Heights Schools Emergency Financial Manager Claims Water Plant Is Key To School System Debt Payoff

Andrew Trzaska | March 11, 2013

Muskegon Heights Public Schools emergency financial manager Dr. Donald Weatherspoon attended Monday’s city council meeting to draw a link between Muskegon Heights’ water plant situation and the possible failure of his plan to pay off the eight-figure debt incurred by the now dormant Muskegon Heights Public Schools.

Currently, the multi-million dollar debt the school district holds is being slowly serviced by a millage off of non-homestead property values, including businesses and apartments.  The millage was previously used to build the new Muskegon Heights High School over a decade ago, but voters in the city recently extended its taxing power beyond 2012 to help pay down the district’s debt.

The comments create a sense of complexity around the two separate units of school and city.  City of Muskegon Heights is not truly on the hook for the debts of Muskegon Heights Public Schools because they are very different entities, though the district is currently levying taxes on residents of the city through the millage.

The extension of the millage was Dr. Weatherspoon’s brainchild, but he fears the district will not be able to draw out the full amount of money it planned to if the city’s shifting water customer situation deteriorates.

Weatherspoon’s analysis of the city’s water plant circumstances is based on the idea that the pending departures of Fruitport and Norton Shores from the system could cause a chain reaction that would lead to businesses located in Muskegon Heights to leave for other towns and other water systems.

If these businesses theoretically leave the city, their property tax revenue would also disappear. Fewer property taxes equal fewer millage dollars, sinking plans for the district to pay off its debt.

Four city council members and city manager Natasha Henderson listened to Dr. Weatherspoon’s reasoning during the public comment section of the meeting. Council member Keith Guy, Patrice Johnson and Kimberly Sims were absent from Monday’s meeting.

Henderson had questions on some of Weatherspoon’s assertions at Monday’s meeting.

First, she questioned how Weatherspoon appeared to be equating the city’s water fund with its general fund. She stated that the two funds were separate, and deficiencies in one fund would not affect the other.

Weatherspoon followed up with a clarification of sorts. He suggested Muskegon Heights would dramatically raise its water rates after the departure of Norton Shores and Fruitport. The shock of the higher rates would cause businesses to leave en masse.

After Monday’s meeting, Henderson denied plans to immediately jack up water rates due to the departure of the two municipalities.  She also emphasized that water rates in Muskegon Heights continue to remain lower than what the county’s other system, Muskegon, current charges its customers.

Dr. Weatherspoon said the council needed to reverse the tide of businesses closing.

“I’d really like to see that erosion stop.”

Dr. Weatherspoon cited Highland Park in his comments, where he is also emergency financial manager, saying their financial footing is improving faster than Muskegon Heights Public Schools.  Henderson assured Weatherspoon of her understanding of financial emergencies, citing a long-running knowledge of the financial troubles of Benton Harbor.

Weatherspoon noted that he would be including the changing situation surrounding the Heights water plant in a revised plan to the Michigan Department of Treasury next month, as an indicator of the financial factors playing into the district’s recovery.