Wednesday, June 25, 2008

Newport School may close

Low enrollment and high operating costs cited

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The Newport School may not reopen in the fall because of lack of funds, according to parents, teachers and a member of the school’s board of trustees.

Since April, teachers have not been paid. At the end of the school year, students’ hot lunches were canceled and parents were sending in towels for the bathrooms.

The private school, located in Silver Spring, has struggled financially since it was forced to move in 2001 from its former location in a building owned by Montgomery County Public Schools. Teachers, parents and officials have cited higher operating costs, difficulty in fundraising during tight economic times and a lack of enrollment as the reasons for the money crunch.

In a June 10 newsletter to parents, Newport’s Board of Trustees said if Developers Diversified, the landlord that owns the building Newport rents on Tech Road, does not reduce the rent by one-third, the school would close.

As of this week, Developers Diversified was still considering the school’s request, board member Robin Stevens Payes said Tuesday afternoon. A board meeting to discuss what action, if any, to take will be held Wednesday night, Payes said.

‘‘We certainly don’t want to see an 85-year-old school die,” she said.

According to the newsletter and another about a May 7 meeting during which incoming headmaster Andrew Zvara addressed the budget crisis, Newport was in a financial hole of $173,703 as of March 31. The newsletters cited the school’s trouble in retaining enough students, about 130, to break even. As of May 29, the school had 85 students enrolled for the fall, according to the June 10 newsletter.

Payes said 80 percent of Newport’s income comes from tuition, which ranges from about $14,000 to about $22,000 a year, and the rest comes from donors and fundraisers.

Newport’s board has been taking steps to keep the school open, including recruiting more students, negotiating to sublease the Tech Road site, reducing payroll by 30 percent and asking every parent to raise or donate at least $3,500, according to a June 3 newsletter to parents.

Newport is an independent nonprofit school that serves nursery school through 12th grade. Its finances are handled by the nine-member board and administration officials, such as the headmaster, director of admission and the director of business and finance.

Some board members deferred comment to board President Troy Priest, who did not return calls or e-mails seeking comment. Other board members did not return calls or e-mails. Zvara refused comment when asked about the school’s budget issue.

Founded as the Town and Country Day School, Newport was originally located in Kensington. But in 2001, Newport moved from a location in a former middle school on Newport Mill Road because the county needed the building. Newport then relocated to space at the First Baptist Church in Wheaton for five years.

However, Newport lost 75 percent of its 400-member student body after its first move and the school declared bankruptcy, according to Payes.

The bankruptcy case, filed in August 2001, is still open. There were 71 claims made against the school for a total of $764,448.35, according to court documents.

One of the major creditors was SequoiaBank, which according to court documents, called in loans for $166,737.44 when the school moved from Newport Mill Road. Newport’s lawyers and the court created a plan where the school would pay $324,000 to its creditors over a five-year period, the documents said.

After its stay at the Wheaton Baptist Church, Newport moved to a new location in an industrial area on Tech Road in February 2006. School officials at the time hoped the new location would boost the school’s profile.

But Newport’s financial troubles did not end with its new location, Payes said.

‘‘We were never able to recoup the number of students to keep the school self-sustaining,” she said.

Payes said the rent is more expensive because it is a commercial space. Added to that are higher energy costs and the inability to raise the average amount needed per year, about $250,000, Payes said.

The school has a 60-month lease, and according to the June 3 newsletter, the current lease calls for base rent to escalate from $31,985 to $32,945 for total payments for months 37-48. That does not include more than $15,000 of other operating and tax escrow charges. The board is hoping to revise the lease to reduce the base rent ‘‘to allow for a catch-up period” in order to rebuild cash flow, according to the newsletter.

In the meantime, teachers have not been paid since April, according to Payes and several teachers. Many have left, including the athletic director of six years, Tammy Ryan.

Ryan, who also removed her daughter from the school, said the board told teachers in February the school was hurting financially but did not disclose by how much until April 29, when teachers were told in a staff meeting they were not going to be paid for the rest of the year.

Damon Fernandes, a teacher at Newport since 2007, left the following day. Ryan and Fernandes did not like the way the board handled the situation.

‘‘I could see the writing on the wall in February when they started to give us our checks live instead of directly depositing them,” Fernandes said in an e-mail. ‘‘I could see that this was a sinking ship.”

Gary Irby, a part-time art teacher for five years who also left, said not being paid was ‘‘basically the same as being fired.”

Newport’s Web site lists 22 faculty members and 10 administrators and support staff.

Barbara Schoeberl, a parent at Newport who has created a Web site to rally parents to save the school, said she and other parents have had difficulty getting through to the board to offer fundraising ideas. ‘‘Our efforts have been completely shunned and our voices not heard,” she said.

However, Payes defended the board’s decisions as private. ‘‘Board decisions are not public decisions,” she said.

The reasons that the previous headmaster, Rachel Goldfarb, left the school, are also in dispute, according to Goldfarb.

The school announced in late April that Goldfarb was retiring as headmaster and Zvara, a former headmaster and long-time Newport teacher and administrator, would return to the school and replace her in the fall.

Frank Gill, an interim co-headmaster, told a Gazette reporter in May that Goldfarb was retiring for medical reasons. But Goldfarb said, ‘‘I did not say that I resigned nor did I say I wanted to be on full-time medical leave.”

Goldfarb said she was involuntarily placed on medical leave after she was diagnosed with cancer in February. She said she told the board she would delegate some responsibilities while she underwent treatment but would still serve out her term as headmaster.

Goldfarb said the board instead placed her on medical leave. ‘‘I was basically told to stay home and heal,” she said.

Gill did not return phone calls seeking further comment. Payes would not comment on Goldfarb’s claim.