Musk Hts schools seeks state advance for payroll

MUSKEGON HEIGHTS, Mich. (WOOD) — The Muskegon Heights Public School Academy System has asked the state to forward it $191,000, about a week after asking for an advance of $231,000 to cover a missed payroll.

The 2-year-old charter school district’s board met Thursday at noon. In the five minute meeting, the three-member board voted unanimously to ask the state for a second advance on its April state aid payment. If the Department of Treasury approves the measure, the district will have borrowed about 93% of its April state aid payment.

According to a representative from the Department of Treasury, the district receives a state aid payment of about $455,000 on the twentieth of each month.

24 Hour News 8 asked Mosaica Regional Vice President Alena Zachery-Ross, who serves as the district’s superintendent, if she anticipates the district will need another advance before the end of the school year.

“I don’t know,” said Zachery-Ross. “At this time, we’re working to make sure we have a balanced budget.”

That would be a first for the Muskegon Heights charter system. It ended its first year (the 2012-2013 school year) with a deficit of $553,763. Representatives from the district and its management company, Mosaica Education Inc., point to higher-than-expected renovation costs at district schools, startup costs, and fewer students than anticipated choosing the district.

The number of students is particularly important for school funding, as a large portion of money is tied to per pupil enrollment. The state aid note that the district is borrowing against is based on the district’s current enrollment numbers. If those numbers go down, the district will still have to pay the state back for the amount borrowed.

This is, at least in part, what happened to the original Muskegon Heights Public School District. That district borrowed against future state aid notes, and declining student enrollment pushed the district further into debt.

When asked if there was a plan to deal with paying back a loan if student enrollment continues to decline, Zachery-Ross replied, “that’s what we’ve been working diligently on so that we can have an approved budget that allows us to service the students in this community.”

The district, Mosaica and the Department of Treasury told 24 Hour News 8 they are working together to try to find a permanent solution.

Zachery-Ross told 24 Hour News 8 she does not anticipate the district having another payroll problem for the rest of the year. She said she didn’t know whether the district would need another state aid advance.

Mosaica Education Inc., the district’s for-profit management company, received more than $1.5 million in management fees and licensing costs for its curriculum in the last school year. A budget posted on the district’s website anticipated the fees would be more than $1 million this year for the same management and licensing fees.

Those fees are spelled out in the district’s charter contract. 24 Hour News 8 was told that at least some of that money goes to pay Mosaica employees in Muskegon Heights, not district employees, but employees like Zachery-Ross.

When asked if there was any concern if the district would not have classes next year, Zachery-Ross replied, “No. We are going to ensure that there is school here, so we’re working with treasury were working with the Michigan Department of Education and our emergency manager.”

Mosaica CEO Michael Connelly told 24 Hour News 8 that the district’s board is trying to secure a private loan to mitigate some of the district’s deficit, but nothing has been resolved.

Representatives from the Department of Treasury told 24 Hour News 8 that there is no set timeline for when, or if, the state will approve the request for the state aid advance.

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