School & District Management

For-Profit Experiment Plays Out in Two Mich. Districts

By Katie Ash — May 01, 2013 13 min read
Teacher Kim Woods works with 9th grader Takija Brewer in her U.S. History class at Muskegon Heights Public Academy High School. The entire staff of the Muskegon Heights school district was dismissed after emergency manager Donald Weatherspoon hired Mosaica Education to manage the district.
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Educators and policy observers are keeping a close eye on two controversial experiments in private management of public schools now unfolding in this western Michigan city and in the Detroit-area community of Highland Park.

Citing chronic budget woes in the communities’ low-performing school districts, Gov. Rick Snyder of Michigan last year declared a state of financial emergency and appointed an emergency manager for each district. The managers, in turn, hired two separate companies—Mosaica Education and the Leona Group—to run the schools.

Gov. Snyder, a Republican, has also appointed emergency managers for one other district, the Detroit public school system, and six Michigan city governments—almost all of which represent primarily black communities. The moves have caused pushback from civil rights groups and aggravated racial tensions in the state.

For educators and K-12 analysts, meanwhile, the Muskegon Heights and Highland Park ventures have implications for evaluating what happens when for-profit companies manage public schools on a systemwide basis.

The districts ended the 2011-12 school year with hefty accumulated budget deficits attributed to years of declining enrollments, dwindling economic bases, and financial mismanagement.

Against that backdrop, the governor appointed Donald Weatherspoon to be the emergency manager for the 1,400-student Muskegon Heights district, which had amassed a $16 million deficit, and Joyce Parker to head the 1,000-student Highland Park district, which had accumulated an $11.3 million deficit.

African-Americans make up 88 percent of the students in the Muskegon Heights system, and 98 percent of the Highland Park system’s enrollment.

After his appointment in Muskegon Heights, says Mr. Weatherspoon, he knew he had to act quickly if the schools were to open again in the fall. So, in an unprecedented move, he decided to lay off the entire staff of the Muskegon Heights school district and create in its place a new charter district, called the Muskegon Heights Public School Academy, to be run by a private education management company.

Last June, Mr. Weatherspoon signed a five-year contract with New York City-based Mosaica Education, which operates more than 75 charter schools in 13 states and the District of Columbia. The company had three months to hire and train staff members, including those rehired from the old district, bring neglected facilities up to code, and persuade parents to keep their children enrolled.

Alena E. Zachery-Ross, the regional vice president of Mosaica Education, describes herself as essentially the superintendent of the Muskegon Heights Public School Academy. The district was taken over by an emergency manager last year.

Ms. Parker followed suit in Highland Park. In July 2012, she signed a five-year contract with the Phoenix-based Leona Group, which operates 68 schools in five states, to run the district’s high school and two pre-K-8 schools in the newly formed Highland Park Public School Academy.

Mr. Weatherspoon, who took over as the emergency manager for Highland Park in late October and now oversees both districts, says it was a unique convergence of circumstances that led to the formation of the charter districts, and he does not necessarily see it as a model for other cash-strapped districts in the state. (Currently, 49 Michigan districts are running budget deficits.)

And critics of the strategy say that neither Mosaica Education nor the Leona Group has an impressive record of turning around low-performing schools.

“We think that there’s a huge opportunity closed when the state steps in and decides to intervene in a place like Highland Park and Muskegon Heights,” said Amber Arellano, the executive director of the Education Trust-Midwest, an education policy and advocacy group in Royal Oak, Mich.

“Our concern is that, based on what we know about those operators,” she continued, “it would appear as if [this] opportunity may be wasted ... because those are two of the lowest-performing charter operators in Michigan.”

‘Don’t Give Up on Us’

Cold and gray weather has hung on tight to Michigan this spring, and occasional snow flurries dot the sky one day in March when Alena E. Zachery-Ross, the regional vice president of Mosaica Education, took the stage here at a community meeting held in the Muskegon Heights High School auditorium.

Addressing a sparse crowd of roughly 30 people, Ms. Zachery-Ross, who describes herself as essentially the 1,190-student Muskegon Heights Public School Academy’s superintendent, presented the district’s midyear report card.

Tales of Two Companies

Two private companies are now running two separate school districts in Michigan that the governor placed under the supervision of emergency managers after those districts suffered from financial mismanagement and poor academic performance. The following is a look at the two companies and their past performance running schools.

Leona Group

• Based in Phoenix, with additional offices in Coral Springs, Florida; East Lansing, Michigan; and Toledo, Ohio

• Founded in 1996

• Manages 68 charter schools

• Operates in five states

• Serves 20,000 students

• Employs 2,760 workers


Schools operated by the Leona Group in Michigan have a 90 percent average four-year graduation rate and a 94 percent average college-acceptance rate to 2- or 4-year colleges, according to Madalyn Kaltz, a spokeswoman for the company.

An independent report by the National Education Policy Center, based at the University of Colorado at Boulder, found that 54.4 percent of schools operated by the Leona Group across the United States in 2010-11 made adequate yearly progress—2 percentage points higher than the national average for AYP, a key measure of performance under the federal No Child Left Behind Act.

A January 2013 study from Stanford University’s Center for Research on Education Outcomes, which studies charter schools, found, however, that students in schools operated by the company experienced less academic growth than comparable students in regular public schools. The study included data from five academic school years, 2005-06 through 2009-10. But Ms. Kaltz said a more holistic view is needed to determine the success of the schools. “Child growth and development is much more complex than what is reflected by a one-time snapshot based on standardized tests,” she said in an email to Education Week. “A primary key to our success is that our school leaders and staff know every child by name, face, and family, therein creating the type of caring environment where children feel supported, empowered, and motivated to learn.”

Mosaica Education

• Based in New York City, with offices in Atlanta and Lansing, Mich.

• Founded in 1997

• Manages 75 charter and private schools

• Operates in 13 states and the District of Columbia

• Serves 11,000 students

• Employs 1,700 workers


During the 2005-06 and 2006-07 school years, the research group WestEd, as well as researchers at the Education Policy Center at Michigan State University, found that students in schools operated by Mosaica Education experienced significant amounts of academic growth based on the Iowa Tests of Basic Skills. But recent research shows a more mixed picture of performance in schools operated by Mosaica.

According to an independent report by the National Education Policy Center, at the University of Colorado at Boulder, 50 percent of Mosaica-operated schools in 2010-11 made adequate yearly progress, 2 percentage points below the national average.

Mosaica’s chief executive officer Michael J. Connelly said the numbers reflect the tough environments in which Mosaica chooses to operate. “All the states where we operate charter schools have the highest standards for making AYP,” and Mosaica operates charter schools in many struggling urban districts which could affect its overall performance, he said.

But a study released in January from Stanford University’s Center for Research on Education Outcomes, which studies charter schools, found that students in Mosaica-run schools experienced less academic growth than comparable students in regular public schools over a five-year period from the 2005-06 school year until the 2009-10 school year.

Reading and math scores were up since the fall for 2nd to 7th graders, although many students continued to lag behind where they should be, she said, and many 8th to 12th graders remained far behind where they should be to graduate on time.

But on the positive side, attendance was up and the number of fights at all schools had gone down, Ms. Zachery-Ross said.

“Don’t give up on us,” she implored the audience.

Some experts point out that Mosaica students nationally do not show as much academic growth as students from similar socioeconomic backgrounds in regular public schools.

Company officials counter that progress in situations like that in Muskegon Heights should be based not just on test scores, but also on improvements in the overall climate of a school.

“We’re not going to have it all figured out this year,” Ms. Zachery-Ross said in an interview before the public meeting. “We’re not pretending that we have it all together. It’s a continuous process.”

The first few months of the school year were chaotic. A quarter of the teaching staff hired by Mosaica in the summer left the district. Teachers and administrators struggled to gain control over student behavior. The high school is now on its third principal since August.

“It’s been everything all at once,” Ms. Zachery-Ross said.

But, she insists, things are improving. Mosaica installed security cameras in all the classrooms at the high school and recently hired more security guards for the middle and high schools. High school staff members say behavior problems are on the decline.

But the new district faces an uphill battle in closing achievement gaps. According to tests administered at the beginning of the school year, 92 percent of 9th graders scored at least three grade levels below where they should have been in reading, and 82 percent were at least three grade levels below in math.

Despite the poor scores, teachers say Muskegon Heights students are showing academic progress.

“Grades were drastically improved once [the students] realized we weren’t going anywhere,” said Matt Tevlin, a first-year teacher who started at the high school in August.

Mosaica Education provides a structured curriculum: its own Paragon program, a multicultural and interdisciplinary social studies curriculum; Houghton Mifflin Harcourt’s Saxon Math; and Houghton Mifflin Harcourt’s Journeys Common Core for reading.

Under the Mosaica model, teachers are required to spend a prescribed amount of time on each subject area, said Sonya Hernandez, the head of school, or principal, for Muskegon Heights’ 329-student Edgewood Elementary School. “We’re emphasizing bell-to-bell instruction,” she said.

Teachers are also required to have a data wall showing students’ growth on Scantron tests, which are given three times a year.

Norm Kittleson, who was a special education teacher at Edgewood Elementary, said the prescriptive curriculum was part of the reason he quit this spring.

“Certain things were supposed to be done at certain times of the day,” he said. “There’s not a lot of autonomy for the teachers in terms of adjusting the instruction or deviating from the plan.”

Mr. Kittleson also said he did not receive adequate support from the administration or Mosaica. Because he was hired midyear, he did not go through the three weeks of preservice training other teachers received before the school year started, he said.

Tackling Teacher Turnover

Among the teachers who have left the new Muskegon Heights system so far, the largest single proportion—28 percent—cited the charter district’s lack of participation in Michigan’s public-school-employee retirement plan as the reason, according to exit interviews collected by the district. Twenty-five percent cited student discipline.

Ms. Zachery-Ross said she recognizes that Mosaica’s salaries and benefits are not as competitive as the neighboring districts’. Teachers who worked in the former Muskegon Heights school system who reapplied to work in the charter district took a pay cut to do so. (Mosaica’s base teacher salary in Muskegon Heights is $35,000, compared with the former district’s $49,132. Teachers in the new district do not participate in a teachers’ union.)

Mosaica has also cut the number of administrators. The finance and human resources departments are run from the company’s corporate offices in Atlanta.

Having a national network from which to draw teachers was helpful in finding and recruiting teachers on a short timetable, said Sue McCarty, the compliance officer for the charter district.

But a national pool can also create its own set of challenges. For instance, the district found itself in hot water in February when an investigation by Michigan Public Radio uncovered five uncertified teachers in the district. All five teachers have since received their Michigan state certifications.

Because Mr. Weatherspoon, the emergency manager, rendered the Muskegon Heights school system defunct by reducing its staff to zero and created a new district for Mosaica to operate, the newly formed district has not taken on the $16 million debt.

The deficit will be paid down through a millage tax, renewed by voters in November, although it is unclear how long that may take. Estimates range from nine to 27 years, said Mr. Weatherspoon, who oversees the district along with a three-member board he appointed.

The now defunct school district operated under a $20 million budget in 2011-12. The new charter district is currently operating with a $14.6 million budget.

In the contract signed with Mosaica, the company will receive a minimum of $1.45 million for services for the 2012-13 school year as well as $200,000 for the Paragon curriculum license. (The company could earn more if enrollment increases.)

‘Feeling That I’m Safe’

Meanwhile, Highland Park’s new district is facing similar challenges.

Its high school, Highland Park Renaissance Academy, is located next to the Highland Park Ford plant. Opened in 1910 as a production facility for the Model T, the plant is where Henry Ford’s first assembly line was used.

Jennifer Castonia, a security officer employed by a contracted security service, patrols the halls at Muskegon Heights Public Academy High School. The school has installed 40 video cameras and a buzzer for entry into the school, and employed security officers in an attempt create a safe and secure environment.

The 40,000-square-foot factory now has boarded-up and broken windows, even as a sign outside commemorates it as a National Historic Landmark—a testament to the automotive industry that once sustained the community.

Like Muskegon Heights, Highland Park is a city where poverty is the norm, and the schools are some of the lowest-performing in the state. Security is a high priority for all the district’s schools, especially the high school, where guards pat down students as they enter the windowless building.

But students say the Leona Group’s new teachers and administrators have made a big difference in the climate of the school.

“It’s not violent [here] anymore. There hasn’t been a real fight all year,” said Justin Bailey, an 18-year-old senior who has been attending school in Highland Park since his sophomore year.

Dia’juania Grimes, an 18-year-old senior who has been enrolled in Highland Park since 9th grade, said classes were repeatedly interrupted last school year because of bomb threats and trash-can fires students set in the restrooms.

“I didn’t learn nothing my first two years,” she said. “This year, I have that feeling that I’m safe.”

As in Muskegon Heights, the teachers and staff of the regular Highland Park school district were laid off at the end of 2011-12. The Leona Group then hired the staff and teachers to open the new charter district in the summer, rehiring a small portion of the staff from the previous district who applied.

The new charter district, Highland Park Renaissance Academy, is not unionized.

The company also invested significant amounts of money in cleaning up the school facilities before students arrived in September, which Ms. Grimes said helped restore students’ pride in their school.

But Leona students nationally, according to one study, do not show as much academic growth as students from similar socioeconomic backgrounds in regular public schools.

‘A Laser-Beam Focus’

Pamela Williams, who was born in Highland Park, is the superintendent of the new charter district. Ms. Williams previously served as the principal of a Leona Group-run school, Saginaw Preparatory Academy, in another Michigan community.

She described her main priority as “a laser-beam focus on teaching and learning.” And that means not being afraid to fire teachers who aren’t showing significant academic growth with their students, she said.

Because Highland Park Renaissance Academy is technically its own new district, like the new Muskegon Heights system, it does not carry the debt accrued by the regular Highland Park system.

And, as in Muskegon Heights, Mr. Weatherspoon, the emergency manager, plans to pay down the debt owed by the defunct district through a millage tax.

But to keep Highland Park’s charter district financially viable, the Leona Group focuses on doing more with less, said Anthony Hubbard, the regional vice president for the company.

Charter schools in Michigan receive $7,110 in per-pupil funding, compared with $8,195 in per-pupil state aid that Highland Park received last year.

Teachers in the new Highland Park system are paid less—an average of about $39,400, compared with the $54,700 average teacher salary for the regular district. In fact, the total amount spent on staff salaries and benefits is about a third of what the regular district spent last year—$4.5 million, compared with $13.8 million.

While lower salaries account for some of the difference, the charter district has also cut back on the amount of administrators the district employs.

And overall, the charter district is operating on a budget of $8.9 million compared with the previous year, when the budget totaled $15.9 million, which does not include debt service.

The Leona Group receives a $780,000 annual fee for running the schools in Highland Park.

ACLU Lawsuit

On another front, the American Civil Liberties Union of Michigan filed a class action against the state of Michigan, the state agencies that oversee education, and the Highland Park system shortly after the Leona Group signed the contract to run the schools.

The suit is based on a Michigan law that requires the state to provide extra resources and assistance to bring students reading below grade level up to proficiency within a year in order for a school district to ensure that its individual schools remain accredited.

The ACLU has asked for an immediate remedy of the problem by the state through research-based instructional methods, highly-trained teachers and administrators, new educational materials and textbooks, a clean and safe learning environment, and a process for monitoring the schools’ progress.

So far, the state court in the case has ordered a panel of experts to observe the schools and craft a plan to address the challenges outlined in the lawsuit, said Mr. Weatherspoon. One result is a high level of scrutiny of the Highland Park Renaissance Academy.

“Leona’s been forced to get ahead of the curve,” Mr. Weatherspoon said.

While Mosaica Education and the Leona Group have managed to remain financially viable—something the districts they are now occupying were unable to do for many years—whether or not they will be able to raise academic achievement remains to be seen.

Teachers, administrators, and students in the new school systems say progress has occurred in the months the charter districts began operating, but they know the schools are still far from their goal of college and career readiness for all students.

Seventeen-year-old senior Trevon Kitchen, who attends the high school in Muskegon Heights and will be the latest of several generations of his family to graduate from the local schools, said he has high hopes for Mosaica’s ability to improve the district.

“They came into this not knowing what to expect,” he said. “Give it time, and don’t judge so quickly. Hopefully, given time, it will be better.”

Coverage of the education industry and K-12 innovation is supported in part by a grant from the Bill & Melinda Gates Foundation. Education Week retains sole editorial control over the content of this coverage.
A version of this article appeared in the May 08, 2013 edition of Education Week


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