Education Minister Hekia Parata has announced she will allow Whangaruru School in Northland to continue operating, because they will struggle to find schooling elsewhere.
Ms Parata announced an audit on the school earlier this year after issues were raised regarding its financial performance, administration and governance.
Despite finding adequate reasons to terminate the partnership agreement with the school, Ms Parata has opted to let it stay open, and hopes the newly established board of trustees will facilitate the educational means the children need.
"At the heart of this are 39 vulnerable young people whose future prospects will be greatly enhanced by gaining educational qualifications," says Ms Parata.
"Many face particular challenges and have been excluded from other schools. Keeping them in school and learning is in their best interests and the best interests of the wider community. That is why I have decided to give the new board a chance to show it can make a difference to the lives of kids who otherwise face a bleak future."
Ms Parata says a number of changes have been made to rectify the school's shortcomings since the audit was announced, including the appointment of a new chair, disestablishing two management positions and the employment of "an experienced and highly regarded" principal.
The school is also reviewing policies and procedure, and will try to gain the support of key local leaders.
However, Ms Parata will also oversee an agreement which ensures the school maintains a close relationship with the Ministry of Education, the appointment of at least one trustee nominated by Ms Parata, and the appointment of a trustee with a recognised financial background.
With all this accounted for, the long-term future of the school is still unknown, Ms Parata says there will be another audit in October.
"The board also knows that I reserve the right to terminate the agreement sooner if I am not satisfied the students are being provided with the standard of education they need and deserve," she says.