A charter school where the Minnesota Department of Education says students have graduated without meeting state requirements must be shut down by the organization that oversees it, or state officials say they'll step in themselves.

BlueSky Online School is still violating the law two years after the state began investigating problems at the public school, officials at the education department said Monday. State officials have asked the school's authorizer, Novation Education Opportunities, to either terminate or not renew its contract with BlueSky, effectively shutting down the school by this summer.

BlueSky's interim director, Don Hainlen, blasted the department's move as a decision reached by "bricks-and-mortar people who don't know anything about online schools."

The school is following the law, and all 10 of its mid-year graduates -- who got their diplomas last month -- had completed the proper course work, he said.

But those students' final transcripts indicate that some of them did not meet state graduation requirements for math or social studies, state officials said. Lesson plans provided by BlueSky showed that the school's courses in algebra and American government either failed to address state benchmarks or weren't rigorous enough, they said.

"We will vigorously pursue every legal option that we have available to us to defend our school," Hainlen said, adding that BlueSky may also hire an independent curriculum expert to compare its lessons with those at similar schools in Minnesota. "We believe that we have been targeted by [the state], and we're being treated differently."

The education department has given Novation until March 21 to indicate whether it will cut ties with BlueSky. If Novation refuses, state officials say they will end the school's contract themselves under a law that was overhauled two years ago to more closely monitor Minnesota's charter schools.

State law requires every charter school to have an authorizer -- a college, school district or nonprofit that keeps tabs on its finances and student performance. Among other things, the new law is intended to place more of the burden for oversight on authorizers, rather than the state.

"Ultimately, this is a test to see whether or not [authorizers are] willing to follow through on what they were approved to do," said David Hartman, acting supervisor of the department's charter schools center.

As department spokeswoman Charlene Briner put it, "We're going to actually see if those laws have some guts."

Monday's decision comes four months after the education department threatened to withhold state funding from BlueSky if the school could not show it was following the law. But such penalties, the state now says, would be "futile."

"They seem to be unwilling or unable to solve the problem," Briner said.

The department is "respectful and deferential" of the relationship between charter schools and their authorizers, Hartman said. Novation is aware of previous state audits of BlueSky's curriculum, but "this information is new, and they deserve an opportunity to respond to it."

That approach drew criticism from Eugene Piccolo, executive director of the Minnesota Association of Charter Schools. "It's confusing. It's weird," he said. The state has the power to either penalize a charter school financially or terminate the school's contract with its authorizer, so it "makes no sense" to give Novation two weeks to follow up with the results of an investigation that someone else conducted, he argued. "If the [state education] commissioner is not going to use her authority, then maybe we should change the law and take it away from her."

BlueSky's contract with Novation expires at the end of June. Hainlen said that Novation recently indicated it would renew the school's contract for two more years, Hainlen said, but in light of Monday's move by the state, "They're going to re-evaluate that and have asked for some additional documentation."

In a written statement, Novation executive director Bryan Rossi said that the organization takes the state's claims seriously, adding that they are "unsubstantiated at this point." Novation "will have to fully review the contents of this latest determination before we can justifiably react."

Sarah Lemagie • 952-882-9016