Detroit-Area District, in Emergency, Outsources Schools [Short]

Published August 25, 2012

Highland Park School District entered uncharted territory for Michigan, outsourcing its three schools to charter company Leona Group LLC starting this fall. The summer announcement followed a January state audit and resulting appointment of an emergency manager.

“To my knowledge, this is untried in Michigan,” said Michael Van Beek, director of education policy at the Mackinac Center for Public Policy. 

The district has an $11.3 million deficit and approximately $5 million of debt. Its budget is $18.9 million. Between fiscal years 2010 and 2011, district enrollment dropped 28 percent, to 1,331.Enrollment at the time of the audit was an estimated 969 students.

Michigan school district Muskegon Heights, in similar fiscal circumstances, has also decided too utsource itself to a charter company, but the new management hasn’t begun.

Failed Management
Highland Park spent $16,500 per pupil in fiscal year 2011. Under charter control, per-pupil spending will be closer to $10,000.

“If it, in fact, does succeed, … the school board will have to decide whether or not they want to retake control of the schools. [Their control] is a contributing factor in them having a large number of fiscal problems,” Van Beek said.

It will likely take twelve years before the school board can accomplish its goal of controlling Highland Park schools, said Michael Atkins, Leona Group’s general counsel. He said for this to happen, the board must pay off all creditors except the state.

“It’s the Highland Park schools, and it needs to stay the Highland Park schools,” he said. “We’re getting them there. We’re very pro-public schools.”

Academic Paucity
The Leona Group promises not only financial but also academic redemption in one of the state’sworst-performing districts.

State standardized tests show 32.6 percent of Highland Park fourth-graders are proficient in reading and 13 percent proficient in math; the statewide averages are 67.7 percent and 39.9percent, respectively. Eighth grade students average 47.5 percent proficient in reading; the statewide average is 60.5 percent. In math, 5.2 percent of Highland Park eighth graders areproficient, compared with 29.4 percent statewide.

A side effect of saving money while improving education is rehiring. The Leona Group typically hires back 70 percent of the staff at schools they enter, at smaller paychecks. Highland Park’s
average teacher salary formerly was almost $65,000 a year, not including benefits. Leona Group teacher salaries average approximately $36,000.

Image by augatti.