Check out the details of Michigan’s first privatized public school system

Jul 17, 2012

Parents in the Muskegon Heights Public School district are just starting to get an idea of what to expect for their children this fall.

The district is having major financial problems and is under the control of a state appointed emergency manager, Donald Weatherspoon.

Weatherspoon said turning over the entire district to a charter school operator was his only option to keep school open this year.

Last week, the three-member school board (appointed by the Weatherspoon) hired Mosaica Education Inc. to operate the schools in Muskegon Heights.

And yesterday, the board approved a budget drafted by Mosaica Education.

Charter contract is out – how much will the charter company make?

The management agreement the board signed then only became available to reporters late last night.

According to the document Mosaica Education will make a minimum $8.75 million in annual fees for managing the school system and for a license to operate its Paragon curriculum over the next five years.

The company could make close to $11 million if student enrollment surges.

The fees will be paid on a monthly basis.

But lawyers were quick to point out this clause,

“The amount of the annual fee is subject to reduction in a mutually agreeable amount in any school year if extenuating circumstances make the entire annual fee inappropriate.”

They assume that having too few students enrolled in a given year would qualify as a circumstance where management fees would be lowered.

Other notable details in the agreement include:

Evaluations and records

  • The system may retain an outside consultant to evaluate the performance of Mosaica. The company “will provide those individuals access to records, facilities and information as if such requests came from the Board”.
  • “All System records shall be physically or electronically available, upon request, and the System’s physical facilities. The financial, educational, operational and student records pertaining to the System and System property, and are public records subject to disclosure in accordance with the provisions of the Michigan Freedom of Information Act.”
  • There will be quarterly reports on academic performance and Mosaica’s performance on delivering services. Those will include “parent satisfaction forms” that’ll be summarized annually. A special performance evaluation specifically based on the management agreement will be done every two years.

Contract terms – including potential break-up scenarios

  • The 5 year contract automatically renews for 5 more years unless either party provides written notice 180 days before the end of any 5 year term.
  • Mosaica may terminate the agreement within 60 days if the System doesn’t pay the company as outlined in the agreement, if they adopt a curriculum without Paragon or if they omit something or act in a way that “causes MEI to be unable to perform its material obligations” under the agreement.
  • System may terminate if Mosaica fails to “remedy a material breach” of the agreement within 30 days. That could include not accounting for the spending of system funds, failure to follow board rules, policies and procedures, failure to meet educational goals, or in the case that Mosaica filed for bankruptcy.
  • The System could terminate the agreement without cause – provided that Mosaica is entitled to an “award of damages suffered on account of such early termination.”

What if the EM law is suspended?

It appears the answer lies in this paragraph:

"If any federal, State or local law or regulation, court or administrative decision or Attorney General's opinion has a materially adverse effect on the ability of either party to carry out its obligations under this Agreement, such party, upon written notice, may request renegotiation of the Agreement. Such renegotiation will be undertaken in good faith and will include the use of a third party mediator or other alternative dispute resolution process. If the parties are unable to renegotiate the terms within 90 days after such notice and good faith negotiations, the party requesting the renegotiation may terminate this Agreement on 120 days' further written notice or at the end of a school year, whichever is earlier."

This year’s budget is preliminary

Meaning - this is the base document that will likely be amended throughout the year. Some highlights Mosaica mentioned in 2012-2013 budget include:

  • Base teacher salary is $35,000 plus about $10,000 in benefits
  • Company plans to hire 37 elementary teachers, 15 middle school and 14 high school teachers; plus 3 principals
  • Student teacher ratio is 25 to 1
  • Assumes 1,434 students will enroll for the fall

The appointed charter school board members did not discuss or have questions about the budget during Monday’s meeting. They didn't discuss or have questions about the management agreement they signed last week either.

Board President Arthur Scott said he and the other board members did not feel comfortable being interviewed about the budget after the meeting. He said it was only the second time he’d seen it.

Weatherspoon says that’s not a surprise since board members are still in basic training about what their roles are.

“I don’t anticipate that they’re going to step out on a limb and say something that you know will come back to bite them,” Weatherspoon said.

The student count is the biggest factor in the budget

Mosaica Controller Roger Gray says student enrollment is the big, important unknown in the budget. The amount of money a school district gets from the State of Michigan is determined in part by how many students are enrolled.

Mosaica plans to have 1,434 in the fall. That would be an increase over last fall’s student count of 1,386. The company plans to reverse the long running decline in student enrollment at Muskegon Heights each year over the next 5 years.

Mosaica also projects the per-pupil state allowance will increase each year. Per-pupil amounts have leveled off recently after close to a decade of declines.

A minor complication to student enrollment is that former Muskegon Heights Public School students don’t automatically get enrolled at the new charter academy system. So parents have to actually take steps to enroll their students there. Not many of the hundreds of parents at a “unity meeting” Monday evening knew that.

More than 100 students have enrolled so far, Mosaica officials said.

Beverly Riley is impressed with the charter school company. She likes that they’re focusing in on the district's rather dismal academic achievement. There will be longer school days and more school days during the calendar year.

But she admits there’s a lot uncertainty and not every parent is comfortable with that.

“This can be looked at as a learning curve you know? And some people may say ‘well we’re not in a position where we can have our kids in the learning curve. But anything that’s worth having is worth working towards,” Riley said.

Riley says her daughter will attend 8th grade at Muskegon Heights in the fall.