Staff not paid, state advances money to Muskegon Hts.

Muskegon Heights High School. (April 1, 2014)

MUSKEGON HEIGHTS, Mich. (WOOD) – After staff at the Muskegon Heights Public Academy System did not receive paychecks Monday, the state advanced the charter school district $231,000 to cover the bi-weekly payroll payment.

A treasury representative said that staff could expect to receive payment within the next day or two. The principal of the high school, or the head of school, Carla Turner-Laws, told 24 Hour News 8 Tuesday afternoon that staff had been paid. Initially, she would not identify herself to 24 Hour News 8 or say whether she was an administrator of a teacher.

She went on to tell 24 Hour News 8 that the only person who would comment on the story was superintendent of the district, Alena Zachery-Ross.  Ross was in Lansing and did not return calls for comment.

Turner-Laws went as far as telling a man who did not work for the district and who was sitting in his pickup truck on public property that he could not talk to 24 Hour News 8. When he wouldn’t stop, she called someone to give the person on the other end of the line the truck’s license plate number until 24 Hour News 8 made it clear cameras were rolling and asked why she was trying to intimidate people into not speaking with the media.

Muskegon Heights Public Academy System is a charter school district run by Atlanta-based, for-profit company Mosaica Education Inc. That company took over Muskegon Heights Public Schools because it was millions of dollars in debt.

Muskegon Area Intermediate School District Superintendent Dave Sipka, who was reached by phone Tuesday, said that while there are several reasons behind the cash-flow issue, a major one was that Mosaica’s business model is based on a district with about 1,400 students and the Muskegon Heights Public Academy System currently has around 900.

According to Sipka, this isn’t the first time payroll has been an issue for the charter district. One previous payroll payment had to be covered by money advanced from Mosaica Inc. The district had just received a state aid payment of $455,000 on March 20, and the payroll cost is $231,000.  Terry Stanton from the Michigan Department of Treasury said that the state was not made aware of the cash-flow issue until March 28.

“As a business, the trouble is, they’ve just lost so many students over the years,” Sipka said. “From last year to this year, as a for-profit business, their business plan isn’t working right now.”

Sipka also pointed to other costs that were higher than initially budgeted for in the charter.  He said the company had to pay significant costs — more than $500,000 — to get schools up to code in 2012.  He also said the costs of special education were higher than the company first budgeted.

“It’s never one issue, it’s a series of issues,” Sipka said.

Sipka said he first spoke to Mosaica about cash problems back in December. He said the company spoke about trying to borrow money from the state in the form of a state-aid note. That money would be based on the number of students the district currently has, and if the district continues to lose students, the ability to pay back a state-aid note would become more difficult.

“I cautioned them back in December… to do that is a slippery slope,” Sipka said. “If you lose kids, now your ability to pay back is gone. It’s a never-ending cycle.”

That’s what happened with the Muskegon Heights Public Schools district: Too much money was borrowed and the district couldn’t pay it back to the state.

Yet Sipka said that at this point, that’s not the position in which the charter district has found itself.

“This is not something that [Mosaica] can’t get out of,” Sipka said. “It’s all about structuring loans at this point, to carry them through.”

Sipka said the district does anticipate some student growth in the future, but the company also may need to pay for more building improvements.

Several calls to the treasurer of the charter school district’s board were also not returned Tuesday.

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