Saint Louis School is looking to reinvest in its academic and campus needs now that its alumni association has agreed to back a financial plan to ease the school’s debt burden.
School officials said declining enrollment and unexpected facility costs forced the school in recent years to take out loans "to pay for repairs and other necessities to maintain the safe operations of the school."
Enrollment at the private, all-boys Catholic school has dropped by more than 30 percent since peaking at 820 students during the 2007-08 school year. That was before the recession began dragging down student numbers at most private schools locally and nationally. Saint Louis has 540 boys enrolled in grades 6 to 12 this year.
The school stressed that student application figures are now beginning to rebound.
The campus — built in Kaimuki in the 1920s — took out loans to make roof repairs on two campus buildings and to fix termite damage in two others, among other emergency restoration and maintenance projects.
Saint Louis has tried to keep tuition increases to a minimum amid its costly borrowing. It raised this year’s tuition by 4 percent to $13,322 for the high school grades, following a 5 percent increase the year before. The school said its board of trustees has voted not to increase tuition for the coming year.
In a letter to families and supporters, School President Walter Kirimatsu said that while the school has kept up with its loan payments, the interest and principal amounts are steep when added to day-to-day maintenance and operating expenses.
"When you have three different loans, you’re paying huge amounts of interest," said Patrick Bullard, spokesman for the Saint Louis Alumni Association.
The association, which owns valuable real estate in Moiliili along Isenberg and South King streets, has agreed to co-sign a $7.2 million loan that will allow the school to consolidate its existing debt as well as provide operating funds.
A $5.2 million commercial loan will be used to pay off capital improvement debt, and a $2 million commercial line of credit will be opened to provide working capital.
Bullard called the deal a partnership in that the association will help to pay off the new debt through monthly funding it provides the school from grants and other programs.
"The idea was to help them regain their strength and presence they had before being limited due to the loans. This gives them one loan with a much lower interest payment," Bullard said. "Fiscally, they’re just going to be in a lot better shape now, and it’s kind of like a brand-new beginning."
He said the restructured debt will give Saint Louis more flexibility with its income.
"The focus of the school has always been on the students and providing greater academics and a top learning experience. So having the flexibility with the savings from the loans certainly will help to improve some of their plans and efforts for the future for all aspects of student life," Bullard said.
