For charter school advocates, the closing of a north Minneapolis charter this week highlights the consequences of the Minnesota Legislature's decision last summer to delay a big share of state aid until after the school year is over.

The Academy of North Minneapolis announced this week it would shut down Friday, forcing the families of 129 students to find new schools with only a few days' notice. Only in its second year, the school was struggling academically and said it was losing students as a result of the housing instability caused by last May's tornado. A state official disputed the school's blame on the delay in aid payments, saying the Academy of North Minneapolis was provided ample start-up and regular aid.

Yet an advocate with a charter school support group said startups are vulnerable to the state aid delay because they lack reserves to fall back on. That group is asking the Legislature for relief for startup charters.

"This is the No. 1 issue for all charter schools -- nothing close," said Brian Sweeney, external affairs director for Charter School Partners, a charter support group to which the academy belonged. "This has put a number of charter schools on the bubble."

The academy opened with the aim of preparing a student body that was mostly poor and black for competitive colleges and advanced careers. But last year, only 14 percent of its students achieved reading proficiency and 4.9 percent hit the math benchmark. Those levels lagged the closest district school with similar demographics.

The school tried to budget conservatively because of the holdback, academy board chair Betsy Frost said, but was unable to cope with the loss of state money as its enrollment fell from a high of 168 students at the start of the year.

The state budget shift that holds back 40 percent of a school's aid was crafted to provide much of the remaining 60 percent up front to help the cash flow of charters. That meant that the academy normally would get all of that 60 percent by March. But falling enrollment meant that the state needed to recoup overpayments for the student-based aid by deleting the expected February payment, Frost said. She said that tornado-related housing issues seemed to torpedo the school's student numbers.

"We did not have a balance to be able to bridge the gap," Frost said Thursday. She estimated the school's debts at $400,000 to $500,000. Department of Education spokeswoman Charlene Briner countered that the academy had more than $15,000 per student.

The academy told parents Wednesday night that Friday is the last day of the school and invited other charters and district schools in to help parents figure out where to send their children next.

At least 44 charter schools have closed in Minnesota since 1996, with the state listing financial reasons as a contributing cause for two-thirds of them. There's been a slowdown in new charters, with the academy the only 2010 startup as new requirements for charter authorizers took effect and startup grants fell off. Sweeney said he expects eight to open this fall.

His organization is pushing for legislation to provide $200,000 in state grants for charters for the year before they open and to give fledgling charters 90 percent of their state aid on time to help them meet bills.

At Hiawatha Academies, a five-year-old south Minneapolis charter that outperforms district schools, Executive Director Shannon Blankenship said he spends up to 20 percent of his time dealing with financing the school through the delayed payment. Schools won't get all of their aid for the current school year until October, which delays the incentive payments his school makes to teachers who achieve superior student results.

"The Legislature should understand the impact," Blankenship said. The delay means an extra difficulty for his school because it is adding a middle school but won't get paid for increased enrollment until the following year. "Imagine running your household on only 60 percent of the revenue and waiting for the remaining 40 percent."

Steve Brandt • 612-673-4438