This highly-rated Central KY school is facing a big money problem after state notice.

Model Laboratory School in Richmond is facing a new and significant challenge to its financial stability, Model Superintendent John Williamson told parents in a letter Tuesday night.

The Kentucky Department of Education has determined that Model, the state’s only remaining K-12 University laboratory school, as of 2020-2021 is ineligible to receive state education money directly from Madison County Schools, which is one of its three sources of funding, the letter said.

A parent complaint submitted to the Kentucky Department of Education regarding special education services prompted a state review of Model’s current budgetary structure, both Williamson and Kentucky Education Commissioner Wayne Lewis confirmed Wednesday. The budget review led to the determination that Model should not be getting money from the school district.

“We understand how this news could cause great concern and speculation for our students, parents, faculty, staff and the larger community,” Williamson said in the letter to parents.

Following the review by the state department of education, Lewis notified Model, EKU and Madison County School administrators that the state’s new interpretation of the current Model funding structure would render Model ineligible to receive state education money directly from Madison County, Williamson said.

Williamson explained that for more than 30 years, Model Laboratory School, with an annual budget of $7.4 million, has operated as a public school partnership between Madison County Schools and Eastern Kentucky University.

The financial resources come from three primary sources, including about $2.3 million annually in funding allocated from Madison County Schools based on student attendance calculations.

Model also gets about $2.2 million in annual funding from EKU because EKU students get hands-on learning opportunities at Model, a K-12 school with more than 700 students.

Additionally, model students pay tuition and fees -- about $3,800 annually for a total of $2.8 million to cover the remaining gap of per pupil costs for instruction, facilities, programming and administrative support.

“I was kind of shocked to get this from the department of ed because we had this agreement that’s been longstanding...with the Madison County Schools that the department at one point had approved,” Williamson told the Herald-Leader Wednesday, “but no matter, we were already trying to find legislative fixes.”

Williamson said that the state department’s position is that Model should eliminate tuition and operate solely on limited public funds or continue charging tuition and operate without any additional public school funding.

“Neither option is financially feasible,” Williamson said in his letter to parents. “They would have a significant impact on school operations and enrollment. Without the state support and funding partnership through Madison County Schools, Model would be forced to consider either a crippling decrease in funding to support our existing enrollment or significant increase in tuition costs.”

He said the clearest path, at this time, is to ask the 2020 General Assembly for a permanent funding solution and that state Rep. Deanna Frazier, R- Richmond, has pledged to help by sponsoring legislation.

In a September 20 letter to Williamson and Madison County Superintendent David Gilliam, Lewis said the Kentucky Supreme Court had ruled that a “common school”, one supported by public taxation, must be free to students who attend.

He said that while his department does not doubt that “there may be excellent educational programs offered at Model,” the fact remains that not all students living in Madison County’s district have the privilege of attending model. Instead, he said, only students who pay tuition can attend

Lewis said one option is that the Madison school district and Model, if they want to continue an arrangement, should eliminate tuition by March 2020.

Williamson said a forum to discuss the issue with families and others has been called for 6:45 p.m. Thursday, in the Model Laboratory School Auditorium in Richmond. He said there was no intent to close the school.

“As the education funding climate has changed over the years, we have weathered several challenges to the financial stability of Model yet stayed the course,” Williamson told parents. Despite the current “challenge to our budgetary structure, we want to assure you that our commitment to the school and students we know and love is unwavering.”

Lewis, meanwhile, said that he has been “a fan of the work that Model Lab has done over the years” and wants to resolve the issues and ensure both the continued success of Model and the students in the Madison County school district. EKU Vice President David McFaddin and Williamson met Tuesday with Lewis, who “promised the education department’s collaboration in the development of a legislative solution,” Williamson said.

The financial fix is not the only request that Model officials are seeking from the General Assembly. This summer, Williamson and Eastern officials said they would ask lawmakers to make Model the state’s lab school, which would allow it to showcase exemplary education practices and become a center for teacher continuing education.

Meanwhile, Model is appealing the Kentucky Department of Education’s finding on the parent complaint about the federal Individuals with Disabilities Act, and neither Model officials or Lewis would provide specifics Wednesday. Lewis said he would probably rule on that appeal in a few weeks.