An abrupt closure announced at Scottsdale United Methodist Cooperative Preschool has left parents reeling and exposed deeper financial issues at one of Scottsdale’s oldest churches.
“At the rate they are spending, the church will close in less than two years if they don’t change something,” Scottsdale United Methodist Church Pastor Ann Lyter told parents last week.
They had found out days earlier that the church’s 55-year-old preschool would be closing in a week, when the school year ends.
Many parents had already signed their children up for the next school year and the preschool’s summer program.
The closing of the 55-year old preschool is a cost-cutting maneuver by the historic Scottsdale church as it apparently confronts significant financial issues.
The church is not closing its daycare program, though that could happen at a later date, Lyter said.
The preschool closure could leave parents scrambling to find new accommodations for their children over the summer and during the next school year.
Those parents are not giving up, though.
They presented a proposal to church leadership late last week aimed at keeping it at the church for at least one year.
So, why can’t the church keep open a preschool that has been a part of the community since 1965?
“We need to increase our income and we need to decrease our expenses and we had to look at where we can do that,” Lyter said. “And there are limited places where a church can make those changes.
One of those places, according to Lyter, is by reducing support services like the preschool.
According to Lyter, the church has long subsidized the preschool, which was originally intended to be an outreach arm.
Lyter said the daycare’s rent is reduced by 25 percent and the preschool’s rent is “is reduced even slightly more than that, so it is just over 50 percent of what we show our triple-net rent might be.”
Lyter said the church will now explore finding tenants for that space, such as nonprofits, that it won’t subsidize.
Triple-net rent refers to an agreement in which the lessee agrees to pay real estate taxes, building insurance and maintenance.
Lyter said the church pays for those things as it relates to the preschool and daycare, although the latter has contributed to maintenance costs in the past.
Jordan Picasso, the preschool’s interim director, said parents at the preschool — which is a cooperative — also perform some maintenance duties.
Picasso said she was “blindsided” by the abrupt closure, noting the preschool was meeting its financial and operational goals set by the church near the end of last year.
Picasso taught at the preschool before taking over the program in October 2018 following the allegations of financial impropriety by a former preschool director.
However, Lyter said the closure had more to do with the church’s overall financial position than the preschool specifically.
Lyter said the church leadership only recently made the decision to close the school after learning the results of a recent stewardship fundraising campaign.
The campaign relies on winter visitors, so the results of the campaign were not known until recently.
While the campaign raised some money, it was not enough to save the preschool.
“It gave us some but not enough — not enough for the amount the church is scheduled to run in the red this year or that it ran in the red last year or many years before,” Lyter said.
That highlights the precarious situation the church, one of three oldest churches in Scottsdale, finds itself in.
Scottsdale United Methodist Church can trace its formation back to 1924.
The church’s current facilities at Miller and Indian School roads were originally built in 1956 with a new sanctuary and ramada built in 1964.
The preschool goes back almost as far, dating back to 1965.
Picasso said that in the early days, it catered to families of children with disabilities who were not welcome at public schools.
Lyter sympathized with the parents and children affected by the closure.
“There are lots of issues with this and part of it is timing, and I do not disagree with you at all that the timing sucks,” Lyter told parents last week.
Lyter offered one potential solution from church leadership that would take a gargantuan — and speedy — fundraising effort by parents.
Lyter said the church would be willing to keep the preschool open for one year if the parents can come up with $30,000 to cover the church’s portion of expenses.
The parents would have to come up with that $30,000 by Monday, May 20, and the school would still close following the next school year, Lyter said.
The parents were not discouraged by the challenge but wanted more time to come up with the money or asked if they could pay it on a monthly basis.
The parents presented a counteroffer to church leadership late last week that would keep the preschool open for the next year and give the community time to figure out its next steps.
Those steps would likely include incorporating the preschool and paying rent to the church or another facility in the area.
Picasso, the preschool director, said that path would significantly increase the preschool’s expenses but that it was a viable option.
The plan does not include the $30,000 lump sum payment but will include higher monthly payments for the next year, parent Jennifer Hibbard said.
“Our goal is to make this make more financial sense for the church,” Hibbard said.
“We just want the opportunity to at a minimum operate for additional year,” she said. “Then we become our own entity, and they can just rent to us, and if they will not have us then we can rent somewhere else.”
Hibbard said she believed the preschool could turn a profit on its own, based on an analysis of its financial records by a parent who works as a financial analyst.
The two dozen parents who showed up to the meeting with Lyter did not seem discouraged, despite the long odds.
And the preschool was not their only concern.
“You have great families and really great community out there that’s really good about banding together to keep Scottsdale Scottsdale…we need to find a way to save our preschool, and not just for one year, and to save our church,” one mother said.
Financial issues that arose last year have complicated the situation at the preschool.
Allegations of financial impropriety against a former preschool director resulted in the preschool relying heavily on the church to pay its bills last year.
According to a report filed with Scottsdale Police Department, a former director of the preschool allegedly stole $6,370 from the preschool program by taking in cash tuition payments from parents and failing to deposit them in the preschool’s bank account.
The Progress is not naming that former director because no charges have been filed.
According to Picasso, the preschool is no longer dealing with those financial issues.
Leadership also requested that the preschool and daycare consider merging operations to save money.
Picasso said, ultimately, that plan was not feasible.
While the preschool situation is worked out, it is unclear what the future holds for the church itself.
Lyter said the church has ran a budget deficit “for a very long time” and has taken loans against a foundation account that was created preserve the church in perpetuity.
One question brought up by the preschool parents was whether or not the church — located in a prominent location in downtown Scottsdale — could be sold to developers.
Lyter said at least one developer approached the church about buying the land in the last 18 months.
That proposal would have resulted in the closure of the preschool, with the developer taking over the majority of the property and leaving one building for the church.
It is unclear whether or not the church seriously entertained that offer.