The state of Michigan despatched an emergency manager to take over the public schools of Muskegon Heights, Michigan, because the little district with three schools and 1,400 students had run up a deficit of $12 million.
Rather than help the district figure out how to pay off its deficit, the emergency manager decided that it was best to close down the public schools and hand over the students to a for-profit charter company. He selected Mosaica Education of Atlanta.
Now Mosaica has released its budget. Over the next five years, it projects,Mosaica will extract a profit from its charters in Muskegon Heights of at least $8.75 million and possibly up to $11 million, depending on enrollment.
I am puzzled. If Mosaica can make a profit that approximates the size of the deficit, why couldn’t that same amount of money be allocated to pay off the deficit?
Why was it necessary to extinguish the public schools and bring in a for-profit corporation?
Diane Ravitch's blog 
Because the politicians were not making enough money from all of the kickbacks they were getting from all of the city contracts they were scamming from. Now they get their money much faster from the charter companies.
Cynical, yes. Do I hate that I feel this way? Yes. Just going from experience. Was Eva Moskowitz not already making (stealing) enough money from NYC & NYS?
Diane,
I would assume that the profit will be realized by decreased expenditures per pupil with the same tax outlay per pupil.
Public school
tax revenue-cost of education(tax+?$)=deficit
Charter school
tax revenue-cost of education(tax-?$)= Profit
Eazy peazy
So if they are realizing a cost savings, why couldn’t the emergency manager realize the same cost savings? They will use the money saved to pay their investors and shareholders. Shouldn’t that same money be used to pay down the debt or to improve the schools? You are making an argument for privatizing. I am not. The “profit” would pay off the deficit.
I read his analysis in a more “snarky” way, not in a literal way. Because the question then is “how can the private entity make that profit?” By lowering costs/expenditures which means fewer, lower paid inexperienced throw away teachers and inadequate staffing levels with the administrators being the well paid overseers using fear and intimidation to attempt to control staff and students.
Not to mention they will get sweet deals on leases/purchases of the public commons/good that are the buildings and facilities already paid for by the taxpayers.
And then when they, the charters fail, as they will because underlying socio-economic issues will not have been addressed by the politicians, and the city/state attempts to re-take back over the private charter will cry “The state is taking private property and it needs to reimburse us for full market value”-leaving the taxpayers to have paid twice for the infrastructure. Just wait and see, that is the next step in the privateer deformers playbook. These folks are good at these games, not to mention they have the billionaires on their side who buy the politicians to write the laws so that this will all be legal. Legal but not just, that is.
I read the arbitration agreement between Lafayette Academy and Mosaica a while back when I was researching the current head of our state’s charter commission (in Georgia…he was CFO of Mosaica before taking his cush govt job). They were woefully unwilling to provide even basic necessities for education to occur such as clean halls, transportation, textbooks…the line that stuck out to me was that the school reeked of urine due to lack of custodial services. Yet somehow they slickly survive and here they are, taking over more failing schools so that they may profit. This is so crazy.
Duane,
I’m not surprised that you took it as snarky. I was illustrating that there would likely not be an increase in cost to the tax payers.
The methods used to realize the cost savings may include all those that you listed or may include none.
Diane,
The emergency manager is likely not an educator or school administrator. Likely a numbers guy (accountant, etc.) and likes the surety of a contract with a large corporation.
The manager could realize the savings but likely doesn’t want the head ache. The path of least resistance is to subcontract. Since the powers of the manager are vast, It is easier to break the school contracts and sign a single contract, less negotiating.
I am stating facts about school finance.
The emergency manager could have dissolved the district and sent the student to near by school districts. I would be okay with that.
Cheers (with a touch of snarky)
Since Mosaica has a poor record in Michigan in re student test scores, it’s not much hope for the children. But good money for Mosaica. That’s what it’s all about. When do we stop giving away public assets to private corporations, not to mention the children, for whom it is all about?
We will stop giving away public assets when public stewards practice stewardship and not drive public institutions to the brink of financial ruin.
I’m afraid the schools are on an unsustainable course. The inclusion of technology in schools has increased the overhead cost at the expense of student learning. I am not a Luddite, but I do not see the value added by technology additions to learning are worth the cost.
I used an advanced math textbook in high school that was 15 years old. Try to stream your lesson from Kahn academy on a 15 year old computer. 🙂
Likely to get worse unless public schools can demonstrate their value to state regulators or voters agitate for more local control of education.
Don’t you think it would help if states stop cutting education budgets? When they do that as tax revenues fall due to recession, it is tough on schools. Skimping on technology won’t save millions. How about cutting out all the consultants and entrepreneurs now sucking up public dollars? Teachers didn’t put them there. Talk to your Congressman.