Indiana

IPS shocker: $30 million deficit was phony

PHOTO: Scott Elliott

The $30 million deficit Indianapolis Public Schools has been bemoaning for nearly a year doesn’t exist, new Superintendent Lewis Ferebee said today.

In fact, Ferebee told the school board, IPS ended 2013 with an $8.4 million surplus.

Based on his own analysis, corroborated by the district’s attorneys and an accountant, Ferebee concluded the deficit was a phantom and speculated that IPS’s prior administration “intentionally overstated expenses to protect our cash balance,” he said.

“I’m at a point now where I feel like I have enough information to confirm that we don’t have a structural deficit,” he said. “I think it’s important to be transparent with the community.”

The revelation comes as IPS approaches its budget-making season and may instantly relieve the need for drastic cuts the school board was expected to consider to try to rein in what it believed to be massive overspending. In other words, it could keep schools open, save teachers’ jobs and keep programs that benefit students from being cut.

“I sought counsel from our legal counsel and also the CPA of our legal firm,” Ferebee said. “They said, ‘you’re not crazy. We see some of the same things.’ ”

In recent years under former Superintendent Eugene White, the district made nearly annual announcements of deficits, which led to layoffs, pay freezes and cuts in programs and services for students. Ferebee said he believed those reports of deficits were designed to quietly keep a strong cash balance to cover any unexpected expenses that might otherwise be difficult to address during the school year. Board members and the public were led to believe IPS was falling short financially, he said. White and former interim Superintendent Peggy Hinckley said late Tuesday they were skeptical of Ferebee’s analysis.

Ferebee said he believed the practice went back years. Without naming names he also said he expected unspecified “personnel changes” would be one of the results of his investigation.

Last year, interim Superintendent Peggy Hinckley raised alarms about the deficit, suggesting IPS would have to consider closing as many as 10 schools to get its spending under control. Hinckley, who was replaced by Ferebee in September, predicted IPS would have to tap reserve funds to make it through this school year.

But Ferebee said he discovered a disconnect when he began digging into IPS’s financial position during the district’s winter break in December. The numbers didn’t add up, he said.

What he found, Ferebee said, was the district’s budgeting system was entirely disconnected from its actual spending and income. To make the budget, Ferebee said, IPS used estimated revenues and included in its spending plan a host of programs and initiatives that were more speculative than real.

For example, Ferebee said IPS included in its budget in recent years the creation of a science and technology magnet high school, setting aside dollars for a school that was never launched. The school board, he said, was unaware that this money was not being spent, even at year’s end. Board members were never shown the difference between what budgeted and what was actually spent.

IPS’s budget projected revenue of $244 million and $274 million in spending for the calendar year that just ended in December of 2013. The $30 million difference was the deficit that district officials repeatedly said since last spring needed to be closed, and which prompted Hinckley’s call for school closings.

But at the end of the year, Ferebee said, the actual spending number was quite different. While revenue was close to the projection at $246.2 million, spending was much lower at only $237.8 million, resulting in an $8.4 million surplus, not a deficit.

“I had a lot of emotions,” Ferebee said of his reaction once he was certain his numbers were right. “It was very disappointing for me that we were communicating we had a budget deficit when we actually didn’t.”

A report on IPS’s operations released last month by the Indianapolis Chamber of Commerce referenced the budgeting problem and recommended moving toward a budget based on actual numbers instead of projections. Ferebee said the plan going forward is for monthly reports to the board on actual spending and revenue compared to the budget projections for both.

While the vanishing deficit may be hard to explain to the community, it’s also a golden opportunity to demonstrate a new level of transparency about the district’s decision making, Ferebee said.

For students and teachers, Ferebee said a surplus instead of a deficit means IPS likely will not face school closings or layoffs this year. Ferebee said IPS is entering talks with unions about revamping its compensation system, and the surplus means raises at least could be considered. Most district employees have not had a raise in five years beyond automatic hikes under union contracts that reward added years of experience and additional education credits earned.

For parents and students, it also means IPS can look at how to make changes to try to improve learning, not just focus on ways to save money, Ferebee said.

“This is an opportunity for us to be more strategic in our efforts in terms of how we support students and families and how we improve student outcomes,” he said. “We have a long way to go as it relates to improving student achievement. Knowing that we don’t have a structural deficit definitely opens doors of opportunity for how we support our students.”

a 'meaningful' education?

How a Colorado court case could change how public schools everywhere serve students with special needs

Dougco headquarters in Castle Rock (John Leyba/The Denver Post).

The U.S. Supreme Court on Wednesday grappled with the question of what kind of education public schools must provide students with disabilities, hearing arguments in a case that originated with a complaint against a suburban Denver school district and that could have profound implications nationwide.

The case involves a student diagnosed with autism and attention deficit/hyperactive disorder. His parents pulled him out of his Douglas County elementary school, saying he wasn’t making enough progress and the district’s response was lacking.

They enrolled the boy in a private school for children with autism and asked the district to reimburse them for the tuition, arguing their son was due a “free appropriate public education” as required by the 1975 Individuals with Disabilities Education Act.

The law spells out the requirements states must meet to receive federal money to educate special-needs students. The district declined, saying it had met the standard of the law.

The family eventually filed a lawsuit against the district. Lower courts all sided with the district, reasoning that it had provided the child “some” educational benefit — the standard cited in the federal statute at issue.

Lower courts across the nation have varied in their definition of the proper standard. The high court arguments Wednesday centered on whether “some” benefit was good enough, or whether special-needs students deserve a more “meaningful” benefit.

Jeffrey Fisher, an attorney for the boy’s family, told the justices that as a general rule, individualized education plans for special education students should include “a level of educational services designed to allow the child to progress from grade to grade in the general curriculum.”

Throughout the arguments, the justices expressed frustration with what Justice Samuel Alito described as “a blizzard of words” that the law and courts have used to define what’s appropriate for special needs students.

Chief Justice John Roberts said regardless of the term used, “the whole package has got to be helpful enough to allow the student to keep up with his peers.”

Neal Katyal, an attorney for the school district, argued that providing children “some benefit” is a reasonable standard.

“That’s the way court after court has interpreted it,” he said. “It’s worked well. This court shouldn’t renege on that.”

Ron Hager, senior staff attorney for special education at the National Disability Rights Network, attended the oral arguments Wednesday and said he was optimistic the lower court’s ruling would be overturned.

He said if the Supreme Court does overturn the federal Tenth Circuit Court’s ruling and requires a higher standard, it won’t necessarily come with major financial costs for school districts. Instead, he said, it will nudge them to be proactive and provide teacher training and intervention services early on instead of waiting until problems — and the expenses associated with them — snowball later.

Marijo Rymer, executive director of the Arc of Colorado, which advocates on behalf of people with intellectual and developmental disabilities, said she was heartened to see the case advance to the Supreme Court. Establishing a clearer standard on what constitutes a fair and appropriate education for students with disabilities is a civil rights issue, she said.

“It’s critical that federal law, which is what this is based on, be reinforced and supported, and the court is in the position to deliver that message to the nation’s schools and the taxpayers that fund them,” Rymer said.

Both Hager and Rymer acknowledged that even if the Supreme Court establishes a new, higher standard, it could be open to interpretation. Still, they said it would send a strong message to school districts about their responsibilities to students with disabilities.

Summer remix

Ten stories you may have missed this summer (and should read now as the new school year kicks in)

PHOTO: Caroline Bauman
Gabrielle Colburn, 7, adds her artistic flair to a mural in downtown Memphis in conjunction with the XQ Super Schools bus tour in June.

Labor Day used to signal the end of summer break and the return to school. That’s no longer the case in Tennessee, but the long holiday is a good time to catch up on all that happened over the summer. Here are 10 stories to get you up to speed on K-12 education in Tennessee and its largest school district.

TNReady is back — with a new test maker.

Last school year ended on a cliffhanger, with the State Department of Education canceling its end-of-year tests for grades 3-8 in the spring and firing testmaker Measurement Inc. after a series of missteps. In July, Commissioner Candice McQueen announced that Minnesota-based Questar will pick up where Measurement Inc. left off. She also outlined the state’s game plan for standardized tests in the coming year.

But fallout over the state’s failed TNReady test in 2015-16 will be felt for years.

The one-year void in standardized test scores has hit Tennessee at the heart of its accountability system, leaving the state digging for other ways to assess whether all of its students are improving.

Speaking of accountability, Tennessee also is updating that plan under a new federal education law.

The state Department of Education has been working with educators, policymakers and community members on new ways to evaluate schools in answer to the federal Every Student Succeeds Act, or ESSA, which requires states to judge schools by non-academic measures as well as test scores.

Meanwhile, issues of race and policing have educators talking about how to foster conversations about social justice in school.

In the wake of police-related killings that rocked the nation, five Memphis teachers talked about how they tackle difficult conversations about race all year long.

School closures made headlines again in Memphis — with more closings likely.

Closing schools has become an annual event as Tennessee’s largest district loses students and funding, and this year was no exception. The shuttering of Carver and Northside high schools brought the total number of district-run school closures to at least 21 since 2012. And more are likely. This month, Shelby County Schools is scheduled to release a facilities analysis that should set the stage for future closures. Superintendent Dorsey Hopson has said the district needs to shed as many as two dozen schools — and 27,000 seats — over the next four years. A Chalkbeat analysis identifies 25 schools at risk.

Exacerbating the challenges of shifting enrollment, families in Foote Homes scrambled to register their children for school as Memphis’ last public housing project prepared to close this month amid a delay in delivering housing vouchers to move elsewhere.

The new school year has officially begun, with the budget approved not a moment too soon for Shelby County Schools.

District leaders that began the budget season facing an $86 million shortfall eventually convinced county commissioners to significantly increase local funding, while also pulling some money from the school system’s reserve funds. The result is a $959 million budget that gives most of the district’s teachers a 3 percent raise and restores funding for positions deemed critical for continued academic progress.

The district also unveiled its first annual report on its growing sector of charter schools.

With charter schools now firmly entrenched in Memphis’ educational landscape, a Shelby County Schools analysis shows a mixed bag of performance, while calling on traditional and charter schools to learn from each other and promising better ways to track quality.