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After an IRS audit revealed a nonpayment of federal taxes of more than $100,000, Leupp Schools, Inc. leaders voted to eliminate 21 staff positions Wednesday afternoon, officials said.

The school was closed Wednesday, according to the school website.

Unaffected is the Flagstaff Unified School District-run Leupp School, which is not part of the Navajo Nation school system.

“As a precautionary measure for the safety of students and staff, the Leupp School Administration has declared a non-school day Thursday, February 18, 2016,” a notice on the school website said. “A report of this action will be provided as soon as all information has been compiled. We assure you while there is no current threat to the health and safety of students and staff, this action is being taken as a precautionary measure.”

In a press release, Tommy Lewis, the Superintendent of Schools in the Department of Dine Education, said he was worried about the school’s future.

Lewis said he became aware of the school’s financial problems in August of 2015.

“We will continue to monitor the school to make sure student safety and learning is not interrupted,” Lewis said in a press release.

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In a statement, Lewis said the reduction in force would be the only way the school could get through the year without running out of money.

Department spokesman Albert Deschine said IRS audits from August and September 2014 revealed the school failed to pay $108,775 in federal taxes.

In the press release, Deschine said Lewis and the Office of Accountability and Compliance of the Department of Dine Education produced a reorganization plan in 2015 in response to parent concerns about mismanagement of money.

“We assisted in outlining a plan on how the school could declare a reorganization and possibly a reduction in force so the school would have funds to the end of the school year,” Lewis said in a statement. “The projection at the time was that if a reorganization was not declared by the board right away, the school could possibly run out of money by March 2016.”

Darrick Franklin, a senior education specialist in the Department of Dine Education, said the layoff will affect both classified and certified staff, including some teachers. He said 51 employees will remain employed at the school.

The school enrolls 147 students in kindergarten through high school, Deschine said.

Deschine said it was unclear if there would be criminal liability for the unpaid taxes.

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The reporter can be reached at cvanek@azdailysun.com or 556-2249.

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City Government and Development Reporter

Corina Vanek covers city government, city growth and development for the Arizona Daily Sun.

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