Indy charter school struggling with unexpectedly low enrollment

A new charter school on the city’s north side is experiencing some of the negative consequences of school choice—the financial challenges that come when parents don’t choose your school for their children.

Ace Preparatory Academy, started by an aide to former Indiana Superintendent of Public Instruction Tony Bennett, is at about 22 percent of its initial expected enrollment, with just 33 students enrolled as of Oct. 19.

The school opened this fall near Keystone Avenue and 54th Street and serves kindergarteners and first graders. The goal is to eventually add grades 2-5.

The enrollment shortfall has caused considerable financial stress on the operation: The school’s board on Wednesday approved an annual budget with cuts of more than $950,000 from its initial planning, reducing annual expected expenses from $1.5 million to about $600,000.

That’s resulted in the school eliminating seven staff members. Ace Prep is down to four employees—two teachers and two administrators. They’ve also renegotiated some contracts, cut all budgeted staff bonuses, reduced the school’s contribution to the employee retirement plan, and renegotiated the contract of school leader Anna Shults. The school predicts a positive cash flow at the end of the year based on the cuts.

“I am feeling like not only is this the right thing to do, but we can all breathe easy knowing that the integrity of what we need to do is not impacted overall,” Shults told board members. Shults is a former Indiana Teacher of the Year who worked with Bennett when he was the top education official in Florida.

The news comes as Indiana school officials are wondering if Indianapolis has reached a “saturation” point when it comes to available charter-school seats. When the supply of seats is greater than the number of students who need them, there is increased pressure on all schools to meet enrollment targets, or risk financial insolvency if they don’t. The enrollment of a school is tied to how much money it receives from the state.

IBJ reported in September that schools, including Ace Prep, were increasingly deploying intense marketing campaigns to attract students. Some elected officials are worried that schools are spending too much money to compete with each other for a limited pool of students.

James Betley, executive director of the Indiana Charter School Board, the school’s authorizer, said the “Ace Prep board is doing exactly what it is supposed to be doing in this situation."

He said the school’s original enrollment goal was an educated but “overly optimistic” guess.

“I care less about whether a first-year school guesses correctly about its first-year enrollment in its application than I do about how the school handles a lower-than-expected enrollment if it occurs,” Betley told IBJ.

Betley said if it appears that the school “can’t survive the year financially,” then the charter school board would step in.

“Until we see signs that the school is not going to make it through the year, then we’ll let them keep operating,” Betley said.

Why is the school under-enrolled?

Betley said it could be due to a few factors, including the school’s “slow-growth” model of starting out by serving kindergarten and first grade, since parents with more than one child usually prefer to send their children to the same school.

Betley also said Ace Prep was authorized to open before Indianapolis Public Schools started “moving at light speed” in partnering with outside groups to run its schools through the “innovation network school” law. In that model, individual schools are run essentially like charters but they still have some help from the district.

“That has definitely changed the dynamic,” Betley said. “We do our best to keep in touch with them to try to prevent things like this from happening.”

Going forward, Ace Prep’s board asked Shults to come up with an enrollment strategy to present to the school board next month.

For now, Shults said she is focusing on “little wins,” such as the benefit that comes from each school staff member having to be intimately involved in a student’s learning.

For instance, she said the school is trying to create an environment where “reading is loved and celebrated” and each staff member gets to know each student's strengths and weaknesses thoroughly.

“There are lots of pluses about being a tiny and mighty team,” Shults said. “We all know every scholar’s business.”