STEP Academy leaders resign as charter school faces financial collapse

The embattled leader of STEP Academy, one of Minnesota’s largest charter schools, agreed to resign, just a few days after he shifted the blame for the school’s financial crisis to the nonprofit that oversees the school for the state.

Staff members were told Monday that Mustafa Ibrahim, who has served as the top administrator of STEP since 2012, will resign, chief operations officer Paul Scanlon said. Two STEP board members, including chairman Abdulrazzaq Mursal, one of Ibrahim’s strongest supporters, also stepped down.

It’s not clear if the leadership changes will help keep the doors open at STEP’s campuses in St. Paul and Burnsville, which are bleeding cash and losing teachers so rapidly that some employees are worried about their futures.

If STEP shuts down, it would be the largest charter school failure in Minnesota history. So far this year, nine of the 181 charters schools operating in the state at the beginning of 2024 have closed, the most since the first charter school failure in 1996, state records show.

The controversy over STEP’s management has led to divisions among parents and staff. On Monday night, parents packed the school board’s annual meeting with those who appeared to support STEP leaders holding up a range of posters with sayings like ”Parents trust STEP leadership” and ”IQS created CHAOS in our school.” Some parents and employees have defended the school and its academic program which has boasted graduation rates reaching 100% in recent years. However, another segment of teachers have strongly criticized administrators.

At STEP, up to nine teachers have told co-workers that they will soon be leaving the school, and other departures may be in the works.

”I am unsure if this leadership change will convince them to stay,” said Katie Royseth, who has worked as an educational assistant at STEP for four years. “The main concern now is whether we can keep our current staff members. If we cannot, it would be near impossible to continue. I find it would also be impossible to hire and replace that many teachers and staff in the middle of the school year.”

Rahima Ahmed, a teacher at STEP who resigned from the board last week, was more optimistic. Ahmed said she was resigning because the weight of her responsibilities has left her feeling “burned out.”

“I am deeply confident that STEP Academy will continue to grow and thrive in the years to come,” Ahmed said in a written response to questions. “While I remain dedicated to the school’s success, I believe it’s time to step back and allow fresh voices and new perspectives to help shape the path forward.”

STEP Academy, which enrolls 783 students at its campuses in St. Paul and Burnsville, has been repeatedly cited for contract violations by Innovative Quality Schools (IQS), the nonprofit that oversees the school as an authorizer for the Minnesota Department of Education.

In an Oct. 4 letter, IQS warned STEP leaders that the school’s finances are in “an incredibly fragile state.” To survive, IQS said in the letter, STEP must take immediate and significant action, such as closing one of its two campuses.

A week later, after IQS accused school leaders of failing to make necessary adjustments, the nonprofit threatened to terminate STEP’s contract in a follow-up letter. Such actions have typically led to the closure of charter schools because they are not allowed to operate without an authorizer.

In a five-page statement to the Minnesota Star Tribune, Ibrahim blamed STEP’s financial problems on IQS. He said the nonprofit has abused its power by creating “unnecessary barriers and distractions” that have destabilized the school. Ibrahim accused IQS of attempting to “wrest control” of the school and replace its Black leaders with “hand-picked white professionals.”

“The financial challenges we face are directly linked to IQS’s incessant meddling in our decision-making processes and erosion of our autonomy,” Ibrahim said in the statement. “Their deliberate and discriminatory practices have consumed our time and resources, diverting our focus from core educational priorities.”

IQS first cited STEP’s board for weak oversight in 2019, saying it failed to respond when Ibrahim repeatedly engaged in “improper management practices.” Despite ongoing concerns, IQS has continued to renew the school’s charter for the past five years.

The situation didn’t reach crisis levels, however, until the costs of the school’s 2022 expansion into Burnsville wiped out STEP’s financial reserves. Its fund balance, the most critical indicator of a charter school’s financial health, fell from $2.7 million in 2022 to $54,461 in 2023, state records show. This year, the school is operating at a deficit of nearly $800,000.

In response to Ibrahim’s allegations, IQS said in a statement that its repeated interventions were aimed at ensuring the school operates within state guidelines and lives up to the promises made in its contract with the nonprofit.

“It is unfortunate that Dr. Ibrahim has made unfounded claims of racial bias,” IQS Board Chair Steve Kelley said in a statement. “He is wrong. IQS and its leadership team have acted professionally and impartially.”