HILO, Hawai'i — A Big Island charter school is suing the state Department of Education and others, alleging it was wrongly placed on probation for failing to obtain county permits for its school buildings and for longstanding financial problems.

The suit by the Waters of Life New Century Public Charter School alleges the Charter School Review Panel erred when it held a hearing in May and placed Waters of Life on probation, a step that could eventually lead to revoking the school's charter to operate.

The suit alleges the state Board of Education never established the legally required rules to place a charter school on probation or revoke a charter, and therefore the panel had no legal authority to place the school on probation. The suit asks the Hilo Circuit Court to reverse the June 12 probation order.

Waters of Life is the only Hawai'i charter school ever placed on probation, said Sandra Goya, spokeswoman for the state Department of Education.

The suit was filed against the DOE, Superintendent Patricia Hamamoto, former Board of Education Chairman Randall Yee, the Charter School Review Panel and panel Chairman Alvin Parker.

Staff for Katheryn Crayton-Shay, director of Waters of Life, or WOLPCS, referred questions about the lawsuit and the future plans of the school to school lawyer Gary C. Zamber, who was not available for comment yesterday15.

Waters of Life has struggled for years to find adequate facilities for its students, and the latest problems emerged after an anonymous complaint was made to the Big Island Fire Department.

That report prompted a fire safety inspection of school facilities at the 'Ainaloa Longhouse, the Kurtistown Assembly of God and three houses where classes were being held, with the inspector finding fire code violations at all five of the Waters of Life classroom sites that served a total of about 185 students.

The violations were then reported to the county Planning Department, which discovered that the owners of the homes that were used as classrooms had never applied for the special use permits required to open schools in agricultural areas.

The Planning Department then cited the homes on 24th Avenue, 30th Avenue and 32nd Avenue in Hawaiian Paradise Park, closing all three, and also cited the Kurtistown Assembly of God Church for failing to obtain a permit to use the building as a school.

Those problems and other issues prompted the Charter School Review Panel to hold a contested-case-like hearing on Waters of Life in May, and in June the panel released an order banning Waters of Life from reopening in the fall unless it had fire code clearances and the required county permits for every building.

Yesterday, though, the school Web site said that open enrollment is under way.

The panel also ruled that the school "exhibits a historical pattern of financial instability, indebtedness and poor fiscal management," and concluded "WOLPCS is not operationally viable, specifically, WOLPCS is not financially viable."

The panel concluded that the school submitted "multiple versions" of its financial statements, and also found the school "is unable to produce timely, accurate and meaningful financial statements and budgets," according to the order.

The panel also found the primary reason the school could go from a large deficit to a balanced budget a short while later was it absorbed 80 students who were attending classes on three other sites that were originally not affiliated with Waters of Life.

The panel concluded that for every $8,000 the state paid the school for the new pupils in the 2007-2008 school year, Waters of Life kept about $3,000 and passed most of the rest of the money on to the operators of the "satellite school" sites. This brought in an extra $276,804 for Waters of Life, according to the order.

The Charter School Review Panel said in its order Waters of Life was supposed to obtain permission from the Charter School Review Panel before absorbing the extra sites and students but never did.

The suit by Waters of Life lawyer Zamber alleges that Waters of Life was singled out for punishment for failing to provide adequate facilities when other Big Island charter schools have the same problem.

The school "is one of several public charter schools that lack County of Hawai'i certificates of occupancy and county permits for operation of their respective campuses," and Waters of Life introduced evidence of other violators at the May 2 hearing, according to the suit.

Only Waters of Life was punished because "such action by the panel is motivated at least in part by demonstrated animus toward WOLPCS and unlawfully singles out WOLPCS for disparate treatment," according to the suit.

A number of Big Island charter schools have for years held classes in tents, shipping containers and other makeshift facilities, but the Charter School Review Panel said the list of other schools with violations that Waters of Life provided "is not credible because it is from an unnamed WOLPCS parent who purportedly works for the county," and had not been verified, according to the order.

Panel Chairman Alvin Parker was not available for comment yesterday, and BOE Chairwoman Donna Ikeda said she could not comment on the suit because she had not yet seen it.