Officials at a Wahiawa public charter school said they plan to fight back against a decision by the Hawaii State Public Charter School Commission that would result in the loss of more than $1 million in state funding.

“It’s a very bad situation, and we’re going to fight it as much as we can,” said Amanda Fung, principal of Kamalani Academy.

The commission on Monday voted unanimously to reduce the final enrollment counts of Kamalani and a Kauai school, Alaka‘i O Kaua‘i, because they started permanent virtual or blended learning programs without first seeking the authorization of the commission.

The commission, which governs the state’s 37 public charter schools, issued a “notice of concern” late last month to both schools regarding “enrollment irregularities” and potential violations to their charter school contracts.

On Monday, following a virtual public hearing, the commission formally reduced Kamalani Academy’s enrollment count from 335 to 152 students, and Alaka‘i O Kaua‘i’s enrollment from 194 to 172. The reductions represent the number of students enrolled in what the commission described as unauthorized online programs.

The new counts will be forwarded to the state Department of Budget and Finance for the purpose of budgeting and for determining per-pupil funding allocations. The enrollment counts also are used to determine additional federal funding, including coronavirus relief aid.

After Monday’s vote, Commission Chairman John Kim said the charter panel has the dual responsibility of supporting its schools and being stewards of state and public funds.

“Sometimes our heart wants to do one thing but our mind says we have to do something else. What we did today, I believe, is consistent with similar situations we had in the past,” Kim said.

But Fung said Kamalani was treated unfairly and unlawfully by the commission, and the school will be exploring its options for opposing the decision.

Among other things, Fung said the school plans to appeal to the U.S. Department of Education and talk to the state Department of Education about the situation.

“It’s not right. We did nothing wrong,” said Kuuipo Murray, chairwoman of the Kamalani governing board.

Murray said the school’s governing board met and decided to continue the distance-learning program while seeking remedies for the situation.

She said the school would take a $1.3 million hit if the charter commission’s ruling stands — about half of Kamalani’s budget.

“That’s a huge blow. That’s just ridiculous,” she said.

The public charter school serving kindergarten through eighth-grade students restarted its online program in September under a contract with Utah-based Harmony Educational Services after COVID-19 infections spiked in Hawaii.

Five months earlier, the commission had voted to give its schools the flexibility to move to distance learning if necessary due to the pandemic. But it was only a temporary authorization, officials said, and not the basis for changing a contract with the commission.

“Thirty-five schools treated it as temporary and did distance for a while … and one or two schools did it for a reason to go permanent,” Commissioner Mitch D’Olier said. “Temporary authorization doesn’t create a basis to create a new program without coming back to change your contract.”

Commission Vice Chairwoman Cathy Ikeda said commissioners weren’t trying to disenroll anyone.

“It’s about what contractually we can put down for their enrollment,” she said.

But Fung said that when she and others at Kamalani looked at the commission’s May guidance, they didn’t see the need to ask for a change in the school’s contract. She said Kamalani’s contract already authorizes it to have as many students as it takes to reach its Wahiawa building capacity, which is 477.

“We are not anywhere close to that capacity,” she said.

Fung said the school was simply serving its community the best it could. And because Wahiawa was a high-risk zone for COVID-19, the program became popular and ballooned to 182 students.

Fung said the school wasn’t going to turn students away.

“The law says we don’t have that option. We have to accept students up to our building capacity,” she said. “We followed the law.”

Fung said Kamalani is operating under a three-year Native Hawaiian grant, and the school doesn’t need the online program to stay afloat.

“We don’t have to increase enrollment at our school. We’re doing just fine without extra enrollment. It’s actually less stressful,” she said. “But this is what we had to do to help our community.”

DJ Adams, director of Alaka‘i O Kaua‘i Charter School, said Tuesday that his school will abide by the commission’s decision.

“From this point forward our charter school will evaluate the possibility of adding a distance learning portfolio in the charter renewal process in 2023, as there is obviously great need in our communities,” Adams said.