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Runnels School set to close, tuition money lost

3 months 4 weeks 12 hours ago Monday, March 09 2020 Mar 9, 2020 March 09, 2020 6:31 PM March 09, 2020 in News

BATON ROUGE - Runnels School in Baton Rouge will close at the end of the school year.

The school's administration made the announcement Sunday in an email to parents. School leaders decided to close down the entire K-12 private school due to a decrease in enrollment and other financial hardships. 

Monday, WBRZ learned from parents of Runnels students that their tuition money has been spent and they're waiting to learn when their refunds will be filed. John Raymond has a 5th grader at Runnels and decided to pay her 2020-2021 school year tuition up front. He made the payment in January.

"Lump sum of almost $10,000," he said.

There are dozens of parents who paid their child's tuition up front after they received a number of emails assuring them the pre-K through 8th grade school would remain open and in "no danger whatsoever" of closing. In February, Runnels announced it was closing its high school and then, almost 30 days later, said it would be closing the entire school.

Founder Kelly Runnels told 2 On Your Side the issues are a decade in the making and, even with a 40-percent tuition increase, couldn't stay afloat. He attributes the school's troubles in the millions of dollars.

Kelly Runnels says the tuition for high school students was put in an escrow account and when it was decided the school was closing that money was returned to them. The tuition for pre-K through 8th grade went in the general fund.

"A lot of it has been spent," Runnels said.

It's a serious worry for Raymond who could be using that tuition money to put toward his daughter's education elsewhere.

"She really needs that extra attention of a smaller school," Raymond said.

Runnels says it's working with an investor, who happens to be his brother. The plan is to sell the school property for good within a two-year time frame and start repaying parents by the end of March.

In an email to parents, founder Kelly Runnels wrote: 

"With hearts overflowing with pride – and misery – Gladys (Runnels) and I must report to you that Runnels School cannot continue to serve our beloved community any longer." 

This decision has come after school leaders previously planned to just offer K-8th grade.

You can read the full letter from Runnels below:

"Dear Members of Runnels School Family,

Since the mid-1960's Runnels has been an integral part of the educational and cultural landscape of Baton Rouge. It has also been a vital ingredient in the lives of hundreds – and thousands – of the students, faculty, and staff members of Runnels. These thousands of individuals did not just be served by the school, they also in countless ways helped create, promote, and sustain the magical nature of the school.

With hearts overflowing with pride – and misery – Gladys and I must report to you that Runnels School cannot continue to serve our beloved community any longer, after the close of school year 2019-2020, as approved by The Board of Trustees.

With gratitude to all of you for joining us in this truly noble endeavor, we will attempt to help you understand the many reasons that have compelled us to this decision. The reasons are all fundamentally financial in nature.

The reason most apparent is the decade-long decline in our enrollment, a factor experienced by virtually all tuition-charging schools. In our case, our enrollment has steadily declined by 34% over the past ten years. Unlike most tuition-charging schools, Runnels has had no financial support by a parent organization, such as a church, which means that a 34% decline in enrollment implies a similar decline in the funds available to operate the school. In our 55-year history, we have learned that the solution is not to raise tuition – that inevitably results in even greater decrease in enrollment. We have also learned that modest tuition increases (3% - 4%) are usually accepted by the market, and that has been our practice.

We have also learned that economies such as discontinuing some courses and services is not the answer either. We have learned from experience that many parents are unwilling to forgo any programming that is important to their children, and all of our programming is very important to large segments of our student population. We certainly understand, but it does make it difficult to consider eliminating features to cut costs.

A more subtle financial hazard became clear to us as we attempted to study the details of the planned “Pre-K to 8th Grade School.” The already marginal enrollment in those grades contains a significant number of Monthly Contracts, requiring relatively little cash at enrollment time, with a significant fraction of the payments not due until the summer months. In practical terms, we cannot force parents to honor those contracts, leaving parents to opt out of the agreement if they cannot accept (for example) cost-saving efforts by the school. The current enrollment in the Preschool program is woefully short of being break-even, and the usual spring-time influx of enrollments has not materialized, neither at the preschool nor in the elementary and junior high grades.

Another huge problem with planning for the Pre-K to 8th Grade School is the dismal prospect of staffing it. Many current staff members in those grades have their own children enrolled in high school grades, who will not be served in the future. This is again a financial issue. It is bad enough to contemplate replacing a large percentage of our faculty next year, but our ability to hire new teachers at the salaries we can afford, without the benefit of tuition for their children in high school grades.

There is no realistic reason to believe that declines in enrollment will abate. The decline in the past decade was eerily steady, unaffected by changes in school leadership, or flood, or anything else. The underlying explanation has to be the current and increasing abundance of good, and free schools in surrounding parishes and in charter schools and magnet schools in Baton Rouge.

We have explored every strategy we could imagine to continue to be able to offer the magic of Runnels School – but have not succeeded. In financial terms, we are currently millions of dollars behind and to continue the effort will only worsen the situation.

The only asset the school has to pay all of its debts is to sell the school property for an amount within sight of the appraised value. That is not a “fire-sale” that could possibly pay off Investor Bank's mortgage but little else – not the pre-paid tuition payments, and not any other debts of the school. The good news is that there is an investor who is willing to negotiate with Investor Bank to “work out” our loan arrangement with them, to allow our current students to finish this school year with all the accolades, celebrations and joy that have always been a part of spring semesters at Runnels School.

Prepayment of tuition and fees previously paid will be subject to funds available upon completion of restructuring of school real estate. This could take up to sixty days.

Our elementary and preschool leaders and staff will provide assistance to our families in locating options for new school placements for the children. They will help in every way possible to make the transition a smooth one – providing recommendations and records, and contacting other good schools to tell them about our situation and about our wonderful students. They will be a blessing at whatever school their parents choose for them to attend, as they have been in our school family.

We thank you for loving our school and for allowing us to be a part of your children's lives for so many years. It has been our greatest joy.

Sincerely,

Gladys and Kelly Runnels"

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