NC New Schools’ sudden fold raises questions

Tony Habit apparently was a charismatic figure to North Carolina educators, who embraced the ideas of his NC New Schools Project, which began in 2003 with a grant from the prestigious Bill and Melinda Gates Foundation. The Gates group has long been interested in new approaches to education, and the New Schools model seemed a good one.

But now, the organization has closed in the wake of a financial collapse. And questions about how that happened must be answered.

The original idea was to help create smaller high schools and to support early-college high schools, which aim to help students who’ll be the first in their families to attend college to graduate from high schools with substantial college credit or even an associate’s degree. New Schools also worked on regional specialty high schools with a certain focus and schools called STEM schools, which stands for science, technology, engineering and mathematics.

Habit, a North Carolina native, had worked in schools as a counselor for special needs students, and he also worked at Wake Education Partnership.

New Schools started great guns, apparently, with millions of dollars in grants from several sources, including foundations connected to Duke Energy and GlaxoSmithKline. The organization got lots of praise. In Duplin County in Eastern North Carolina, officials were aiming to put the entire school system on an early college model.

But The News & Observer’s Joseph Neff reports that the organization shut down in April and filed for bankruptcy. Curiously, emails obtained by Neff show that Habit knew in June of last year that a deficit could be coming, possibly of $2.1 million in an organization with a $10.5 million budget. Habit says he got a clear picture of the financial problem in January. The organization’s chairman, Jeff Corbett of Duke Energy, says he didn’t see any records about a deficit until after New Schools closed.

More curious, Habit moved the organization into new, expensive office space in Research Triangle Park while it continued to pay rent on an office near Crabtree Valley Mall. And the new office contained $600,000 worth of new furniture, computers and other equipment.

The group’s bankruptcy filing shows it owes nearly $1 million to school districts and schools all over North Carolina that had contracted for services. Most of those districts are rural ones and poor ones – they were the ones most likely to seek new approaches to help students.

The suddenness of the collapse demands some explanations, from Habit and from board members who apparently didn’t know that problems existed.

This story was originally published June 14, 2016 at 8:30 PM with the headline "NC New Schools’ sudden fold raises questions."