Already run by emergency manager, Highland Park schools face new budget shortfall

May 15, 2014

Credit Steve Carmody / Michigan Radio

Despite a previous state takeover, a slew of surprise costs and a dramatic drop in student enrollment have led to a new budget deficit for the public school district in Highland Park.

A multi-million dollar deficit prompted a state takeover of Highland Park Public Schools in 2012. The state appointed emergency manager restructured the district’s deficit into long-term debt with over $7 million in emergency loans from the state.

The manager created a new charter school district to educate students. In 2012  The Leona Group LLC., a charter company,was hired to run the entire district for an annual fee of $780,000.

But now the district is running a deficit again.

What caused the new deficit?

In documents filed with Michigan’s Department of Education, officials from Leona Group said the decline in student enrollment was a “major contributing factor” to the roughly $600,000 deficit.

Before Leona took over, Highland Park had nearly 1,000 students enrolled. This year there were only 639. The state provides the district $7,168 per student.

Leona wrote “It is believed that (the enrollment decline) comes partially as a result of community unrest surrounding the conversion” of the original district into a charter district.

Another factor was the unexpected cost of building repairs and special education.

The company told MDE “substantial staffing reductions were made” in response to the lower student enrollment. It said support services have been reduced to “meet required obligations only.” It also said it eliminated elective classes “except to the amount necessary for students to meet graduation requirements.”

The president of the district’s charter school board, Archer Collins, referred media questions to The Leona Group, which did not return repeated requests for comment on this story.

Plans to close the budget gap over the next 3 school years

In documents obtained through a Freedom of Information Act Request, The Leona Group outlined in late February how it plans to close the budget gap.

  • The Leona Group will waive its annual management fee for the 2013-14 school year and reduce the fee for the next two years. It’s unclear how much that savings will amount to.
  • The district will close Highland Park High School. It’ll consolidate grades K-8 into one building and 9-12 in another building.
  • The district will institute a “conservative, but targeted transportation program … to attract students from outlying areas.”

But Highland Park Public Schools' current emergency manager, Gregory Weatherspoon, says none of these options are set in stone yet.

“Now (Leona waiving its fees) that’s news to me. I heard some talk about that," Weatherspoon says. “That has not hit the table in writing 'cause that would be something that the PSA board would be dealing with.”

Weatherspoon says the PSA board will meet this Friday at noon. That will be the first chance it’s had to review the Deficit Elimination Plan, he said.

“I would definitely be asking those questions if they’re not answered already. 'Cause I just received the DEP plan,” Weatherspoon said.

Weatherspoon says the charter company had to cover the costs of building repairs on its own, but he couldn’t say whether the company had to front the district money to cover payroll. That’s what Mosaica Education Inc. had to do in the Muskegon Heights school district, which he also has authority over.

Michigan State Superintendent Mike Flanagan recently approved the deficit elimination plan, giving the district until June 2017 to close the budget shortfall. But he’s requiring the district to submit monthly budget control reports to the department.

Despite the major enrollment decline at Highland Park over the last couple of years, Leona projects that 650 students will show up this fall and the year after. But is that realistic?

“That is a good question,” Michigan Department of Education spokesman Bill DiSessa says. “I’m not familiar with the underlying facts in Highland Park. I would say this: If any district has had declining enrollment, that’s a pattern of decline obviously. That’s a big concern for us and that’s one reason we would be monitoring things closely.”

Weatherspoon says he is aware of some charter school near Highland Park closing next year. He believes Leona hopes to attract some of those students over the summer. He's hopeful current students will stick around, too.

“We’re trying to work to get the communications out to the parents so they’ll know what’s going on next year,” Weatherspoon said. “There are things changing all over the district and we’re hoping that parents will stay with us and understand that we’re still going to provide that quality education.