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Mosaica Education Inc.will not manage the Muskegon Heights Public School Academy System after this year.
(MLive file photo)
MUSKEGON HEIGHTS, MI -- Mosaica Education Inc. will no longer manage the Muskegon Heights charter school district, and plans will begin immediately to seek a replacement company.
The Muskegon Heights charter school board on Saturday, April 26 voted to amend its contract with Mosaica to run the schools from five years to two, effectively ending the contract on June 30. A new company will be sought for a three-year contract, through the 2016-17 school year.
Muskegon Heights Public Schools Emergency Manager Gregory Weatherspoon said the separation came down to an issue of finances. Mosaica, a for-profit company, was running a deficit budget and not making a profit. School officials said the split is not the result of dissatisfaction with academic progress of students in the K-12 Muskegon Heights Public School Academy.
Weatherspoon said both Mosaica and the charter district board agreed the separation agreement was necessary.
"They came here to do a service for the children," Weatherspoon said. "They got the job done, but it didn't fit their financial model... The profit just simply wasn't there."
At the core of the financial problems were investments into the school buildings, which Mosaica leased from the public school district for $1, as well as higher-than-expected special education costs and lower-than-expected enrollment. As the first charter school district in the nation, school officials have acknowledged there was a lot of uncertainty about costs when Mosaica took on the management role two years ago.
Muskegon Heights Public Schools Emergency Manager Gregory Weatherspoon, Muskegon Heights Public School Academy Superintendent Alena Zachery-Ross, and Muskegon Heights charter district board President Arthur Scott, from left, answer questions Saturday about the departure of Mosaica Education Inc.
Mosaica recently has had cash flow troubles that resulted in it seeking emergency advances of state aid in order to make payroll, which had to be delayed earlier this month. The management company, based in Atlanta, fronted $761,000 so that staff could be paid, Weatherspoon said.
The company will be repaid that money with a portion of a $1.4 million emergency state loan that Muskegon Heights Public Schools expects to receive on Monday, he said.
Mosaica's contract calls for it to receive about a $1 million annual management fee. It was paid $600,000 of that the first year of the contract and waived the rest, said attorney Gary Britton. This year, the company waived the management fee, but will receive $84,000 split over the next three months to help cover administrators' salaries for the rest of the year, said John Gretzinger, an attorney for the charter district.
The charter board on Saturday also approved a series of amendments to its contract with Muskegon Heights Public Schools, which is the authorizer of the charter district. Those amendments essentially allow for the charter district to receive payments from the $1.4 million emergency loan to cover costs, Gretzinger said.
The separation agreement has already been approved by Mosaica's board.
"This was a difficult decision for us and our board," Mosaica Chief Executive Officer Michael Connelly said in a prepared statement. "We are very proud of the academic turnaround we were able to achieve under the leadership of Alena Zachery-Ross, our regional vice president and the superintendent for the system."
Muskegon Heights charter board President Arthur Scott said it is hoped that the new company will hire Zachery-Ross and the rest of the staff who are currently employed by Mosaica to work in the district.
"We have a fantastic group of educators here," he said.
The charter district ended last year with a $600,000 deficit, solely because of investments in the facilities, Muskegon Heights officials said.
There are still about $600,000 in repairs that are needed to the school buildings, Weatherspoon said. M.L. King Elementary, the district's lower elementary school, needs $400,000 in repairs and likely will be closed after this school year, he said.
Muskegon Heights officials expressed concerns last year about Mosaica. Among issues then Muskegon Heights Public Schools Emergency Manager Donald Weatherspoon said had to be addressed were student achievement, training of school staff, curriculum design, school safety and assessment of student needs, according to correspondence between the public school district and Mosaica that MLive Muskegon Chronicle obtained through Freedom of Information Act.
As the school year came to an end last spring, Donald Weatherspoon, Gregory Weatherspoon's brother, wrote in a May 8, 2013, letter of his deep concerns about Mosaica's first year, threatening to revoke the charter contract without "100 percent compliance."
"Significant progress must occur if this historic partnership is to continue," he wrote in a letter to Scott, adding that Mosaica's performance has been "far less than satisfactory."
Mosaica was contracted by the charter board to operate the public school district's four schools in July 2012 after the district was turned into a charter school district by Donald Weatherspoon. With the district millions of dollars in debt and many students' academic scores alarmingly low, he decided to wipe the slate clean and open the nation's first all-charter school district.
Gregory Weatherspoon said student achievement improved this year under Mosaica, calling that a "terrific story." But finances were another story.
"We didn't have constant communication from day one to see the cash flow," he said. "When we did see the cash flow, we did see there was a problem."
Scott echoed Weatherspoon, saying Mosaica did "a great job."
"At this point, Mosaica just can't eliminate the deficit as we hoped for," Scott said.
The charter board will accept until May 23 proposals from organizations interested in running the school district. It will seek help from Zachery-Ross, Weatherspoon and community members in interviewing the applicants.
Scott said a couple organizations have expressed interest in becoming the next management company. It is hoped a new management company will be in place by June 30, he said.
Joe Warren, president of the Muskegon Heights Alumni Association, said he was asked to sit on that interview panel. He said he hopes the new management company comes in quickly to ease the concerns of parents who might be tempted to pull their children out of the district.
"I just want to get it taken care of as soon as possible so that come August, the kids know they have a school to come to," Warren said.
Lynn Moore covers education for MLive Muskegon Chronicle. Email her at lmoore8@mlive.com and follow her on Twitter and Facebook.