Michigan City Outsources All of Its
Schools
Highland
Park Turns Over Troubled Operations to For-Profit Charter Firm
By STEPHANIE BANCHERO And MATTHEW DOLAN
August 2, 2012, 7:57 p.m. ET Wall St Journal
http://online.wsj.com/article/SB10000872396390443545504577565363559208238.html
HIGHLAND PARK, Mich.—The public school
district in this hard-luck city has come up with a radical answer for its
troubled education system: It is outsourcing all of it.
Highland
Park School District, one of the state'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.
The abrupt
news last week sparked concern—and in some cases, relief— from parents and
other residents who packed a Wednesday night meeting in the faded industrial
city, which is nearly surrounded by Detroit.
The parents
came to hear from the charter company, Leona Group LLC, which promises to
improve the learning environment and boost student performance in a district
where only 22% of third graders passed state reading exams last school year and
just 10% passed math. The results were even worse for high-schoolers:
About 10% were proficient in reading, and none in math.
"I have
a lot of questions, but I'm hopeful that it will turn out for the best,"
Cynthia Gresham, a school volunteer and parent of an incoming senior at
Highland Park Community High School, said at the meeting.
Highland Park, Mich., resident and teacher Sylvia Culberson
asks questions Wednesday during a packed meeting about turning over the city's
struggling schools to Leona Group, a charter-school operator.
Districts
nationwide are trying radical approaches to shake up financially and
academically troubled schools, including dismissing the entire staff or turning
several schools over to outside groups to run.
A few
districts in Georgia
have converted into charter districts in an effort to get out from under state
class-size and teacher-salary schedules. In those cases, the district
administration generally remains in place and oversees schools, but each school
creates a council of teachers and parents that make hiring and budget decisions.
New Orleans has
taken one of the most extreme approaches by converting most of its schools to
charters and allowing students to use state-funded vouchers to attend private
schools.
Charter
schools—public schools run by outside entities using taxpayer funds—are free
from many administrative constraints, including union contracts, and typically
spend less than traditional schools per student.
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 state data.
"This
could be the new model for public education," said Jeanne Allen, president
of the Center for Education Reform, a national research and advocacy group that
supports school choice. "It stands to be a lab of innovation where people
can see that thinking outside the box is not so scary."
But
opponents say the plan is designed to kill off unions and lacks the public's
input. "Where's the accountability to the community?" asked Katrina
Henry, president of American Federation of Teachers union Local 684, which
represents the district's teachers.
Highland
Park decided to privatize its schools after years of enrollment decline, poor
fiscal stewardship and allegations that a board member stole more than $125,000
by submitting false invoices; the charges against the member are pending.
During the
2010-2011 school year, the district spent $16,508 per
student. By comparison, Michigan
districts on average spent $9,202 per pupil that year. In the process, Highland Park ran up an
$11.3 million deficit over its $18.9 million school budget.
The district
got itself into financial trouble, in part, because it didn't cut staff as fast
as its enrollment declined along with the city's population, leaving it with
higher per-pupil expenditures, said Joyce Parker, who, under a controversial
state law, was appointed district emergency manager in May by Republican Gov.
Rick Snyder.
"The
financial problems were immense and we had to look at nontraditional ways to
get the district back on track," said Ms. Parker, who has full control of
the district and made the decision to convert to a charter after ruling out a
merger with a neighboring district.
Under the
plan, the district will be hived off into an education arm with a separate,
three-member board appointed by Ms. Parker 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
2010-11 school year.
In a typical
school it takes over, Leona has hired back about 70% 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.
Leona runs
54 schools in five states. Students in almost half of them fail state academic
benchmarks. But of its 22 Michigan
schools, 19 meet the mark, Leona officials said.
Leona Chief
Executive William Coats said the company had no incentive to cut corners in Highland Park. "As
we build equity, we give that back to the schools," he said during
Wednesday's meeting when an audience member raised doubts about the for-profit
approach. "We're trying to manage this so you [the district] stay in
business."
Highland
Park is where Henry Ford opened his first assembly line and Chrysler Corp.
built its original headquarters. It has suffered the same ills as Detroit, its larger
neighbor: an exodus of auto jobs, depressed housing stock and a surge in crime.
The city,
which spreads across three square miles, lost nearly 30% of its population from
2000 to 2010, according to the latest U.S. Census. Nearly half of the
11,776 residents live below the poverty line.
Students and
parents complain of dirty classrooms, exposed wiring in the schools, rationed
textbook and swimming pools—once used by powerhouse swim teams—that now sit
drained of water.
John
Holloway, the school board president, said the problems became a "runaway
train that we could not stop."
As the
situation worsened, the state gave the district a $4 million loan in July 2011
and advanced it $450,000 more earlier this year just
to meet its payroll.
A
union-backed initiative that could go to voters statewide in November seeks to
repeal the emergency-manager law under which Ms. Parker was appointed to run
the district. The law had been strengthened in 2011 by the governor.
Glenda
McDonald, a Highland Park
resident and laid-off teacher, said that the problem was not entirely the fault
of the community. "The disinvestment in our communities led to the
disinvestment in our schools, and that's why people left," she said.
"We had nothing to offer them."
Write to Stephanie Banchero at stephanie.banchero@wsj.com and Matthew Dolan at matthew.dolan@wsj.com
A version of this article appeared August 3, 2012, on page
A3 in the U.S. edition of
The Wall Street Journal, with the headline: Michigan City Outsources
All of Its Schools.
http://online.wsj.com/article/SB10000872396390443545504577565363559208238.html