The Louisiana Department of Children and Family Services has revoked the license for the daycare owned by struggling nonprofit Operation REACH, Inc., according to state officials.

That revocation, effective at the end of last week, means The Knowledge Garden, at 1700 Josephine St., must end its operations immediately. Former clients of the daycare said officials never told them that the state wanted to revoke the license. Three parents said that tuition went up right before many parents found out.

The center originally planned to fight state’s license revocation, which state officials said was because of the center’s chronic failure to provide officials with criminal background checks on its employees. Its appeal hearing was set for Monday morning. Late Friday afternoon, Knowledge Garden officials called to drop their challenge,  said Christine Dabney, a clerk with the division of administrative law.

As a result, the state revoked the license, said René Sonnier, spokeswoman for the child services department.

Operation REACH Chief Executive Officer Kyshun Webster did not respond to questions asking whether he’d informed parents that the state wanted to pull the daycare’s license. He did say that parents said they were willing to pay higher costs.

The Knowledge Garden was one of Operation REACH’s main sources of income, and the nonprofit has struggled to stay afloat in the past year. One of its major funders, the Corporation for National and Community Service – the federal agency that runs AmeriCorps – pulled funding in September 2011 after officials found “irregularities” in Operation REACH’s financial ledgers. In March, former employees began to raise concerns about Webster’s spending. They pointed to thousands of dollars spent at vacation destinations, restaurants and apparel stores.

Two weeks ago, federal auditors said the nonprofit couldn’t account for nearly $900,000 in grant funds.

Webster defended his expenses, stressing that he was not the only employee with access to the organization’s checking accounts, and he threw responsibility for proper fiscal management of the AmeriCorps program on his chief compliance officer, Nicole Payne-Jack. Payne-Jack, one of the former employees with concerns, said that Webster had ultimate control over the organization’s finances.

Parents watching the backlash play out in the news media became disillusioned with the daycare they’d once respected, said Melissa Harris, whose two children had attended the daycare for the past two years.

“I know people were pulling their kids out, and had been pulling their kids out, ever since the news first broke about Operation REACH,” she said.

It’s a shame, she said, because she loved the teachers there.

“The teachers, the facility was really nice, but the management was just terrible,” she said.

Harris withdrew her children in early August, shortly after word got out that the daycare was in trouble with the state. Harris, and another parent, Sue Mobley, both said Webster never announced to parents that the state intended to revoke the daycare’s license. The state issued its notice to revoke on June 27.

As recently as a year ago, the center served more than 60 children, Mobley said.

“The way that we found out that there was an administrative hearing, was because a parent’s friend who was considering sending her child to the school, looked up licensing, and there was a star next to it,” Mobley said.

When asked whether he’d notified parents of the state’s intent, Webster avoided the question in an emailed statement:

“The revocation notice was untimely, but we believed we could have resolved the matter, according to our legal counsel,” he wrote.

Mobley, who also withdrew her children in August, said other parents began to withdraw after Webster announced tuition increases in late May.

“Literally, they lost every child in the center in a two-week period,” Mobley said. Mobley said tuition was set to go up from $600 a month to $750, and that a tuition finance agreement that asked parents take out loans for the annual cost, plus interest,  would have raised it even higher.

Webster said parents said that they were willing to pay more, based on their overall satisfaction with the daycare. Mobley agreed that she and a few other parents did say this in April, but the majority of parents who were willing had all pulled their kids out by the time tuition increases were announced.

Webster also addressed the costs of running the daycare in his statement:

“Operation REACH, the parent organization, subsidized the true cost of running a high quality childcare facility since its opening in 2009,” he wrote. “But ultimately, the business model was not sustainable without subsidy from the parent organization. Therefore, the board made a decision to close with dignity and provide proper notice to all. NO FURTHER COMMENT.”