School Finance

Shelby County Board of Education files funding lawsuit against state

PHOTO: Kayleigh Skinner
Shelby County Superintendent Dorsey Hopson discusses the district's school funding lawsuit against the state of Tennessee as board members Chris Caldwell and Teresa Jones offer their support.

Declaring that “money makes a difference” when it comes to educating Tennessee’s public school students, the Shelby County Board of Education sued the state on Monday claiming that Tennessee isn’t adequately funding its schools, especially for its most vulnerable children.

In a 38-page suit filed in Davidson County Chancery Court, the Memphis-based district argues that the state has violated its constitutional duty to “equitably and adequately fund public school education for all students.”

The suit notes that Memphis and Shelby County have a disproportionately high number of students who are minorities, have disabilities and live in extreme poverty. “Because of the lack of funding, the District is unable to provide many of these impoverished, mainly-minority students with an education that would allow them to achieve the outcomes mandated by the Tennessee Constitution …” the suit says.

The lawsuit by Tennessee’s largest public school district adds significant weight to ongoing litigation over the adequacy and equity of education funding through the state’s Basic Education Plan, or BEP.

In March, the boards for seven school districts in southeast Tennessee, led by Hamilton County Schools in Chattanooga, filed a lawsuit charging that the state has created a system that “shifts the cost of education to local boards of education, schools, teachers and students, resulting in substantially unequal educational opportunities across the State.” That lawsuit is pending, and the state has urged dismissal, arguing that the legislature has leeway in funding K-12 education.

Asked about the latest funding lawsuit on Monday, a spokesman for Gov. Bill Haslam declined to comment on any pending litigation. A spokeswoman for Tennessee Education Commissioner Candice McQueen also declined to comment. Both were named as plaintiffs in the lawsuit, along with members of the State Board of Education and state legislative leaders.

Shelby County School leaders held a morning news conference at Riverside School to explain why they are taking the state to court.

“We are asking the state to live up to its constitutional obligation,” said Superintendent Dorsey Hopson. “(Our students) deserve better than this. We want to give the type of education that our kids need and deserve.”

District leaders have argued that the state grossly miscalculates how much an average teacher costs and doesn’t take into account the financial impact of the growing charter school sector and a host of state-mandated reforms placed on large urban school districts.

If the state fully funded public schools, Shelby County Schools would get an extra $100 million in state funding annually, according to school board member Chris Caldwell.

All year, district leaders have explored the possibility of litigation and in June hired the Wichita-based office of Lewis Brisbois Bisgaard & Smith, a firm that has helped urban districts win a similar school funding lawsuit in Kansas.

In the meantime, the cash-strapped school system has cut more than $275 million from its budget in the last two years alone, resulting in the closings of 17 schools since 2013, teacher layoffs and increased class sizes. County government leaders say the county has largely picked up the state’s slack, allotting 60 percent of its budget toward public education across Shelby County.

“… We have had to constantly cut resources, lay off needed staff members, and remove programs that can help our students remain competitive,” said Teresa Jones, chairwoman of the Shelby County Board of Education. “In a time when academic and career standards are increasing, our students need more resources.”

The lawsuit contends that the district cuts are the result of inadequate state funding, forcing the district to break state constitutional mandates to provide an adequate education for its children. The suit blames the level of funding on some BEP components, combined with an under-appropriation of money to fully fund the formula.

District leaders predict the lawsuit could take years to wind through the court system and could cost hundreds of thousands, if not millions of dollars, in legal fees. But board members and administrators said they are confident that the district will reap millions more back in a victory or settlement and set a legal precedent for all of the state’s 142 school districts.

The state annually distributes about $6 billion in tax revenue to local districts based on the BEP formula.

Haslam, who this year championed a $147 million increase in education spending across Tennessee to address BEP funding and increase teacher salaries, repeatedly has urged district leaders to engage the state in conversation instead of litigation.

 

Editor’s note: This story updates an earlier version to show that the lawsuit has been filed and to include subsequent comments from leaders of Shelby County Schools.

School Finance

Indianapolis Public Schools leaders could scale back their appeal for tax increases

PHOTO: Meghan Mangrum

With little public support and mounting criticism, Indianapolis’ largest school district may scale back its nearly $1 billion request for increased funding from taxpayers.

Indianapolis Public Schools Board President Michael O’Connor told Chalkbeat on Wednesday that the board would likely consider a proposal next week that would reduce the potential tax increase.

All the board members present voted in favor of asking voters for up to $936 million over eight years at a meeting this past December. But there is a consensus among board members that the original proposal would raise taxes too much, O’Connor said.

“The school system needs more revenue,” O’Connor said. But “we think that’s high.”

Superintendent Lewis Ferebee’s administration is working on coming up with a revised proposal, district chief of staff Ahmed Young confirmed. But officials have not yet finalized how much the amount might be trimmed or what services would be reduced to bring down the price tag.

The revelation comes on the heels of stinging public criticism leveled against the district for asking for such a large tax increase. On Wednesday, Indiana State Board of Education member and Indianapolis resident Gordon Hendry slammed IPS’ plan to raise taxes during a state board meeting.

“This may be the most nonchalant billion-dollar tax increase ever approved by anyone,” said Hendry, a Democrat.

The original plan, which was approved by the state for inclusion on the May ballot less than a week ago, includes a measure that would raise up to $92 million per year for operating expenses such as teacher salaries and one that would pay for up to $200 million in improvements to school buildings.

If voters signed off on the operating referendum, their property taxes would rise by as much as $0.59 on each $100 of assessed value, while the capital referendum would raise $0.1384 per $100 of assessed valuation.

The board will not alter the referendum that provides money for building improvements, O’Connor said. But it will consider changing how much it seeks for operating expenses, the part responsible for the bulk of the tax increase.

In the months since the original proposal was unveiled in November, few advocates or community organizations have spoken out in support of the referendums. Instead, groups such as the Indianapolis Chamber of Commerce stayed quiet as they discussed the plan internally.

It’s important to the city that the school district is successful, said Mark Fisher, chief policy officer for the Chamber. There also is general agreement that the district needs more funding, he said. But the group is waiting to hear more from the administration about how the money will be spent.

“It’s a large amount,” Fisher said. “Is this the right amount?”

Tony Mason from the Indianapolis Urban League raised similar questions.

“IPS definitely requires more support to serve the vast needs of its diverse student population,” Mason wrote in a statement. But the district must make the case in detail for the substantial amount it is requesting.

“IPS needs to be mindful of the already existing and unique tax burdens of those living in the IPS district,” he added.

The district has said the referendums are essential because of declining federal, state, and local revenue. According to the district, the operating referendum would pay for special education services, transportation, and regular maintenance. But the bulk of the money, 72 percent, would help pay regular raises to teachers. The referendum to pay for improvements to school buildings would fund updates such as new lighting and door security.

If it passed, the original operating referendum would increase the district’s annual revenue by nearly $3,000 per student. By comparison, a referendum passed in Washington Township in 2016 raised annual revenue by less than $600 per student.

When the initial plan was announced in December, Ferebee told Chalkbeat that political considerations were not used to determine the amount of the referendums.

“We didn’t arrive at this number based on what we thought would be politically appropriate and soothing, but what we actually need to continue to thrive as an organization,” Ferebee said at the time.

But it appears the political challenge of asking voters to dramatically raise their own taxes is more salient for the board.

Board members have privately heard concerns from constituents about the size of the referendums, O’Connor said. He said the district also needs to present more detail to taxpayers about exactly how the money would be spent.

Because $92 million per year is the estimated maximum amount the district could raise if the measure passes, it was always a ceiling, said Young. After the board voted to pursue the initial proposal, the district has continued to do “due diligence.”

“It’s an evolutionary process,” he added.

On Tuesday, school board member Kelly Bentley told Chalkbeat that reducing the amount the district is seeking could help increase the chance that voters approve the referendums and reduce the burden on taxpayers.

“I believe strongly that we are asking no more than what we need,” Bentley said. “But I would rather be successful than not successful in the referenda.”

Correction: February 15, 2018: This story has been corrected to attribute the statement from the Indianapolis Urban League to Tony Mason.

School Finance

IPS bid for more money is ‘the most nonchalant billion-dollar tax increase ever,’ state official says

PHOTO: Chalkbeat staff
Indiana State Board of Education member Gordon Hendry raised concerns about referendums IPS plans to ask voters to approve in May.

An Indiana education official is calling out Indianapolis Public Schools for how the district has handled a recent proposal to collect almost $1 billion from taxpayers over the next eight years.

Gordon Hendry, a member of the Indiana State Board of Education and an Indianapolis resident, said the district’s plan to ask voters this May to approve two referendums to increase funding has not been transparent. The proposed tax increase is also way too high, he said.

“This may be the most nonchalant billion-dollar tax increase ever approved by anyone,” Hendry, a Democrat, said Wednesday at the board’s February meeting.

So far, few education advocates or community organizations have been vocal in their support for the referendums, which total $936 million. Voters have raised concerns about the amount their taxes would increase and how the money would be spent.

The district has said one referendum would raise up to $92 million per year for eight years to pay for teacher raises, special education services, transportation and regular maintenance. The other asks voters to support $200 million in improvements to school buildings, primarily safety updates such as new lighting and door security.

Hendry said the district has not provided voters with enough information about what the new money would be used for, instead offering “general statements.” He said he thinks the district should already be able to cover those costs, such as transportation and facilities, with its existing state and local funding.

“Our entire state budget for education is $7 billion each year,” he said.

IPS, like other districts, receives state, local, and federal dollars. Hendry pointed out that under Indiana’s school funding formula, urban districts already receive more money per-student than other districts, although that is supposed to support students who might be more costly to educate than those in suburban or rural districts. Urban schools typically have more students living in poverty, learning English or with disabilities.

The referendums would come with considerable tax increases for those living within IPS boundaries, Hendry said, and would disproportionately affect low-income families.

Hendry didn’t limit his criticisms to IPS. He urged Indiana lawmakers to freeze all school funding referendums and set up a committee this summer to study how to improve the efficiency of district spending, as well as how to address “long-standing” problems with ensuring teachers are adequately paid.

Going forward, Hendry said referendums need more oversight. He proposed that the state board or mayors and city councils should approve them — a measure he said would increase accountability.

More than a third of school districts have asked for tax increases since state lawmakers capped how much local governments could collect in property taxes in 2008. About 60 percent of them have been successful, including six in Marion County.