Only months after shepherding in $125 million in budget cuts for the current fiscal year, Superintendent Dorsey Hopson is warning district officials that lean times and difficult decisions await Tennessee’s largest school system again during the next year.

In a presentation before the school board Tuesday evening, Hopson outlined the district’s financial forecast for 2016-17, anticipating a $72 million shortfall.

Among the challenges:

  • A shortfall in per-pupil funding under the state’s Basic Education Program (BEP) due to a decrease in enrollment as the state-run Achievement School District continues to expand in Memphis;
  • Cost of personnel benefits is expected to increase another $7 million;
  • The depletion of the $90 million grant from the Bill & Melinda Gates Foundation, awarded beginning in 2009 to address teacher effectiveness.

“I don’t want to sound an alarm bell,” Hopson said, “but it just shows the work we have to do to get to where we need to be.”

Last spring, the school board approved $125 million in budget cuts to offset shrinking enrollment, decreasing tax revenue and increasing pension fund obligations, among other things.

Budget woes have plagued the district since its creation in 2013 with the merger of Memphis City Schools and legacy Shelby County Schools. Administrators have responded by closing 17 schools over the last three years, outsourcing services such as bus transportation and custodial work, and reducing its workforce of teachers and central office staff.

Hopson has said he’s tried to keep the cuts from reaching the classroom level, but that it’s getting harder and harder.

“It just puts such a burden on particularly our teachers and parents when we have to figure out how we’re going to cut $50, $60, $70 million,” Hopson told the board.

Less than four months into the current fiscal year, the district faces more immediate challenges, though.

The superintendent expects a $7.9 million shortfall in BEP funding for 2015-16, a decrease that Hopson attributes to the ASD’s absorption of students previously with Shelby County Schools. Under state law, the ASD can take over schools in the bottom 5 percent of the state’s schools in terms of academic performance, most of which are located in Memphis. This school year, Shelby County Schools’ enrollment of 93,501 is 1,100 less than projected. The ASD already operates 27 schools in Memphis and has proposed taking over six more next year. ASD officials have said state intervention is necessary to address chronic academic underperformance.

Hopson said Shelby County Schools also needs this year an additional $5.5 million to help cover a 2 percent cost-of-living increase for the district’s 8,000 teachers, after having already invested in step-increases for teacher pay for the same amount. Additionally, the district still must address reductions needed to its swelling $1.5 billion liability for employee retirement benefits.

While the cuts ahead are challenging, Hopson reminded the board that the district has a blueprint to help guide its choices. Spending is tied to five priority areas under its Destination 2025 vision plan:

  • Strengthening early literacy
  • Increasing support to the district’s priority schools and improving post-secondary readiness
  • Developing teachers and central office staff to drive student success
  • Expanding high-quality school options
  • Mobilizing family and community partners