EAST CHICAGO — An East Chicago charter school may be unable to continue educating students in coming years due to current liabilities that exceed current assets by more than a half million dollars, according to a new audit.
The 2018-19 financial assessment of the East Chicago Urban Enterprise Academy, submitted to the State Board of Accounts by Donovan CPAs, includes a warning for a second consecutive year that the school's financial trends "could threaten the school's ability to continue as a going concern."
Specifically, auditors found that as of June 30, 2019, the school was liable for $665,335 in payments to creditors and other expenses, primarily the $308,000 needed to cover teacher payroll during the 2019-20 school year.
However, auditors said the school only had $128,531 in current assets to cover those costs, with the bulk of those assets in grants receivable and prepaid expenses.
The school had just $13,829 in cash on June 30, according to the audit.
In comparison, it had $185,726 in cash at the end of the 2017-18 school year, and $344,128 at the end of 2016-17, past audits show.
"This deficit in financial assets net of financial liabilities will result in a significant strain on the school's financial resources," auditors said.
School Principal Veronica Eskew did not immediately respond to a telephone message seeking comment on the audit.
At the same time, the audit notes "the school's management is aware of the negative financial results" presented in the report and says the school is taking measures to improve its finances.
Those include trying to increase enrollment to secure more per pupil funding from the state, adjusting its 2019-20 budget to ensure the school can meet its current obligations and strengthen its net assets and seeking additional grant revenue, according to the audit.
Indiana Department of Education records show 21 certified teachers taught 415 students enrolled in kindergarten through eighth grade at the East Chicago charter school during the 2018-19 school year.
The school's accountability grade for that school year is not yet available due to a state testing snafu.
State records show the school earned a "D" quality rating in each of the three preceding academic years.