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Charter school CEO says Muskegon Heights schools owes company $2 million
Michigan Radio
April 22, 2014

The Muskegon Heights charter school district owes the company that’s operating its schools a little more than $2 million. That’s according to Mosaica Education’s CEO. 

The new charter district was created in Muskegon Heights when severe cash problems prompted a state takeover of the traditional school district by an emergency manager in 2012. Now the charter district is having cash flow problems of its own.

The district couldn’t afford to pay its teachers and staff March 30 or April 15. The state of Michigan fronted the district $422,000 to cover payroll. The money was advanced from the district’s state aid payment, which typically is distributed on the 20th of the month. After debt obligations, that payment is around $455,000.

Mosaica Education’s CEO Mike Connelly says there are “plenty” of times when the company covered the costs of starting a new charter school before it could turn a profit.

“This one is an outlier for us. It’s much less payments to us, zero (this school year) and much more advances to the school, almost a million dollars. So it’s not our normal operation but it’s not a freak of nature though,” Connelly said.

"We consider ourselves social entrepreneurs. We have a double bottom line. Our most important things is the success of the schools we operate," he said.

Teachers and staff at Muskegon Heights schools work for Mosaica. The company is responsible for paying them, but the district, Muskegon Heights Public School Academy (MHPSA) is responsible for funneling the school aid payments to cover operating expenses, Connelly said.

MHPSA school board and its attorney have declined repeated requests for comment on the ongoing cash flow problems.

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