State begins review of Muskegon Heights schools' finances

Dec 20, 2011

Tomorrow the state will begin a preliminary review of the Muskegon Heights School District’s finances. This is the first step in a process that would determine if the school district needs a state-appointed emergency manager.

Many school districts and municipalities make an effort to avoid state takeovers. But in Muskegon Heights, the school board is asking for one.

“As opposed to sort of forced takeovers, this is an invitation for help,” Muskegon Intermediate School District Superintendent Dave Sipka said. Earlier this month Muskegon Heights’ school board decided it didn’t have enough money to employ a superintendent. So Dana Bryant agreed to retire by the end of this week. Sipka becomes the interim superintendent by default.

He says staff, students and parents are concerned about what could happen. “But at the same time there is I think a sense of relief that the information has been disseminated to the public of really the totality of the picture and that there are some proactive steps that are being taken to right the ship,” Sipka said.

In a letter to the district, State Superintendent Mike Flanagan outlined 6 reasons “I have serious concerns about the financial viability of Muskegon Heights Public Schools.”

  1. The deficit for the 2009-2010 school year was $4.3 million (about 22-percent of revenues)
  2. Information indicated the deficit has grown (Sipka guesses it’ll be around $11 million this year)
  3. The district is late in turning in its audit and a revised 5-year Deficit Elimination Plan
  4. The deficit has grown each year since 2006-2007
  5. MHPS owes almost a million dollars to its retirement system
  6. Michigan State Police are investigating the district’s federal Title I program (funds for districts with high poverty rates)

Sipka says there are a number of reasons why things have gotten so bad. He says increases in retirement and health care costs have combined with lower funding from the state. Muskegon Heights School district has lost more than half its student population over the past decade; from over 3,000 students to around 1,450. Sipka also says the Muskegon Heights school district is the poorest per capita in the state.

Because the district is late in turning in its audit, the state has withheld it’s school aide disbursement this month. Sipka hopes to get it filed this week. He says if the state doesn’t send that state aide payment he will not have enough cash on hand to pay teachers and staff on January 6th.

The state expects to finish the preliminary review by January 10th.