Five things

Budget cuts loom for Shelby County Schools, again — here’s what we know

Faced with annual budget cuts since becoming a unified district in 2013, Shelby County Schools has managed to keep most cuts from directly impacting classrooms.

Next school year will be different, says Superintendent Dorsey Hopson.

“There’s nowhere else to cut but the classrooms,” Hopson warned board members last week as he stared at an $86 million projected shortfall for the fiscal year that begins July 1.

This Wednesday, Hopson will outline his proposed cuts during a school board work session, kicking off a two-month process to hone the district’s spending plan. District leaders are scheduled to present their 2016-17 budget on May 25 to the Shelby County Commission, which approves local funding.

Here are five things we know going into the process:

  1. The next round of cuts are likely to be the most painful yet. On its studentsdeservemore.com website launched last week, the district offered an eight-point list of potential cuts, including decreasing teacher benefits, eliminating assistant principal positions at smaller schools, and closing more schools. Also on the table: fewer summer school courses, decreasing pay for substitute teachers, and shrinking the maximum distance for students receiving bus transportation.
  2. The starting numbers have gotten worse, not better, though they’re still better than where the process began last year. Next year’s shortfall, projected last fall at $72 million, is now up to $86 million. Hopson already has identified $50 million worth of cuts, leaving a gap of $36 million to address. This time last year, the district faced a deficit of $125 million, which it resolved through cost-cutting measures such as eliminating 482 positions and outsourcing services such as maintenance.
  3. Much of the cost-cutting is being driven by shrinking enrollment. And enrollment — and the money that follows it — are getting harder to predict. In 2013, the newly merged district had nearly 150,000 students, but enrollment is now at 110,000. The district took a large hit in 2014 when six suburban municipalities seceded from Shelby County Schools by creating their own school systems. It’s also steadily lost students to the state-run Achievement School District, which has taken control of 27 low-performing Memphis schools since 2011 and will add four more next fall. In addition, Memphis has a high rate of mobility. To address the student shrinkage, 20 Memphis schools have been shuttered since 2012, and the board recently voted to close another school next year due to under-enrollment. District staff also are developing a five-year school closing plan to present to the board next fall.
  4. And it doesn’t help that the $90 million grant from the Bill & Melinda Gates Foundation is scheduled to dry up this year. Since receiving its first check in late 2009, the district has received quarterly payments from the landmark grant to support its teacher and principal quality improvement work. But with the last of that money due to be allocated this year, the district must decide whether or how to continue that work. Potentially exacerbating the situation, Gov. Bill Haslam has proposed changes to the state’s education funding formula that could decrease state money that the district has enjoyed to boost teacher salaries because, locally, private sector wages significantly outweigh government job wages. Last year, Shelby County Schools received almost $31 million for that purpose.
  5. The final budget will almost certainly look different from the starting point. Hopson is expected to recommend that the board ask the County Commission for increased local funding — again. And, in an unprecedented move, the district has developed a website as a hub for rallying employees, parents and community members to advocate for additional funding from both the county and the state. Last year, the board received about half of the additional $14 million requested from the county, on top of its regular allocation based on the funding rate. At the time, commissioners grilled administrators about their spending habits and expressed frustration that local governments are increasingly being asked to pick up the slack for the state when it comes to adequately funding schools. That sentiment doesn’t appear to have changed. Asked about the prospects of the commission voting to fund this year’s $36 million gap, David Reaves, the commissioner’s education committee chairman, offered a quick summation. “Highly unlikely,” he said.

School Finance

IPS board votes to ask taxpayers for $315 million, reject the chamber’s plan

PHOTO: Dylan Peers McCoy

Indianapolis Public Schools officials voted Tuesday to ask taxpayers for $315 million over eight years to help close its budget gap — an amount that’s less than half the district’s initial proposal but is still high enough to draw skepticism from a local business group.

The school board pledged to continue discussions in the next week with the Indy Chamber, which released an alternative proposal last week calling for massive spending cuts and a significantly smaller tax increase. The school board rejected the proposal as unrealistic and instead voted to add a much larger tax measure to the November ballot.

If the school board and the chamber come to a different agreement before the July 24 meeting, the board can change the request for more taxpayer money before it goes to voters. Some board members, however, were dubious that they would be able to find common ground.

“While I appreciate the fact that we want to continue to negotiate, I’m pretty sure that I’m at rock bottom now,” said school board member Kelly Bentley. “That initial proposal by the chamber is, unfortunately in my mind, it’s insulting. It’s insulting to our children, and to our neighborhoods, and to our families.”

Chamber leaders, whose support is considered important to the referendum passing, were skeptical about the dollar amount. In a press release, the group said the district was “taking another step towards seeking a double-digit tax increase.”

“We’re concerned that our numbers are so divergent,” said chamber president and CEO Michael Huber in the statement. “We need to study the assumptions behind the $318 million request; clearly the tax impact is significant and the task of winning voter support will be challenging.”

During the board meeting, which lasted more than two hours, district leaders discussed why schools need more money and why the chamber report is unrealistic. They also took comments from community members who were largely supportive of the tax increase.

Joe Ignatius, who mentors students through 100 Black Men of Indianapolis, said that he has seen the benefits of more funding from referendums in other communities.

“This should be a no brainer, to invest in our future for the students,” Ignatius said. “Don’t think about the immediate impact of the dollars that may come out of your pocket but more the long-term impact.”

If the district goes forward with its plan, and voters approve the tax increase, the school system would get as much as $39.4 million more per year for eight years. A family with a home at the district’s median value — $75,300 — would pay about $3.90 more per month in property taxes. (Since the initial proposal, the district reduced the median home value used in calculations on the advice of a consultant.)

The district plan comes on the heels of months of uncertainty. After the school board abandoned its initial plan to seek nearly $1 billion for operating expenses and construction, district officials spent weeks working with the Indy Chamber to craft a less costly proposal. Last month, the board approved a separate referendum to ask taxpayers for about $52 million for school renovations, particularly school safety features.

But the groups came to different conclusions about how much money the district needs for operating expenses.

The chamber released an analysis last week that called for $477 million in cuts, including eliminating busing for high school students, reducing the number of teachers, closing schools, and cutting central office staff. The recommendation also included a $100 million tax increase to fund 16 percent raises for teachers.

District officials, however, say the cuts proposed by the chamber are too aggressive and cannot be accomplished as quickly as the group wants. The administration and board members spent nearly an hour of the meeting Tuesday discussing the chamber plan, why they believe it’s methodology is wrong, and the devastating consequences they say it would have on schools.

Even if the $315 million plan proposed by the district passes, it will come with some sacrifices compared to the initial plan. Those cuts could include: reduced transportation for magnet schools, field trips, and after school activities; school closings; increased benefits costs for employees; and smaller pay increases for teachers and employees.

The district did not make a specific commitment to how much teacher pay would increase if the amount asked for in the referendum is approved, but Superintendent Lewis Ferebee said the funds would pay for consistent raises.

“We would be at least addressing inflationary increases and cost of living, but we hope that we can be higher than that,” said Ferebee. “It would depend a lot on what we are able to realize in savings.”

The school board’s decision to rebuff the chamber’s recommendation puts the district in a difficult position. The chamber has no official role in determining the amount of the referendum, but it could be a politically powerful ally.

Last week, Al Hubbard, an influential philanthropist and businessman who provided major funding for the chamber analysis, said that if the district seeks more money than the group recommended, he would oppose the referendum.

The total tax increase would vary for each homeowner within district boundaries. The operating increase would raise taxes by up to $0.28 for every $100 of assessed property value, while the construction increase would raise taxes by up to $0.03 per $100 of assessed property value.

On school finance

Facing tax opposition, Indianapolis leaders may settle for less than schools need

PHOTO: Alan Petersime

One day before the Indianapolis Public Schools Board is expected to approve a ballot measure to ask taxpayers for more funding, district officials appealed to a small group of community members for support.

Fewer than 40 people, including district staff, gathered Monday night at the New Era Church to hear from leaders about the need for more school funding. School board members plan to vote Tuesday on whether to ask voters to approve a tax hike to fund operating expenses, such as teacher salaries, in the November election. But just how much money they will seek is unknown.

The crowd at New Era was largely supportive of plans to raise more money for district schools, and at moments people appeared wistful that the district had abandoned an early plan to seek nearly $1 billion over eight years, which one person described as a “dream.”

Martha Malinski, a parent at School 91 and a recent transplant from Minneapolis, said the city appears to have a “lack of investment” in education.

“Is the money that you are asking for enough?” she asked.

Whatever amount the district eventually seeks is likely to be dramatically scaled down from the first proposal. Superintendent Lewis Ferebee has spent more than seven months grappling with the reality that many Indianapolis political leaders and taxpayers don’t have the stomach for the tax increase the district initially sought.

“We are trying to balance what’s too much in terms of tax burden with the need for our students,” said Ferebee, who also raised the possibility that the district might return to taxpayers for more money if the first referendum does not raise enough. “If we don’t invest in our young people now, what are the consequences and what do we have to pay later?”

After withdrawing their initial plan to seek nearly $1 billion over eight years, district officials spent months working with the Indy Chamber to analyze Indianapolis Public Schools finances and find areas to trim in an effort to reduce the potential tax increase. But the district and chamber are at odds over how aggressive the cuts should be.

Last week, the chamber released a voluminous list of cuts the group says could save the school system $477 million over eight years. They include reducing the number of teachers, eliminating busing for high schoolers, and closing schools. The chamber has paired those cuts with a proposal for a referendum to increase school funding by $100 million, which it says could raise teacher salaries by 16 percent.

District officials, however, say the timeline for the cuts proposed by the chamber is not realistic. The analysis mostly includes strategies suggested by the district, said Ferebee. But steps like redistricting and closing schools, for example, can take many months.

“Where we are apart is the pace, the cadence and how aggressive the approach is with realizing those savings,” he said.

Not everyone at the meeting was supportive of the administration. Tim Stark, a teacher from George Washington High School, asked the superintendent not to work with charter high school partners until the district’s traditional high schools are fully enrolled. But Stark said he is still supportive of increasing funding for the district. “It is really important for IPS to get the funds,” he said.

The chamber has no explicit authority over the tax increase but it has the political sway to play an influential role in whether it passes. As a result, Indianapolis Public Schools officials are working to come to an agreement that will get that chamber’s support.

A separate measure to fund building improvements was announced by the district in June and incorporated into the chamber plan. That tax increase would raise $52 million for building improvements, primarily focused on safety. That’s about one-quarter of the initial proposal.