Nixa school district to end controversial lease on early childhood center next year
Austin Huguelet
Nixa Public Schools is set to end a controversial lease on an early childhood center that cost state taxpayers millions of dollars, after Missouri lawmakers rejected pleas to enable a costly five-year extension.
For the past five school years, the district has leased the facility behind the Faught Administration Center from local developer Curtis Jared, sending the $875,000 annual bill to the Department of Elementary and Secondary Education, which reimburses districts for the cost of early childhood special education space.
But reimbursements are set to decrease drastically starting with the upcoming school year, under an agreement the district struck with the department in 2015. According to the new, cost-saving formula, the district will be reimbursed only about $100,000 for the next school year, department spokesman Tyler Madsen said this week.
A legislative effort backed by Jared and district officials to work around that deal fell well short of passage last month, forcing the developer and district to come up with an alternative not dependent on millions of dollars of state funding.
In an emailed statement Thursday, the district said it would extend its five-year agreement with Jared for one more year at the new rate, then pay $900,000 from its reserves in June 2020 to take ownership of the building.
Jared's holding company valued the building at $8.5 million, spokesman Zac Rantz wrote in an email, and will count the difference as a charitable donation.
It was not immediately clear how Jared reached the valuation, which is greater than the roughly $5 million Jared previously told the News-Leader it cost him to construct the building.
Jared did not respond to a request for comment Thursday.
Documented obtained by the News-Leader through an open-records request confirm the details provided in the statement.
Thursday's announcement is the latest turn in a saga that's already yielded one announcement of a purchase agreement that never came to fruition.
How did the saga reach this point?
The district's initial five-year lease with Jared began in the 2014-2015 school year and quickly raised eyebrows at the Department of Elementary and Secondary Education.
Almost every other district leasing space — and there were more than a dozen — was receiving far less, and Nixa's reimbursements were even bigger than those going to Springfield Public Schools, the largest district in Missouri.
Former Deputy Education Commissioner Ron Lankford eventually decided the reimbursement program needed spending caps in place and proposed a new rule 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 when the rule came before a legislative committee for review, saying the department had approved its deal without complaint and should honor it.
Eventually, a compromise was reached: If the state would cover expenses at the initial rate through July 2019, the district said it wouldn't renew the lease, which contained four five-year extension options with even higher costs.
Former district Superintendent Stephen Kleinsmith told Lankford in an email the agreement would "give Nixa the time (to) determine next steps with the developer."
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.
But that deal never came to fruition, and in April, Jared and district officials were testifying to a Missouri Senate committee in a support of a bill that would have kept the $875,000 reimbursements going to Jared for another five years before a donation would be arranged.
Jared told lawmakers he was facing a loss of millions of dollars, even after $4,375,000 in authorized lease payments. He later told the News-Leader that the $5 million he spent to construct the center didn't include the cost of debt service and building maintenance.
(The News-Leader asked for an accounting of those additional costs last month and had received no data as of press time.)
What impact could this have on students?
Karen McKnight, the district’s director of special services, talked about how losing access to 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.”
But Thursday's statement said the most recent agreement would not require any change for students after all.
"The agreement ensures there will be no interruption in classes or services in the building," the statement read, "and provides the district the ability to purchase a building that it would not have been able to build on its own."
Current Superintendent Gearl Loden added, “I am amazed at the vision that was put into place years ago by Dr. Kleinsmith and our school board. The partnership with Jared allowed our district to have an early childhood facility that is second to none. It has been an honor to work with such an advocate of public education as Jared."
Lankford, the former deputy education commissioner, wasn't entirely comfortable with Nixa's donation arrangement but said he was glad to have the state off the hook for further payments.
"As far as I’m concerned, the agreement that was struck in 2015 was honored," he said. " Anything beyond that is between the IRS, Jared Enterprises and whatever agreement they struck with Nixa."