There are a lot of school districts in trouble in Michigan.
Forty-five districts are in a deficit. Five districts are currently subject to state oversight under Michigan's emergency manager law. Two school districts completely ran out of money last year, and dissolved.
Today, in a State of Opportunity documentary, we bring you the story of how one troubled school district survived.
Two years ago Muskegon Heights made history by becoming the first school district in Michigan to convert entirely to a charter district and turn the operation of its schools over to a for-profit company. It had never happened before in Michigan, or, as far as we've been able to determine, anywhere else in America.
But this spring, Muskegon Heights schools were in trouble again. Just two years into a five-year contract, its management company walked away from the district. And, once again, leaders in the community had to work with the state to find a plan to keep the district's doors open.
This, ultimately, is the story of how they succeeded, at least for now. And what lessons we might take for the other school districts in Michigan that are facing financial problems.
"My numbers were crap"
Patrice Johnson sits at the wheel of a clean black Honda Accord, on a rainy day in Muskegon Heights.
"The Heights" is a small community of fewer than 11,000 residents covering only three square miles. But it has some big city problems like poverty, blight and crumbling streets. The Heights has one of the highest rates of violent crime in Michigan. This year, two students from the district have been killed in the streets.
Johnson grew up here. She serves on the city council. As her day job she works as the parent liaison for the Muskegon Heights High School Academy. And today, she’s going out on home visits.
After the first year, Johnson says it was tough to find parents who were willing to sign a re-enrollment form.
"The parents I’m visiting right now are parents who have not completed a re-enrollment form, and all of my other methods have failed," she says.
These re-enrollment forms are critical in Michigan because of the state's per-pupil funding scheme. The more kids you enroll, the more money you get, as Johnson knows. The only way to plan for next year financially is to have some idea how many kids are returning.
Last year, one year after a private for-profit company took over operations of Muskegon Heights schools, Johnson said it was tough to get parents to sign the form.
"I guess when you start up something, you’ve got a lot of kinks you had to get through. I mean it was like, the whole world was all eyes on you. And every bad thing was made 10 times worse by rumor, media, whatever," she says.
"You had a lot of kids and parents who were like, ‘we’re not coming back.’ We heard this, we heard that. And so when I did these things, very rarely would I get a kid that was like, ‘yeah I’ll be back.’ So that was tough. My numbers were crap."
This year, enrollment was down, but student test scores went up. Attendance for the kids who were enrolled got better.
The problem was money
Twice this April, the state had to front Muskegon Heights school district money to make its payroll.
A couple weeks later the district announced it would end its contract with its management company, Mosaica Education.
By June, there was still a question hanging over the district of whether it would survive at all. The idea that a school district could completely close up shop is not preposterous. It's happened – in Buena Vista Township, near Saginaw and in Inkster, near Detroit.
In Muskegon Heights, there were no plans for a shutdown. But that didn’t stop the rumors.
How Muskegon Heights got here
A few years ago Muskegon Heights was a regular public school district. But its budget was a mess.
It faced many of the same budget problems public school districts across the state face. It was losing students year after year, so it was getting less money from the state. The cost of healthcare and pensions was rising.
The school board couldn’t seem to cut costs fast enough. Then in 2006 the school district began spending more money than it brought in.
They spent down the money in the savings account. Then they borrowed some money. And then they borrowed some more.
They spent down the money in the savings account. Then they borrowed some money. And then they borrowed some more.
And the school board did something else that showed just how bad their budget was. They asked the state of Michigan for an Emergency Manager.
They knew they couldn’t make payroll. They threw in the towel. They asked for a state takeover. That was a first.
A lot of instability, and an emergency manager
Susan Strobel was a teacher in the high school at the time of the Emergency Manager. She remembers teachers couldn’t keep the talk of budget chaos from students in the classroom.
"They would constantly ask me ‘Are we gonna be in school next week?’ or ‘When’s the school going to close?’, and I said ‘Hey kids, I know just as much as you do.’ No one tells me anything," she quips.
When Emergency Manager Don Weatherspoon did step in, there were no easy solutions. The district’s finances were so bad, the new manager realized he couldn’t afford to open school that fall. He did the only thing he thought he could do. He laid off all the employees.
The next step was another first. To create an entirely new school district in place of the one Weatherspoon just took over; a charter school district. The newly created charter school district had no debt and therefore it could afford to open schools.
Weatherspoon figured the charter school could offer students a better learning environment -- one where school leaders wouldn’t be tied down by all the legacy debt of the original Muskegon Heights school district.
This was the first time a regular school district was replaced by a charter district.
Weatherspoon hired Mosaica to run the entire district -- top to bottom. A month or so later, the emergency manager of Highland Park Public Schools did the exact same thing.
The future seemed good
That summer two years ago, when Mosaica signed a five-year contract to run Muskegon Heights schools, the community was really excited.
Even folks like Angela Ogden, a local union leader and one of the Muskegon Heights teachers who got laid off, had a good first impression of the for profit charter company.
Ogden compared the school district’s budget mess to a prolonged death or a nasty divorce.
"Denial to anxiety and stress and sadness," she said at the time. "And so to have something like this – it provides a sense of hope and excitement for everyone."
The excitement lasted for a while. But parents and students became frustrated with problems in the new district; teacher turnover was high, some teachers weren’t properly certified by the state. There were problems with the special education program.
In two years, the district lost almost half of its student population.
Ultimately, a flood of students left Muskegon Heights, and between 2012 and 2014 the district lost almost half its student population.
Things came to a head this school year when the school district couldn’t afford to pay the management company anymore.
Mosaica CEO Mike Connelly says the school district had to borrow money from the for-profit company to pay staff and by April, Mosaica and Muskegon Heights agreed to part ways.
Students, parents and staff were thrown back into familiar uncertainty.
Here's what's happening now
Alena Zachery-Ross, who was hired to run Muskegon Heights schools by Mosaica Education, will continue to run the district. She's accountable to the school board and not a management company.
People in Muskegon Heights were really happy when the school board announced that Zachery-Ross would be staying. She's a popular person in the district because she managed to boost test scores, among other things.
The ISD (Intermediate School District) will do the district's finances. A company called Advanced Educational Services will be in charge of staffing the school. That means teachers and staff will report to Advanced Educational Services, not the school.
This new, hybrid plan will hopefully restore some local control. It will also save the district about 15% of its costs compared to last year.
Other schools in Michigan
Michigan has a lot of school districts in financial distress right now. As of June, 45 school districts were operating in a deficit.
Five of those districts are being overseen by the state, under Michigan’s emergency manager law.
Last year, two school districts dissolved completely.
Most of the school districts in financial trouble exist in communities that are in trouble. Communities with high poverty, high crime, communities with a legacy of racial discrimination. Communities where the education of children is an especially important priority.
94% of the students who were enrolled this year in Muskegon Heights schools have committed to returning next year.
And yet, after 20 years of school choice and charter schools. After years of trying to figure out anything that will work to keep these districts afloat, to ensure that they provide a high quality education, there are still no sure answers.
But leaders in Muskegon Heights, and in Lansing, believe their new approach, with the cost-saving benefits of a charter school married to the accountability of a board-appointed superintendent, that’s as good of an idea as anyone has come up with so far.
But this plan will not, on its own, turn the district around.
Zachery-Ross knows enrollment must stabilize. She knows she needs to keep the teachers that have already begun the turnaround in achievement.
She says 94% of the students who were enrolled this year in Muskegon Heights schools have committed to returning next year. But next year’s budget assumes more kids will be lost, which means as many as six teachers will be out of a job.
Zachery-Ross says she’s hopeful. If enrollment numbers stabilize, those teacher positions will eventually come back. Twice now, the school district in Muskegon Heights has made history.
But the future is still uncertain.
"I'm so glad I'm from Muskegon Heights"
Every summer in Muskegon Heights, there is a parade for the Festival in the Park. Nearly 11,000 people live in the Heights, and on the Saturday of the parade, it seems every one of them must either be in the parade, or sitting along the route, cheering.
Muskegon Heights schools have always been a big part of the parade. Converting to a charter academy didn't change that fact two years ago. Converting to a new hybrid management system didn't change it this year.
Alena Zachery-Ross, the newly named superintendent of the district, rode near the front of the parade. She wore a bright orange t-shirt the district just had printed.
The shirt declares, "The best is yet to come."
After she's done riding in the parade, Zachery-Ross makes her way on foot to hear the Muskegon Heights High School Academy marching band play its closing number.
If there's one thing that Mosaica Education did that will stay with this community, it's the hiring of Zachery-Ross. She's originally from Detroit. But she's become nearly universally-loved in Muskegon Heights. When Mosaica left, people in the community seemed more worried about losing Zachery-Ross than they were about losing the company.
At the parade, people come up to her, one after the other, to tell her how happy they are she's staying, and how happy they are with the district's new management structure.
"Back to more local control," Zachery-Ross responds.
From the street comes the sound of a whistle. The marching band launches into its closing number. It is the final event of the parade, this year just as in years past.
It is the Muskegon Heights high school fight song. The hundreds of people crowded around the band don't need to be told to sing along. They join in with the song's refrain, as defiant as it is optimistic.
They sing:
"I'm so glad, I'm from Muskegon Heights."