ST PAUL, Minn. — A St. Paul charter school is at risk of shutting down after they were overpaid.
STEP Academy serves a significant part of the Somali community in the capital city and works to reach students who are underserved by traditional schools and who are underrepresented in STEM fields.
The school has 783 students, which is 117 less than they planned for during the school year. According to documents from an Oct. 4 special board meeting, the enrollment gap has put them over budget by $775,000. The school budget $12.2 million this fall.
In a letter to the school board and administration, its authorizer Innovative Quality Schools (IQS), wrote since the projected enrollment has not been actualized the school was overpaid for quarter one of the 2025 fiscal year.
Charter Schools are public schools that are funded according to enrollment. In Minnesota, charter schools receive about $12,000 per student depending on the student’s grade and additional services that the student receives.
IQS wrote "STEP Academy is in a financial crisis. If the Board does not take sufficient and responsible action, the school will be unable to continue operations."
STEP has proposed a revised budget to fill the financial hole they are in by cutting staff and salaries.
The proposed budget would call for $325,000 in reductions at the St. Paul campus, $225,000 in reductions at the Burnsville site, and $225,000 reduction in staffing in operations/office.
The charter school is also working to add $600,000 from renegotiating building leases at both locations and its transportation contract.
In a statement, IQS said “as STEP Academy’s authorizer, we continue to provide oversight of the school and its board. The recent corrective action plan and direction to the school included improving financial controls and expanding board membership to increase the board’s capacity to provide effective oversight of the school. In the coming weeks, we expect STEP’s leadership and board to continue implementing the agreed-upon corrective actions, which were developed to create stability while maintaining a strong academic program. We will continue to advocate for STEP’s students and serve as their authorizer for the remainder of the school year.”
School officials told a KARE 11 crew no one from the school would be available to speak Monday. The next board meeting is October 21.
IQS said it’s essential for the board to follow the corrective action plan given the school’s financial crisis and expects increased and active board engagement, per their letter.
“Even if reductions and renegotiations of agreements are successful in helping the school operate through the end of this year, commitments such as the leases may result in a similar situation for FY26. The Board may need to consider the potential of significant organizational changes, such as closing one site,” IQS wrote in a letter.