New CRC Report on School District Deficit Elimination Options
On Monday, July 9, the newly formed board of the Muskegon Heights Public School Academy signed an agreement with a charter school operator to provide all educational services to all of the Muskegon Heights School District beginning in fall 2012. This action effectively converts the entire school district to a charter school, which is part of the plan crafted by the emergency manager appointed under Public Act 4 of 2011 to simultaneously address the district's lingering financial deficits and ensure the necessary educational services are provided to the children in the district. As identified in CRC's June report, State Bailouts to Erase School District Accumulated Deficits, this plan will result in additional state funds being provided to the district to help eliminate the past deficit.
As a follow up to the previous report on the topic, CRC is releasing a new report, Options to Address School District Accumulated Deficits, to highlight options for state policymakers to consider when dealing with school district accumulated deficits in fiscally failing districts. The options include, charter conversion, a direct state appropriation, an additional local tax, and district consolidation with state assumption of deficit. These options are presented in light of the Muskegon Heights plan, which is being pursued without a clear statewide policy and without the direct involvement of the Michigan legislature.
"If Michigan policymakers accept the premise that some school financial challenges cannot be solved within existing resources and additional funds are needed to address past deficits, then these funds should have their origins in a state policy," stated CRC Director of State Affairs Craig Thiel.
The current plan for Muskegon Heights School District has its origins in the unique confluence of the emergency manager powers under Public Act 4, converting the district to a charter school, and the state's school finance system, as opposed to state policy. "As more and more emergency managers are appointed to help school districts deal with fiscal challenges, the need for a clear policy becomes more pressing," added Mr. Thiel.
The new CRC report concludes that a state policy to provide additional resources specifically for past deficit elimination should, at a minimum, be transparent, equitable, transferable, and consistent with other reforms. Also, the additional resources must be short-term in nature and be accompanied by long-lasting governance, financial management, and educational reforms to ensure that distressed districts will not be seeking forgiveness again in 10-15 years.
CRC's analysis of the treatment of the Muskegon Heights School District is available at no cost on the Citizens Research Council's website, www.crcmich.org.
Founded in 1916, CRC works to improve government in Michigan. The organization provides factual, unbiased, independent information concerning significant issues of state and local government organization, policy, and finance. By delivery of this information to policymakers and citizens, CRC aims to ensure sound and rational public policy formation in Michigan. For more information, visit www.crcmich.org.