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— Tarr believes the delay, at least in part, caused him to fall short of the enrollment of 100 his charter called for -- he started the 2002-2003 school year with 68 -- which damaged Sun Valley financially. Public schools are funded primarily by state money based on average daily attendance. "It comes out to about $5400 per child."

Initial funding for Sun Valley came from a $200,000 education loan from the state. "We wanted a $250,000 loan that charter schools can get," Tarr says, "but they wrote back and said, 'We will give you $200,000 because you don't need that much money, and you have got to pay back second and third year.' But when we realized we didn't have as many students as we had originally planned, we decided we would ask for the additional $50,000. We're still waiting on that and, frankly, we need the money."

The first $90,000 of the loan went into remodeling the building from a restaurant into a school. Since then, Tarr has operated Sun Valley on the remaining $110,000, some small donations, and average-daily-attendance money from the state, which, Tarr says, "wasn't as high as we had hoped. We had punker-type kids who we later heard were encouraged to come here. But they didn't want to be here; their parents wanted them to be here. We have a dress code that requires students to wear decent clothing, not have punker haircuts or piercings, and here are these kids that have all of that stuff. So we had a whole bunch of them pull out, and we were down from 67 to 58 or 59 within a few weeks. And then we had a few more kids that simply just were not working; they weren't turning anything in."

The school's final enrollment was 35, though the average daily attendance for the year was just below 50. "We've had to short a lot of things this year because we didn't have the money," Tarr explains.

One of the things Tarr shorted was his own salary of $4700 per month, which he deferred for the last three months of the school year. Things might not have come to that had the school received a $400,000 grant for which Tarr tried to apply. "Last year," he explains, "there was an opportunity for an implementation grant. It is federal money for charter schools only, but it is administered by the state. It is a $400,000 two-year grant. You get $200,000 the first year, $200,000 the second year. It is not to be applied to salaries or for the building. But you can use it for buying computers, for setting up your network, buying books, software, for the development of the curriculum, for laboratories -- all of those one-time expenses to get your school up and running. To get this grant, we had to turn in our stuff by August 16, 2002."

The grant application required a full explanation of the curriculum and the signature of Pete Schiff. He never signed it. Says Tarr, "That's $200,000 we would have had in our budget this year that we don't have. And now we're hurting."

Schiff responds, "August 6 of last year, I received a letter from Dave Tarr and a signature page for the grant. That was the first I knew of the grant. But I didn't get the grant itself. All I got was a letter saying, 'Pete, would you please sign this signature page and get it back to me.' I had no idea what the hell I was signing -- zip, zero, none. I had no idea whether there would be any possibility that the Ramona Unified School District would have to pay this back. So I pulled it up on the Internet, and the grant says that if you are going to apply, you have to submit a letter of intent. And you should share this letter of intent with the cosigner, the local education authority that has to sign off with you -- in this case, Ramona Unified. And that was due about July 1. I never saw it. And in the body of the grant agreement itself, it says, 'Share the grant that you are submitting with the co-signer 30 days before it is due, so that if there are any questions on anything, you can work it out.' That is right in the document itself. I called the state and they told me, 'You have oversight responsibilities. So if you are signing something that turns out to be grossly inappropriate, you may have the responsibility to pay that back.' And I thought, 'Okay, we are not going to sign something that we haven't seen.' I went down to Sun Valley Charter School and said, 'Dave, where is the grant?' He said, 'Well, I haven't written it yet, I am still working on it,' so I said, 'Then I can't sign this.' And then he said, 'You'll have the grant Saturday,' and then it was 'You'll have the grant Monday,' and then, 'You'll have the grant Tuesday.' In the meantime, we are trying to get ready to open up this 50-million-dollar business called the Ramona Unified School District. We have 1000 employees that we are dealing with. We had principals coming back. We had in-services that we were planning.

"On Tuesday before the Friday the grant was due," Schiff continues, "I happened to be working late, and I answered the door and got the grant from Mr. Tarr at 5:30 in the afternoon and see it for the first time. To do due diligence on it, I would have had to read it, and then I would have had to stop my assistant superintendent of human resources and ask him to read the grant, and ask the assistant superintendent of business to stop what he was doing, as well as our assistant superintendent of instruction. We would have all had to stop, read the grant, do our due diligence, and see if it was appropriate to sign, all on Wednesday, when we were presenting to our whole management team at a management retreat."

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