Without warning

It's a sunny afternoon in May, but instead of chasing a ball or each other, a gaggle of elementary-school students leaned over a fence at the Harborside School in Little Italy chanting slogans like veteran protesters. "Save our school!" they bellowed in pre-adolescent voices, followed by individual pleas to strangers walking along Kettner Boulevard: "We're running out of money" or "Our teachers are losing their jobs" or "We don't need any more condos." They'd even painted an eight-foot-long banner with the words "Save our School."

In an event so rare it hasn't happened in California for 20 years, an independent school is going out of business.

Throughout its 10 years at Kettner and Beech Street, the school has seen the revival of Little Italy and the explosion of land prices around it. Though it enrolls only 150 students, the promise of a neighborhood school with top-notch instruction provided bait for young families looking to live and work downtown. The walls of Harborside's classrooms are covered in brightly colored children's artwork, but also by calendars, graphs and student-produced posters. Philosophically, Harborside emphasizes the most progressive principles of teaching, with investigative techniques, collaborative learning and portfolio evaluations. Groups on the playground range in age, and teachers know students at all levels of the school. The group has become so tight-knit that many of CityBeat's interviews ended in tears.

In a way, Harborside School may be the most specialized of all possible schools, since it was founded, more or less, to serve a single student: Luke Walton. Not the basketball-playing Luke Walton, son of Bill, but Luke Walton, grandson of Sam Walton, founder of Wal-Mart. Luke's mom, Christy, widow of Sam's son John, provided the seed money for the school. In an effort to maintain cultural and financial diversity, the board keeps tuition relatively low, in the $10,000-to-$12,000 range, roughly half the price of other local private schools. Any shortfalls in the annual budget were covered by a check from the Walton foundation.

All that worked fine until 2004, when Luke graduated from Harborside and he, his mom and her bank account moved to Jackson Hole, Wyo. That left the school's six board members scrambling to create a fund-raising network where none had existed. Teachers and staff asked CityBeat to publish some of their remarks without attribution for fear it would hurt their job prospects. "They had no infrastructure set up for when this happens," one school employee said.

In most private schools, it's the board of directors that does the bulk of the fund-raising. Harborside's board included three parents and three prominent developers, including board president Reese Jarrett. By 2004, there was still a real-estate boom, and developers in the area saw the added value in keeping a school nearby as a selling point and a source for philanthropy. That worked until this year.

"I'm not really sure what happened," Jarrett said. "Obviously some of our money came from the development community, and the decline in real estate may have had an impact."

The board didn't tell anyone except principal Steve Edele about the dire money problems. They scrambled for much of the year to find cash, even engineering a last-ditch effort to get taken over by, allegedly, National University. (University officials did not return CityBeat's calls for confirmation).

Teachers had suspected problems for weeks. Bathroom cleanups had become irregular, as had trash pickup. No exterminator was called to solve a rat infestation so severe that a CityBeat reporter could see feces along the edge of the building. One preschool parent complained to CityBeat that her daughter had allergy symptoms only when she was at the school.

The news of Harborside's imminent demise broke on Thursday, May 24, when third-grade teacher Erika Witham heard rumors that the school had run out of money. She hurried across the asphalt to confront Edele. He confirmed that the school was in trouble, and he called a meeting that morning in the school's kitchen. The crisis at that moment was so acute, he said, that the teachers' last paycheck could very well have been the one they received on May 31. The school hadn't paid its rent since April.

Recognizing they needed to meet and get organized, the teachers called parents for an early child pickup. Administrators watched the students as parents arrived to retrieve their children, while teachers tried to figure out what to do. What would they do for work? Would teachers on a 12-month pay cycle receive the rest of their money? Perhaps most ominously, what of the rumors that salary money intended for health insurance and retirement plans had been diverted into the general fund?

A hastily called school board meeting convened on Friday laid out the predicament: The school was totally out of cash. Board president Jarrett informed parents and teachers that $300,000 was needed to pay teachers and staff the remainder of their salaries, eviction proceedings had already begun and, effective June 15, there would no longer be a Harborside School. Parents vented their outrage over the late timing of the announcement. Many private schools do their student placements by Feb. 1, and hiring for teachers is typically completed in March or April.

"By informing all stakeholders, in advance, needless panic and stress could have been avoided," said one parent, Joel Saltzman. "They failed to seek the advice of parents, many of whom are accomplished professionals-including lawyers, business people, entrepreneurs and a CPA who specializes in bankruptcy."

Saltzman said a rise in tuition of $1,000 to $2,000 would have kept the school afloat and maintained the lowest private-school prices in town. Another parent, Christy Rockwell, said she'd be happy to pay higher tuition, and she would have organized fund-raising drives to create scholarships.

The school board invited parents to pledge a donation to keep the school running through the end of the year by passing around a yellow legal pad and asking for signatures. An anonymous benefactor stepped forward after the meeting to put up $100,000 to keep the school open at least through its final weeks. Teachers have stayed on the job, though few believe they will see the remainder of their pay. Distrust of the administration has grown to a point that some parents are writing checks directly to teachers, Witham said. One conspiracy theory suggests the developers on the board told their friends to stop giving so the school could be knocked down for a larger, more profitable development.

"Don't be surprised if the next thing you see here is a big condo with one of the board members names on it," a parent said.

Jarrett dismissed the rumor as "speculation."

In the meantime, teachers have begun clearing their classrooms, and students have been taking their work home, unfinished.