Sacramento's Highlands Community Charter files for Chapter 11 bankruptcy

Highlands Community Charter and Technical Schools plans to seek federal bankruptcy protection as it continues fighting a state determination that it was ineligible for more than $180 million in funding.

In a statement posted to its website Monday, the Sacramento-area charter school system said its board authorized a federal bankruptcy reorganization. Schools will remain open and classes will continue.

"The doors remain open. The lights remain on. Class remains in session," school officials stated.

Highlands said the move will allow it to continue operating while addressing its financial and legal disputes.

A 2025 California State Auditor report found Highlands received more than $180 million in K-12 funding for which it was not eligible. The audit also found problems with attendance records, spending, teacher credentials and oversight.

Highlands disputes the funding determination, arguing thousands of students received instruction, earned credits and graduated during the years in question. The organization said it will continue pursuing administrative and legal challenges.

Highlands has acknowledged failures under its previous leadership, but says it has since overhauled its governance, finances, attendance tracking and other operations.

"Current leadership has not hidden from that history. We confronted it," school officials stated.

The State Auditor has since marked the recommendations directed at Highlands as fully implemented.

Highlands also recently survived an effort by Twin Rivers Unified to revoke its charter. The Sacramento County Board of Education later overturned the revocation.

Meanwhile, Highlands is pursuing a separate charter school in Sutter County under a new name: California Learning Academy (CALA).

Yuba City Unified rejected the proposal in July, and Highlands appealed to the Sutter County Board of Education. Highlands stressed Monday that CALA is separate and "not a plan to abandon Sacramento or move liabilities elsewhere."

Highlands currently serves nearly 2,000 students.

Students and employees are being told to continue attending classes and reporting to work as usual while the reorganization moves forward.