive, according to previous press accounts. More than two dozen parents filed lawsuits against Rocky Mountain and Boulder Creek academies in October, alleging misconduct and breach of contract.

A 17-year-old who was enrolled in a Brown Schools wilderness program in Texas died in 2002 after he was restrained by at least three camp staff members after what the company described as a violent outburst, according to a 2003 article in the Austin American-Statesman.

In 1999, Brown Schools purchased the California-based CEDU programs for about $72 million, according to the Austin American-Statesman.

Brown Schools has changed ownership several times. A California investment firm, McCown, De Leeuw & Co., purchased it about eight years ago. The firm has a broad array of business interests, including 24 Hour Fitness Worldwide and Aurora Foods, which includes Duncan Hines cake mixes, Van de Kamp’s frozen foods and Mrs. Butterworth’s pancake syrup.

Although the chain of events could not be confirmed with corporate headquarters, the popular theory is that the bankruptcy resulted because the debt service for the purchase of the schools drained the company of cash.

Employees smelled trouble earlier this year when the company stopped direct deposit of their paychecks, said laid-off counselor Rob Goldworm. They were told the company was changing banks, but paychecks were still drawn from the same bank. Vendors also weren’t getting paid. Then, on Thursday, employees weren’t paid.

But Boulder Creek Academy director Paul Johnson had reassured staff that the school wouldn’t close. Boulder Creek Academy, Northwest Academy and Ascent were all profitable, he said.

The worst-case scenario, Johnson thought, would be Chapter 11 bankruptcy, which would keep the schools open while allowing the company to reorganize. The news Friday was as much a surprise to him as to everyone else at the schools, he said.

“It’s hard for me to understand why it had to happen this way,” Johnson said Monday. “It doesn’t make sense.”

Johnson said the last 48 hours had been the most emotional in his life. The parents he’s spoken with are furious.

“They entrusted us to care for their kids and we did not follow through,” he said.

Still, Johnson is buoyed by the support shown by parents and others. Over the weekend, parents – including some who’d lost tens of thousands of dollars in tuition payments – donated more thousands to start a fund to assist employees.

Also, there’s a move afoot to try to start a nonprofit organization to purchase the Boulder Creek campus and reopen the school.

Parent Barbara Plesser is solidly behind the plan.

“We’ve rechristened the company CEDID,” she joked.

And she’s got a suggestion for the name of a newly formed school: “CEWILL.”