Can contracting out education services save a school district money and improve student performance? Highland Park Public Schools in Michigan are about to find out.

It’s an innovative idea, one enabled by Michigan’s emergency manager law, which gives one public official almost autonomous authority to oversee a city or school district’s finances and operations, as Governing detailed in its June issue. Last week, Highland Park Public Schools Emergency Manager Joyce Parker announced that she planned to hire The Leona Group, a charter school operator, to take over the school’s curriculum and instruction. Parker and her office will continue to oversee financial matters.

In a statement announcing her decision, Parker portrayed the new model as a “Public School Academy System.” The Leona Group will oversee the hiring of staff and institute learning plans and other school operations related to education, including maintenance of school facilities. Parker and her office are still the district’s ultimate authority and will be responsible for monitoring the performance of the charter operator.

Highland Park’s financial struggles are substantial, according to Huffington Post Detroit. Enrollment dropped by 58 percent from 2006 to 2011, and a cumulative deficit of $11 million has developed. The state government had previously bailed out the district, but Parker’s office projected the deficit would increase by another $4 million or more within the next month. Transferring to a public-charter system “was the only viable option that allows children to attend school within the Highland Park community,” Parker’s office said in the announcement.

The plan has its opponents, including the teachers union, whose contract with the school district will be terminated. Teachers will technically be fired, although they will be allowed to reapply for employment and Parker has urged The Leona Group to rehire any teachers that do. David Hecker, president of the Michigan chapter of the American Federation of Teachers, tells Governing that, while he appreciates that gesture by Parker, the union is “exploring all of its options,” including investigating whether the emergency manager law gives Parker the authority to make such a move.

“They’re doing this for solely financial reasons. We have grave, grave concerns,” Hecker says. “They’re taking public money, using an emergency manager who is not at all elected, and then hiring a private company.”

In addition to its financial problems, Highland Park has struggled with student performance. Earlier in July, prior to Parker’s announcement, the ACLU filed a class-action lawsuit on behalf of the district’s students, saying that the state and district had failed to provide them with a quality education. Less than 10 percent of Highland Park’s student in grades three through eight scored as proficient in reading and math on state exams, the ACLU claimed. The group argued that such poor performance was a violation of the state constitution.

While not directly connecting academic struggles with the district’s financial situation, the ACLU observed that students were working with outdated learning materials in borderline decrepit conditions.

“We only ask that the state fulfill its obligation to our students and provide them with a quality education, which is every child’s right,” Kary Moss, executive director of the Michigan ACLU, said in a statement. “Financial interventions such as the appointment of an emergency manager… are evidence that the state has been on notice of this serious problem for quite a while.”

Parker’s office made no reference to the ACLU lawsuit in announcing Highland Park’s contract with the Leona Group, but did point to the group’s success as a charter-school operator in Detroit, where public schools in dire academic and financial straits have also been turned over to private companies under the emergency manager law. Detroit high schools under The Leona Group’s management have achieved graduation rates above 85 percent and college acceptance rates above 90 percent, Parker’s office said. The group’s record isn’t flawless, however: according to an April 2011 ProPublica investigation, several Florida charter schools that worked with the company terminated their contracts because of poor student performance.

Michigan could continue to be a laboratory for the public-charter model, thanks in part to its emergency manager set-up. Detroit and Highland Park have already pursued that option, and the Muskegon Heights School District (also operating under an emergency manager) has proposed to do the same, according to the MLive news service.

With a relatively untested model that has generated a fair amount of controversy, all eyes will be on how these school districts perform.

“The greatest unknown is whether or not they can succeed academically,” Terry Ryan, vice president at the Thomas B. Fordham Institute, a conservative education reform think tank, tells Governing. “But I think you’re going to see more of this happening, as cities and towns deal with these brutal financial realities.”

Michigan Emergency Managers and Consent Agreements

Red markers shown below represent governments and agencies under emergency management. Yellow markers signify consent agreements. Click the icons for additional information. Information is current as of May.