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Highlands Community and Technical Schools, a Sacramento-area charter network serving about 2,000 adults, filed for bankruptcy after it said debt-repayment negotiations broke down. The school remains open and disputes state and district claims tied to allegations in a 2025 state audit; a bankruptcy hearing is scheduled for Thursday.
Highlands Community and Technical Schools, a Sacramento-area charter school network serving about 2,000 adults, filed for bankruptcy in federal court on Sunday after it said negotiations over repayment of disputed claims broke down. The school remains open while it seeks court-supervised reorganization, with state officials and its charter-holding district listed among its creditors.
The bankruptcy petition was filed in the U.S. District Court for the Eastern District of California. A hearing is scheduled for Thursday. The filing lists between 1,000 and 5,000 creditors, including the California Department of Education and Twin Rivers Unified School District, which holds Highlands’ charter.
According to the filing, the Department of Education is seeking $243 million, while Twin Rivers says Highlands owes it $2.4 million. Those amounts are claims, not findings that the school must pay them: Highlands disputes the charges. The Department of Education declined to comment to CalMatters, and Twin Rivers had not responded to the outlet’s request for comment by publication.
Highlands Executive Director Jonathan Raymond said in a written statement that the filing is intended to protect students and keep the schools operating. He described the process as a way to address disputed financial claims under court supervision. The filing does not itself mean the school has closed; the network continues to serve students at six Sacramento-area campuses.
Bankruptcy Puts School Finances Before Court
The filing moves a high-stakes dispute over public education funds into a federal bankruptcy process. The outcome could affect how Highlands addresses the claims against it and whether it can maintain operations while its finances are reorganized. For students, many of whom attend to earn a high school diploma, learn English or develop job skills, the immediate reported status is that the campuses remain open.
The size of the state’s demand and the separate district claim make the case consequential for public agencies as well as the school. The bankruptcy court will handle the petition and the reorganization process, but the filing alone does not resolve the underlying allegations or establish what amount, if any, Highlands ultimately owes.
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Audit Allegations Behind the Dispute
The dispute follows a 2025 California State Auditor report that accused Highlands’ leadership of misstating attendance and receiving state funding for students the auditor said did not exist. The report also alleged that the school hired unqualified teachers and engaged in nepotism in hiring and contracting. It cited expenses including $1.2 million at the Grand Hyatt Hotel in San Diego and board trips to Paris and Hawaii.
Those points are allegations reported by the auditor, not findings of the bankruptcy court. Raymond told CalMatters that Highlands had addressed 18 of the auditor’s 19 recommendations and appealed the remaining recommendation, concerning alleged misuse of funds. An administrative law judge was expected to issue a ruling on that appeal soon, according to the report.
Raymond also said Highlands had replaced its senior staff and was replacing teachers who lacked qualifications with credentialed teachers or teachers working toward credentials. Founded in 2014, the school serves adults, including many immigrants, seeking diplomas, English instruction and employment-related skills.
Claims, Appeal and Charter Plans Unresolved
The bankruptcy filing does not determine whether the auditor’s allegations are correct or how much Highlands may ultimately owe. The Department of Education’s demand and Twin Rivers’ claim remain disputed by the school, and the available report does not provide a final resolution of either claim. The expected administrative law ruling on the auditor recommendation also remains pending.
Highlands’ plans to relocate to Sutter County are unresolved as well. The school is awaiting a decision from the Sutter County Board of Education on a petition for a new charter under the name California Learning Academy. Yuba City Unified School District denied a charter request in July. The source report does not specify how the bankruptcy proceeding may affect the pending county petition or the school’s longer-term operations.
Thursday Hearing and Pending Rulings
The next scheduled milestone is the Thursday bankruptcy hearing in federal court. The source report does not state what decisions the court is expected to make at that hearing. The proceedings will determine the next steps in the school’s effort to reorganize and address its disputed financial claims.
Separately, the Sutter County Board of Education has yet to rule on Highlands’ new-charter petition, and an administrative law judge is expected to issue a decision on the appealed audit recommendation. Until those matters develop, Highlands says it remains open; its financial obligations, charter plans and longer-term status have not been resolved.
Key Questions
Has Highlands Community and Technical Schools closed?
No. The school remains open, with six campuses in the Sacramento area, according to the source report. It serves about 2,000 adult students.
Why did Highlands file for bankruptcy?
Highlands said negotiations over repayment of disputed financial claims broke down. Executive Director Jonathan Raymond said the school sought a court-supervised reorganization to continue operating while it addresses the claims.
How much money are state and district officials seeking?
The bankruptcy filing lists a $243 million demand from the California Department of Education and a $2.4 million claim from Twin Rivers Unified School District. Highlands disputes the charges, and the filing does not establish that the school owes those amounts.
What allegations led to the financial dispute?
A 2025 state auditor report accused Highlands’ leadership of misstating attendance, hiring unqualified teachers and engaging in nepotism in hiring and contracting. The school has challenged the recommendation concerning alleged misuse of funds; the underlying dispute remains unresolved.
What happens next for the school?
A bankruptcy hearing is scheduled for Thursday. A decision is also pending on Highlands’ petition for a new charter in Sutter County, while an administrative law judge is expected to rule on the school’s appeal of one audit recommendation.
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