August 16, 2005 in Idaho

Future brightens for closed schools

By The Spokesman-Review
File/ photo

Sixteen-year-old Jason Stock was one of the last students to leave Boulder Creek Academy when it closed in March. The school has been sold in a bankruptcy auction.
(Full-size photo)

Former employees of the CEDU behavioral schools in North Idaho are hopeful that the new owner will reopen the schools and hire back many of the employees laid off in March.

On March 25, The Brown Schools – which was the parent company of the four CEDU programs in North Idaho – announced it was filing for Chapter 7 bankruptcy, its schools were closing immediately and its nearly 300 Idaho employees were out of work.

The announcement was a huge blow to Bonner and Boundary counties, where many of the schools’ employees lived and worked.

On Friday, Universal Health Services Inc., which operates more than 80 hospitals and treatment centers nationwide, purchased the Idaho schools for $10 million in a U.S. Bankruptcy Court auction in Delaware.

George Miller, the bankruptcy trustee, said Universal Health Services intends to reopen the schools. Universal’s corporate officials couldn’t be reached for comment Monday.

After the abrupt announcement in March, students at the three CEDU programs in Boundary County were sent home before Miller was able to secure a minimal amount of operations money to keep a skeleton staff at the schools. On Monday, many former staff members were calling the schools to find out about being hired back.

“I’m genuinely happy there’s a group that has bought it that will be good stewards,” said Paul Johnson, director of Boulder Creek Academy. “We haven’t had the investment we’ve needed for the last few years.”

Johnson said he’s not had any candid conversations yet with the new owners about their plans, but he was optimistic that the schools would reopen: “We don’t have a time frame yet. Some of our locations need a lot of capital improvements. They are very aware of that, and that may slow down the opening.”

The schools in North Idaho include Boulder Creek Academy and Northwest Academy near Bonners Ferry, which were residential emotional growth and academic programs for troubled teens. The Ascent wilderness program near Naples served as a kind of boot camp prior to being admitted to the residential programs. CEDU also ran Milestones, a transition program in Coeur d’Alene for students 18 and older.

Milestones is still open with 18 to 20 students, Miller said, and was not included in Friday’s sale because of bankruptcy-related legal questions. Universal is interested in purchasing that program, too, he said.

Universal’s hospitals and programs are primarily run on a medical model, Johnson said. The closest program it has to the CEDU schools is the Provo Canyon School, a residential facility that takes kids who don’t succeed at programs such as Boulder Creek or Northwest academies.

“It’s a medical model as opposed to emotional growth,” Johnson said. “This is a little bit of a new industry for them. They wanted to purchase (the North Idaho schools) before the bankruptcy.”

Universal appears to be in good financial shape. Its Web site boasts of more than 10 consecutive years of increased earnings.

The CEDU schools in North Idaho and California were purchased by The Brown Schools in 1998 for $78 million. Even though most of the schools were profitable, The Brown Schools was unable to pay its debt service, or cover all its legal bills. Neither the investment firm that purchased The Brown Schools – McCown, Deleeuw & Co. – nor its primary lender would bail out the schools when they needed another infusion of cash in March.

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