The chairman of the board that governs St. Augustine High School has resigned over the board’s decision to eliminate the sixth and seventh grades, warning fellow board members in an email that the school risks financial insolvency if it doesn’t reverse course.

Daniel Davillier’s decision to step down from the board on Thursday is part of the fallout from Archbishop Gregory Aymond’s effort to impose a uniform grade structure at all of the city’s Catholic schools. The archbishop has decreed that Catholic high schools will run from eighth grade through 12th grade beginning next school year, a jarring shift for some of the city’s most highly regarded schools and the families that have sent students to them for generations.

St. Augustine, a 7th Ward institution for young black men, is apparently confronting this transition with its finances already suffering. In his email, Davillier, a prominent local lawyer, describes annual budget deficits going back eight years and a shrinking cash reserve. He warns that eliminating two grades will bring another $580,000 worth of annual losses.

“The fact remains that St. Augustine High School is already in a precarious financial position,” Davillier wrote, “and adding an additional $580,000 of annual losses unnecessarily exposes the school to a substantially increased risk of insolvency within the next few years.”

Still, the school’s options would appear to be limited. Any school that wishes to remain affiliated with the archdiocese must conform with the new grade-level arrangement. Under Aymond’s decree, high schools must either eliminate any grade below the eighth or else begin offering every grade from prekindergarten on up.

Church officials based the new structure on a study commissioned from the Center for the Catholic University of America. It said the new arrangement would let Catholic high schools compete for students on a more even playing field, without forcing parents to choose a high school before they were ready.

Other Catholic schools have already spelled out how they plan to comply with the new rules. Holy Cross School, for instance, plans to add a satellite campus with lower grades.

Though various schools have asked for exemptions, the archdiocese hasn’t granted any.

St. Augustine’s local board of directors, which voted on Monday to eliminate its lower grades, probably also had input on the decision from the Josephite order that owns the school. The Josephites, a Catholic order based in Baltimore, have five seats on the local board, and they have not typically bucked directions from the archbishop.

When local board members were at odds with Aymond in 2011 over the use of corporal punishment, for instance, the Josephites backed Aymond’s directive to end the practice, sparking a lawsuit.

Davillier’s email suggests that the board had a spirited debate over how to comply with the new grade-level requirements. He writes that the decision was made over “strenuous objections” from the chairman of the board’s Finance Committee and “almost every other member of the Finance Committee.”

Relying on a possible increase in eighth- and ninth-grade enrollment, he argues, would be “pure speculation” and “ignores the fact that the school has an ongoing problem with retention, and that enrollment applications are trending in the wrong direction.”

He notes that fundraising during the previous fiscal year came in $300,000 below expectations, adding, “We don’t yet have a plan for meeting the goals for the current fiscal year.”

Davillier also mentions an outstanding loan and “FEMA overpayment issues” that could cost the school more than $1 million, though he does not go into details.

His email also makes a reference to an alternative plan, under which St. Augustine would partner with St. Mary’s Academy instead of eliminating grades, though again he does not mention specifics.

“I’m very concerned that the decision to reverse our previously approved plans to proceed with a joint venture with St. Mary’s Academy, and instead eliminate sixth and seventh grades over the next two years, may well result in the financial demise of St. Augustine High School,” he wrote. “I can not, in good conscience, be a part of that process.”

In response, the school released a joint statement from acting board Chairman Justin Augustine, school President Oyd Craddock and the Rev. Roderick Coates, the school’s chief religious officer.

While acknowledging that eliminating grades will not be “without its challenges,” they cast the decision in mainly upbeat terms. They do not address Davillier’s points about the school’s finances.

“The board and leadership of St. Augustine High School has made the decision to phase out its sixth and seventh grades in the upcoming years to comply with the Catholic schools strategic plan,” it says.

“We are grateful for the ongoing dialogue and cooperation between our school and the archdiocese and to Archbishop Aymond for granting us the opportunity to phase in this change based on our school’s specific situation.”