DAVID — There was a time last spring when it looked as if The David School might not survive.
After nearly four decades of helping students who'd had problems in public schools, the private school in a hollow outside the old Floyd County coal town of David was broke.
The Kentucky attorney general's office was investigating concerns of mismanagement by Daniel J. Greene, who founded the non-traditional school in the early 1970s and still directed it.
Paychecks were late, and the nearby St. Vincent Mission was donating food so the school could feed its students, most of them from low-income families. One day in May, a worker from the power company showed up to cut off the electricity.
"You just look at that yawning pit and don't know how you're going to make it," said the principal, Diantha Daniels.
Somehow, the school survived.
A judge removed Greene from control and appointed a new board, whose members started sorting out the financial mess and trying to raise money for the school, which depends on donations.
The David School started classes on time in August and finished the fall semester with 20 students. That was down from 30 the year before, but four new students plan to begin attending this month, Daniels said.
The board is trying to recoup more than $33,000 in tax liabilities from Greene, and it wants to mount a fundraising drive early this year.
"Things are starting to turn around," Daniels said. "We're going to make it."
Greene, a Brooklyn native, has said in earlier interviews that he was struck by the poverty in Appalachia during a visit in the late 1960s and felt a calling to help.
David was once a thriving coal town with a theater, a public pool and other amenities, but after the Appalachian coal economy spiraled down through the 1950s and 60s, the company that built the town pulled out.
In 1973, Greene helped found The David School in a building that had been the coal-company commissary. The school's main mission throughout its history has been helping students who'd had problems in public schools, including many who had dropped out or were at risk to quit.
Students have come to the school because they had been bullied or didn't fit in at a large school, or had gotten behind and needed more attention to catch up than a larger school could offer.
Because of The David School's size, teachers can work closely with students to figure out their learning needs and styles, said Alexandra Werner Winslow, who teaches science.
"It's so thrilling to get to know where kids are and where they need to be, and having the resources to get them there," said Winslow, a 2012 Columbia University graduate who came to the school through the Teach for America program.
Daniels said working at the school is essentially mission work. Teachers receive $300 a month and free housing.
Math teacher Jimmy Roach taught at a larger public school for a year before coming to The David School this school year.
The education is as rigorous as elsewhere, but there is "a more spiritual side" to the experience, and there's a much better opportunity to connect with students, Roach said.
"The pay might not be as good, but everything else is better," he said.
The school has a Christian underpinning, and staff members work with students on life skills as well as academics. Students help with cooking and cleaning, and they do service work in the community.
Jason Rife, 17, a senior, came to The David School after being bullied at a school in Magoffin County.
Rife said he wanted more direct attention from teachers.
"This place has helped me a lot," said Rife, a committed Christian who plays gospel and country music. "I can be myself and not really fear I'm going to be judged."
Rife will be the first in his family to finish high school and said he is determined to go to college.
Daniels said the school has graduated about 500 students since the mid-1970s, many of whom wouldn't have finished high school elsewhere.
She frequently hears from people who tell her how the school helped them, Daniels said.
"They tell me that their life was turned around," she said.
Even people who have fallen out with the charismatic Greene say he deserves great credit for starting the school, for raising money to keep it going for years, and for pushing construction of a handsome log-and-stone building for the school to move to in the mid-1990s.
Greene, 62, was honored nationally for his work, and the school was cited as a model for alternative education and named one of former President George H.W. Bush's "thousand points of light," a program that recognized community service.
But critics say that at some point, Greene came to regard the school as his "personal piggybank," as Ned Pillersdorf, a Prestonsburg lawyer and new vice-chairman of its board, put it.
In 2005, for instance, Greene arranged a deal to sell his house to the school for $157,000 at a time when it was valued for tax purposes at $78,000, according to deeds, tax records and court documents.
Greene and an attorney listed for him in court documents did not respond to requests for comment, but Greene told the Herald-Leader in May that the deal was good for the school.
However, Attorney General Jack Conway's office argued that it was an example of self-dealing that hurt the school.
Greene and his wife, Ann, who have five children, moved to Texas in 2005, but he kept control of the school's finances and continued as its fundraiser.
He made $57,067 in the 2007-08 and 2008-09 fiscal years, but cash contributions to the school dwindled from almost $500,000 in the 2004-05 fiscal year to $138,897 in 2008-09, tax returns show.
Greene also received $104,647 in deferred compensation, according to the school's tax return covering July 2006 to June 2007 — a year in which expenses outstripped revenue by more than $300,000.
Greene told the Herald-Leader last May that the school's governing board approved measures to help him financially after he spent most of his working life running the school for little pay.
The board had approved more retirement compensation for him, but he didn't take it because money was tight, Greene said.
Greene said he had never misused school money.
However, Floyd Circuit Judge Johnny Ray Harris in May approved a request by Conway's office to appoint a new board for the school, which quickly fired Greene.
Since then, the board has found additional examples of "intentional and reckless mismanagement" by Greene that continue to threaten the school's stability, Pillersdorf said in a recent court document.
For instance, Greene withheld federal taxes from employees' pay but did not remit the money to the Internal Revenue Service, and he did not file the last three annual tax returns for the non-profit school, resulting in fines, according to a sworn statement from Pillersdorf and interviews with school officials.
The school faces a federal tax debt of $33,919.
During the time Greene was not making the mandatory payments, he used school funds to pay $27,000 a year for health insurance for him and his family, according to Pillersdorf's affidavit.
Greene also charged more than $2,300 to a school credit card, mostly for items that did not appear to be related to the school, Pillersdorf said.
And on the eve of a court hearing to consider appointing a new board that would fire Greene, he made a deal to sell The David School to a nearby Catholic school that is losing its lease, without telling the staff or students, Pillersdorf said.
"Words cannot express how outrageous it was," Pillersdorf said.
The deal did not go through because Greene did not have the authority to make the sale, Pillersdorf said.
At the school's request, Harris, the judge, ordered Greeneon Dec. 21 to assume responsibility for the credit card charges. Harris also gave Greene until Jan. 10 to explain why he shouldn't have to reimburse the school $33,919 for its tax liability.
Finally, he ordered Greene to sign a deed so the school can sell the house it bought from him in 2005. The property was covered in two deeds, and Greene signed only one, according to a court document.
Dennis Dorton, a retired banker who chairs the school's new board, said the school has a buyer willing to pay $118,000 for the house, which would pay down debt and give the school some financial cushion.
Money was tight through the summer and fall, but the school got some timely lifelines from longstanding and new donors.
For example, the Kentucky Annual Conference of the United Methodist Church gave $7,500 for food service, Dorton said.
"We have been able to keep our nose above water, barely," Dorton said.
Looking ahead, though, the school needs more money.
The van used to transport students has 200,000 miles on it. The heating system went out for three weeks during a cold snap, requiring the school to use space heaters. Repairing a piece of kitchen equipment could cost thousands, Daniels said.
Board members and school staffers are working to rebuild relationships with donors and creditors and to reach out to the community, hosting a community Thanksgiving dinner and serving as a polling place. They say they are determined to keep the school going.
Tom Bormes, a retired Air Force officer who taught shop at the school for 22 years before retiring, returned as a volunteer in August because he didn't want to see the school go under.
"I think that the mission is as relevant as it's ever been," Daniels said. "It's just about planting seeds and making little differences."
Bill Estep: (606) 678-4655. Twitter: @billestep1