The complete overhaul of Halau Lokahi Public Charter School is the necessary next step for a campus that has long struggled financially amid accusations of nepotism and mismanagement, but also retained a loyal core of families who appreciate its combination of online and Native Hawaiian- focused learning.

The Kalihi school is one of the state’s oldest charter schools, and if it rebounds from this latest challenge to provide a solid educational and cultural foundation for its students, the lessons learned will surely apply to any school — private, public or charter — trying to meet the needs of a unique community with limited resources.

That’s a big if, of course, and the transition is sure to be painful.

The new governing board has decided to lay off all 18 employees and immediately rebuild with a smaller staff that the school can afford. The state Charter School Commission unanimously approved the plan, made urgent by Kamehameha Schools’ refusal this fall to continue a $1,500-per student subsidy because Halau Lokahi failed to meet its standards for Native Hawaiian-focused charter schools.

Although painful now, the loss of that money may prove in the long run to be the impetus that drives a true transformation at Halau Lokahi, which opened in 2001. It must improve, to attract more students and win back the trust of a major benefactor, or it will shut down as financially unsustainable.

These are the ultimate rewards and risks inherent in charter schools, which provide families and educators greater choice and flexibility and offer students more personalized learning, but have less financial security than regular public schools.

Halau Lokahi now has 159 students in kindergarten through 12th grade, far below its peak enrollment. About 100 attend the Kalihi site regularly, which emphasizes Native Hawaiian cultural practices through hands-on projects, while the rest study online.

The school ended the past academic year $502,000 in debt, and had stopped paying its rent and staff. Its longtime director and governing board were forced to resign and a new financial plan was implemented for this school year, which quickly became outdated, due to declining enrollment and the loss of the Kamehameha funding. Thus the new rescue plan was hatched, the most extreme yet, which should ensure uninterrupted services to students this school year and offers hope for the future.

The entire staff will be laid off at semester’s end, and the school will reopen in January with a total payroll that costs 50 percent less.

The school board is reviewing all policies and operations to make sure that all finances, governance and staffing meet state and federal requirements, including the state law that core subjects are taught by "highly qualified teachers."

Current employees who meet the qualifications may be rehired and reassigned to new jobs; otherwise new hires will be sought.

It’s an extreme approach that will require enormous effort to succeed. But, quite simply, it is the only plan that can possibly achieve the turnaround Halau Lokahi requires. Schools in the 21st century must be nimble, responsive and true to the needs of their students, staffed by the best teachers available.

"The school’s community remains steadfast in its belief that this school can become an exemplary model in the future and win back the support of its external funders and attract potential students," the board said in announcing the restructuring plan.

If Halau Lokahi manages to pull this off, it will not only have redeemed itself, it will be held up as a shining example of the good that comes from making hard decisions.

And if it doesn’t, it is time to pull the plug, knowing that this pioneering charter school received every chance to succeed.