Muskegon Heights Public School Academy Charter District Slips Onto Deficit Watch List

Andrew Trzaska | December 16, 2013

Muskegon Heights Public School Academy now resides on the Michigan Department of Education’s quarterly list of school districts with deficit fund balances.

The charter district formed by former emergency manager Dr. Donald Weatherspoon now carries its own fund balance deficit of $553,763 as of June 2013, or 5.74% of the district’s total revenues in the previous fiscal year.

Monday’s Board of Education meeting included a review of the district’s 2012-2013 audit.  The auditor reported that most of the deficit was due to the district not securing a loan of over $500,000 for capital improvements.

This is not to be confused with the deficit that Muskegon Heights Public Schools continues to carry from before it outsourced educational and other services to Mosaica Education in 2012.

This places the district in Category 4 of the DOE list, school districts that began fiscal year 2013 with a positive fund balance but ended the year in deficit.

The district is also facing challenges from lower enrollment in its second year in operation, plus funding cuts from the state.

“The Academy continues to experience financial challenges due to the decreased enrollment from the previous year,” said Darryl Todd, secretary and treasurer for the charter system board at this week’s Board of Education meeting.

Todd noted in his treasurer’s report at the meeting that a recent payroll was funded in part by Mosaica Education to cover the lack of cash available.  The district has received Title I funds from the federal government recently, but this does not cover the deficit the district is experiencing.

After hearing the audit report, board president Arthur Scott remained optimistic.

“We understood that we started in a position where most charters had an opportunity to gain funds, that simply weren’t available to us,” said Scott.

This quarter’s Michigan Department of Education watch list includes 61 total schools across 6 categories, if counting the recently merged Willow Run/Ypsilanti school district as one unit and two dissolved school districts, Buena Vista Schools and the Wayne RESA school district of the City of Inkster.

Of all Muskegon County school districts, Muskegon Public Schools, Muskegon Heights Public Schools, and now Muskegon Heights Public School Academy reside on the DOE list. Muskegon carried a $1.2 million deficit at the start of the new fiscal year in June. The DOE document did not list current figures for Muskegon Heights Public Schools.

School districts that reside on the list must submit deficit elimination plans to the state. Reducing the district’s deficit was also discussed at Monday’s Board of Education meeting. Mosaica Education finance director Roger Gray presented the plan deemed the “best way to go forward” by Scott at Monday’s meeting.

The scenario presented is a balanced budget, resolving the deficit by proceeding with facility improvement financing of $650,000. This is the same amount budgeted last year and approved by the district and the state for these capital improvements.

“It was part of the plan for 2012-2013, so we have to roll that forward into the 2013-2014 budget,” said Gray.

This would allow the school district to not just end with a balanced budget but possibly a slight surplus at the end of the next fiscal year.

Gray also stated that the district met with emergency manager Gregory Weatherspoon and the State about the budget issues due to declining enrollment in the current fiscal year.