NCPA - National Center for Policy Analysis

Michigan City Outsources All of Its Schools

August 9, 2012

Highland Park School District, one of Michigan's lowest-performing academically, says it will turn over its three schools and nearly 1,000 students to a private, for-profit charter school company -- the second district in Michigan to take such a drastic step to avert financial collapse, says the Wall Street Journal.

Proponents say the move could offer a lifeline to other school districts in crisis.

  • In 2011, 48 of Michigan's 793 districts ran deficits that totaled $429 million, compared with 18 districts with $59 million in combined deficits in 2004-2005, according to the most recent data.
  • But opponents say the plan is designed to kill off unions and lacks the public's input.

Under the plan, the district will be hived off into an education arm with a separate, three-member board appointed by Joyce Parker -- who was named district emergency manager in May by Republican Gov. Rick Snyder -- to oversee the contract with Leona Group, the charter-school company.

  • The district will remain as an entity run by Ms. Parker to pay off its debt of about $5 million, using local property taxes that currently go to run the schools.
  • Phoenix-based Leona will receive $7,110 per pupil in state funding, plus an as-yet-undetermined amount of federal funds for low-income and special education students.
  • In addition, the Highland Park district will pay Leona a $780,000 annual management fee.

Unions have been sidelined after the district's entire professional staff was laid off, as allowed by the state emergency law, but teachers can apply for jobs with Leona.  

  • Leona has budgeted about $36,000 a year for Highland Park teachers on average, the company said -- compared with almost $65,000 a year the teachers received in the 2010-2011 school year.
  • In a typical school it takes over, Leona has hired back about 70 percent of the teachers, the company said.
  • Leona also will lease the Highland Park district's buildings.

Under the five-year contract with Leona, the new city charter board will monitor the company's progress in improving student performance.

Source: Stephanie Banchero and Matthew Dolan, "Michigan City Outsources All of Its Schools," Wall Street Journal, August 2, 2012.


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