IPS and Indy Chamber outline unconventional three-year partnership to cut spending

Update: Sept. 28, 2018: This story has been updated to reflect the board’s vote Thursday to approve the partnership.

Indiana’s largest school system is embarking on an unusual, three-year partnership with the local chamber of commerce designed to carry out extensive cuts that the business group proposed for balancing the district’s budget.

Under an arrangement that the Indianapolis Public Schools Board voted to approve Thursday, the Indy Chamber will pay as much as $1 million during the first year for two new district administrators and consulting by outside groups to implement its cost-cutting plan. The agreement is nonbinding, and the chamber or district could withdraw at any time.

The partnership is the culmination of months of negotiation between the chamber and the Indianapolis Public Schools Board, which agreed last spring to delay a public vote on two tax increases to give the chamber time to analyze district finances. In exchange, the chamber agreed to help draft a new request from taxpayers and lend its political support to two tax increases that are on the ballot in November.

The staff members and consultants will help the district implement some of the chambers’ broad recommendations for hundreds of millions of dollars in cuts in the coming years, including possible school closures, reduced transportation, and staff reductions. Many of the potential cuts would likely need approval by the school board.

The aim of the cuts is to stabilize the district budget and generate enough savings to pay for raises for teachers and principals. Chamber officials say they are so invested in the effort because the prosperity of the city’s urban core, and its ability to attract investment, depend on the success of Indianapolis Public Schools.

But the plan gives the Indy Chamber a rare level of involvement in managing the district, said Zachary Baiel, president of the Indiana Coalition for Open Government. If the chamber is able to help the district improve its operations, the arrangement could be positive for the community, he said. But he raised concerns that the public could be shut out of decision making.

“Any constituent group would love to have this kind of access,” Baiel said. “It’s a fascinating precedent that’s unfolding.”

At a meeting Tuesday night where the proposal was discussed, school board member Venita Moore said the chamber has expertise that the district “desperately” needs. But she also asked for assurances that the district would have ultimate say on the cuts. “I just want to make sure that we’re taking the lead,” she said.

Superintendent Lewis Ferebee assured Moore that the district is “clearly driving this work.”  The new positions would be funded by the chamber, he said at a press briefing Tuesday morning, but the district would choose who to hire and supervise the staff members.

The chamber and the district have already discussed how the business group can help the schools find savings, Ferebee said. “This is an opportunity for us to cement some of those details of how they will collaborate with the district,” he said.

Board member Mary Ann Sullivan said help from the chamber is essential because district staff members are already working overtime and couldn’t take on the extra responsibilities. “We wouldn’t have the resources to be able to devote to such targeted strategic thinking,” she said.

The chamber initially recommended nearly $500 million in sweeping cuts to Indianapolis Public Schools over eight years. But ultimately, the district and the business group settled on a compromise approach that would allow the district to make slower, less extensive cuts.

Indy Chamber CEO Michael Huber said now that the group and the district are on the same page about the referendums, the chamber is focused on helping the district with operational and financial planning.

“We are working as colleagues and bringing them some additional resources,” Huber said. “I personally think there’s no more important work that we can do as a business organization than provide this type of resources to help IPS get where it wants to go.”

With the chamber’s support, the district is asking voters for $220 million more in tax dollars over eight years for operating expenses, such as teacher salaries. A separate measure would raise $52 million for building improvements. That’s substantially lower than the district’s initial requests, which amounted to nearly $1 billion combined.

Board member Kelly Bentley said the district needs to be clear about the cuts that will be necessary to make the current plan work. “At the end of the day, in order to achieve the significant savings we are talking about, we are going to have to close schools and lay people off,” she said.

The positions funded by the chamber include a chief of transformation, who would be tasked with rethinking and improving the district’s non-academic functions, such as financial operations, transportation, facilities, food service, and information technology. An enterprise development director would lead cost savings projects. The chamber would also pay for at least a year of consulting by Faegre Baker Daniels Consulting, Policy Analytics, and, if necessary, other consultants.

This is not the first time the Indy Chamber has sought to influence the future of the district. The chamber made similar recommendations in 2014, when the district was projected to run a budget deficit. The administration eventually implemented some of the suggestions, but concerns about the deficit dissipated when it was revealed to be an accounting error.