Nixa school district asks lawmakers to pay millions more on controversial lease

JEFFERSON CITY — Four years ago, Nixa Public Schools agreed to end its lease on an early childhood special education center by July 2019.

The cost to state taxpayers — $875,000 per year — had set off alarm bells at the Department of Elementary and Secondary Education, which reimburses districts for the cost of such leases.

Almost every other district leasing space — and there were more than a dozen —  was receiving far less in state reimbursement, according to previous reporting. Nixa and Springfield Public Schools, the largest district in Missouri, were taking in more than 80 percent of the $1.9 million spent on the program each year.

A department leader who realized there were no spending caps in place proposed a formula calculating payments based on local real estate prices and the number of children being served in a space, rather than whatever a district submitted in an invoice.

Nixa pushed back, saying the department approved its deal — a five-year lease with local developer Curtis Jared, renewable up to 25 years — without complaint and should honor it. Eventually, a compromise was reached: If the state would cover expenses through July 2019, the district wouldn't renew the lease.

Springfield, which also had been leasing space from Jared, negotiated its own deal not long after using district funds and remaining state dollars. It bought Shining Stars Early Childhood Center outright from Jared for roughly $4 million and vacated another, smaller facility it was leasing. The district says it has received its final reimbursement from the state.

Nixa has taken a different tack. Rather than end the lease, it's working with a local lawmaker on an extension.

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What the bill would do

Sen. Eric Burlison, R-Battlefield, filed a bill that would keep the $875,000 reimbursements coming for another five years, after which Jared and district officials say the building will be donated to the district.

In a committee hearing and in a speech on the Senate floor, Burlison assured colleagues that “as a fiscal conservative,” he supports the state’s new standards.

But he said he also thinks the state should honor what it agreed to pay Nixa before it created new regulations, especially given the circumstances.

Nixa’s building, Burlison said, was built specifically for early childhood education on district property, meaning Jared would be hard-pressed to find another tenant if the district breaks the lease.

Karen McKnight, the district’s director of special services, said having to leave the building would hurt students and their families.

The district is required to provide early childhood special education to eligible children, so those programs wouldn’t go away, she said. But the district would have to carve out space elsewhere, putting other programs at risk.

“We have filled (other space) with other programs including toddler day care, expanded Title I programs and tuition-based early childhood programs,” McKnight said. “So we'd have to make some decisions on some cuts there.”

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The Department of Elementary and Secondary Education is officially neutral on Burlison's effort. But former deputy education commissioner Ron Lankford, who spearheaded the push for the new rules, objects to the attempt to extend the payments.

Lankford said the department agreed to give Nixa, Springfield and other districts with existing deals a five-year grace period with the explicit understanding they would use the time to put an end to their leases.

He notes former Nixa Superintendent Stephen Kleinsmith proposed as much in an October 2015 email discussing a solution to the impasse between the district and the department, which was then playing out before the legislative committee that reviews new regulations.

If the state would agree to initially exempt the district from the proposed rule, Kleinsmith wrote in an email, “Nixa will agree not to renew their (early childhood special education) facility lease at the expiration of the initial five year lease period.”

He said the extra time would allow Nixa to figure out next steps with Jared.

Agreements failed to bring 'closure'

The following June, Kleinsmith told the News-Leader he had an answer: DESE had agreed to buy the building for $5 million over five years.

"We agreed DESE would pay for the entire facility over a five-year period," he said then. "And the developer will donate the building back to us."

But in a more recent interview, Kleinsmith (who retired in 2018) said those previous agreements failed to bring the deal to “closure.”

“Jared needs a few more years of DESE fulfilling their commitment and paying up to a point,” he said, “and this should bring this agreement to an end.”

Nixa Public Schools spokesman Zac Rantz offered a similar explanation when asked why the district is asking for more money now and what guarantee the public has that this request will be the last.

“We are currently in a lease with the landlord/developer, and we are working with Mr. Jared on any changes that might occur to the current agreement,” he said. “Mr. Jared has stated publicly that he intends to donate the Early Childhood building to the district in five years or less.”

Jared confirmed as much in committee and an interview, saying without an extension, he’ll be out millions of dollars on the project.

Jared has said building Nixa’s early childhood center cost him “right at” $5 million, but he said it cost him more than that to service debt and take care of the building. He did not provide a full accounting of those costs when the News-Leader asked.

“All we want to do is get this extended to do what was originally agreed to,” Jared said. “That way, this thing burns off, it doesn’t get reopened up or extended, it’s done.”

But Lankford said that wasn't the deal, and would effectively reward the district for failing to keep its word.

“We never said anything about giving Nixa another $5 million,” he said. “The (deal struck in 2015) brought the matter to a close.”

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Sen. Jill Schupp, D-Creve Coeur, echoed those concerns in floor debate and in an interview.

“If the school district needs five more years of funding, it’s contingent upon the school district to figure out how to get it,” she said. “I don’t think the taxpayers throughout the state are responsible for a very expensive building when clearly those rules were written long enough ago that something needed to be negotiated between the lessor and the lessee.”

What's next?

Lankford suggested that if Nixa really needs more money, it could consider a bond proposal like the nearby Cassville district, which saw $4 million approved earlier this month for a list of projects that included an early childhood center, according to the Cassville Democrat.

Just a month ago, Nixa voters approved a $15 million bond issue and 41-cent tax levy increase. The money generated will help the district add classroom space and build a new performing arts center, among other things, at Nixa High School, according to previous reporting.

Asked by the News-Leader whether it had considered alternative funding for the early childhood center, the district did not respond.

And despite a Nixa official testifying in support of Burlison's bill, Rantz, in an email, said the district is not the driving force behind the bill.

"The district’s understanding is the legislation has come about because the developer has stated he needs additional funding to recoup the cost of the building," he wrote. "Any testimony or comment from the district concerning the proposed legislation has been meant to provide information about how the district may be impacted if the legislation does not pass."

So far, lawmakers have seen at least some merit in Burlison’s proposal. The bill passed out of committee in March without a single dissenting vote and won initial approval from the full Senate last month.

Burlison’s bill still needs a final vote before moving on to the House. The legislative session ends May 17.

The legislation is Senate Bill 465.