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Highlands Community and Technical Schools, a Sacramento-area charter school serving about 2,000 adults, filed for bankruptcy after negotiations over disputed repayment demands broke down. The school remains open while a court-supervised case proceeds; a state demand of $243 million and the school’s effort to establish a new charter in Sutter County remain unresolved.
Highlands Community and Technical Schools, a Sacramento-area charter school serving about 2,000 adults, filed for bankruptcy after saying negotiations over repayment of disputed financial claims had broken down. The school said it remains open and is seeking court-supervised reorganization as it contests demands that include a $243 million claim from the California Department of Education.
The school filed in the U.S. District Court for the Eastern District of California on Sunday, according to reporting by CalMatters republished by The 74. A hearing was set for Thursday. The filing lists between 1,000 and 5,000 creditors, including the state Department of Education and Twin Rivers Unified School District, which holds Highlands’ current charter. Twin Rivers says it is owed $2.4 million, the report said.
Highlands disputes the charges. Executive Director Jonathan Raymond said in a written statement that bankruptcy would allow the school to pursue an orderly process while continuing to serve students. The Department of Education did not comment to CalMatters, and Twin Rivers had not responded by the report’s deadline.
The school serves adult learners at six campuses in the Sacramento area, offering high school diploma programs, English classes and job-skills training. Many students are immigrants. The report said Highlands remains open while the bankruptcy case moves forward; it did not describe any immediate campus closures or changes to classes.
Bankruptcy Puts School Finances Before Court
The filing brings a major dispute over public funds into federal bankruptcy court, where the school can seek to reorganize while addressing creditor claims. The reported amounts—$243 million sought by the state and $2.4 million claimed by Twin Rivers—are significant against the backdrop of a school serving thousands of adult learners. The claims are contested, and the filing does not establish that the alleged misuse occurred.
For students, the immediate reported status is that Highlands remains open. The case could nevertheless affect the institution’s finances and future operations as proceedings continue. The school’s ability to keep providing classes, and the eventual resolution of the claims, are not yet known.
The situation also has consequences for public agencies and taxpayers. The state auditor’s allegations concerned attendance reporting and spending, while the bankruptcy filing identifies public bodies among the school’s creditors. The court process will address the school’s financial position, but it does not by itself settle the separate disputes over the allegations or the school’s charter plans.
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Audit Allegations Preceded Filing
The dispute follows a 2025 California State Auditor report that accused Highlands’ leadership of misstating attendance, in effect receiving state funding for students who did not exist. The auditor also alleged that the school hired unqualified teachers and engaged in nepotism in hiring and contracting. These are allegations reported in the audit, not findings established by the bankruptcy filing.
The audit cited expenses it described as questionable, including $1.2 million at the Grand Hyatt Hotel in San Diego and payments for board trips to Paris and Hawaii. Raymond said Highlands had addressed 18 of the auditor’s 19 recommendations and appealed the remaining recommendation, which concerns alleged misuse of funds. An administrative law judge was expected to issue a ruling soon, according to the report.
Raymond also said Highlands had replaced all senior staff since the audit and was replacing teachers without required qualifications with credentialed teachers or those working toward credentials. Founded in 2014, the school provides adult education at its Sacramento-area campuses.
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Claims and Charter Plans Remain Unresolved
The court has not resolved the state’s demand or Twin Rivers’ claim, and Highlands disputes the charges. The report does not specify the legal basis for the Department of Education’s $243 million demand or provide the school’s full response to each allegation. The administrative law judge’s decision on the school’s appeal of the auditor’s remaining recommendation was still pending at the time of publication.
Highlands’ bankruptcy does not appear, based on the report, to have ended its separate effort to relocate to Sutter County. The school is awaiting a decision from the Sutter County Board of Education on a petition for a new charter under the name California Learning Academy. Yuba City Unified School District denied a charter request in July. The report does not say when the county board will decide or how the bankruptcy could affect that process.
The filing also leaves open how the school’s debts would be handled, whether creditors will challenge its proposed course, and whether its current campuses and programs will remain unchanged. No closure was reported, but future operating plans were not detailed.
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Court Hearing and County Decision Ahead
The next reported court milestone was a Thursday hearing in the Eastern District of California. The report did not state the hearing’s scheduled purpose or provide an outcome, so the school’s immediate bankruptcy timetable remains unclear. The case will bring the disputed claims into a court-supervised process, but further filings or rulings will be needed to show how the school plans to address them.
Separately, the Sutter County Board of Education is expected to decide on Highlands’ petition to operate as California Learning Academy. The report gave no date for that decision. The administrative law judge’s pending ruling on the appeal of the auditor’s recommendation is another unresolved development. Until those decisions are available, the confirmed position is that Highlands continues operating while its financial and charter disputes proceed.
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Key Questions
Which school filed for bankruptcy?
The filing was made by Highlands Community and Technical Schools, a charter school serving adult learners at six Sacramento-area campuses.Is Highlands still open?
Yes. The report says the school remains open. It does not describe any immediate campus closures or class changes.How much money is being sought?
The bankruptcy filing says the California Department of Education is demanding $243 million. Twin Rivers Unified School District says it is owed $2.4 million. Highlands disputes the charges; the claims have not been resolved in the report.What prompted the financial dispute?
A 2025 state auditor report alleged attendance misstatements, hiring of unqualified teachers and other problems, including questionable spending. Highlands said it addressed 18 recommendations and appealed the remaining one concerning alleged misuse of funds.Could Highlands move to Sutter County?
That remains possible but undecided. The school is awaiting the Sutter County Board of Education’s decision on a new charter petition under the name California Learning Academy. Yuba City Unified School District denied a charter request in July.Source: rss
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