fuzzy math

Budget uncertainty looms as Shelby County school board enters final review

Tennessee’s largest school district is honing in on a reduced $941 million budget for its fiscal year beginning July 1, but the process thus far has been clouded by a lack of specifics behind various cuts floated by administrators.

After a month of wrangling, and with only about two weeks left to present a final spending plan to the Shelby County Commission, the school board for Shelby County Schools heads into its final budget review Wednesday with more questions than answers shared in public forums. A vote is scheduled for next Monday.

The process began in early April as Superintendent Dorsey Hopson declared a projected $86 million deficit — with nowhere to cut but the classroom — and outlined $50 million in proposed cuts, with the hope that the County Commission would cover the remaining $36 million shortfall. The cuts included several prized programs that no one, including Hopson, expected to stick due to the academic gains they’ve fostered and the built-in constituencies that immediately protested. In the ensuing weeks, the school board voted to close six more schools to protect those programs, but few details about the overall budget have emerged since.

At a community budget meeting on Monday, Hopson disclosed without explanation that the gap between proposed cuts and the remaining shortfall has been reduced from $36 million to $28 million.

But even the reduced shortfall is far more than county officials have indicated a willingness to cover. Shelby County Mayor Mark Luttrell is proposing a funding increase of only $8.7 million for the county’s seven school districts, of which Shelby County Schools would receive about 78 percent.

Numerous other questions about Shelby County Schools’ budget remain going into the homestretch:

  1. Will teachers get a raise? The perennial topic wasn’t discussed by board members during budget meetings, but Chairwoman Teresa Jones said Monday that the board is committed to giving teachers a salary increase of between a 1 to 3 percent, depending on how much the County Commission is willing to increase funding to the district.
  2. How many people could lose their jobs? When Hopson first proposed $50 million in cuts, the administration listed a summary of areas to cut including some special education teachers, career and technical education instructors, world language teachers, and employees providing educational services to students in juvenile detention. Some of those positions are vacant, others are not. But district leaders have yet to disclose the total number of employees who would lose their jobs if the current spending plan is approved.
  3. How would proposed changes to the district’s employee health insurance plan impact teachers and retirees? Throughout the process, the one constant has been an assumption that the district would adopt a cost-saving plan similar to that used by Shelby County government. Hopson said last month that the plan has “much higher deductibles” than the district’s current plan but significantly lower premiums, which would translate into higher take-home pay for employees. On Monday, Jones called the drop in premiums “marginal” and said retirees likely would be most impacted under the proposed change. The district has not disclosed specifics.
  4. Are the savings from recently approved school closures enough to offset the initial proposed cuts for the Innovation Zone, CLUE and guidance counselors? The speedy decision to begin closure processes for three district-run schools and revoke the charters of three others was based not only on the poor academic record of the schools but also cost savings to restore funding for the CLUE program for gifted students, the iZone school turnaround initiative and guidance counselors. But the original proposal was to close 10 schools at an estimated savings of up to $8 million, and administrators have not provided a new estimate for closing only six. The original cuts to CLUE, the iZone and guidance counselors totaled $7 million.

From the beginning, the budget process has been short on publicly shared details. Reporters’ repeated attempts to obtain a copy of the initial proposed spending plan have been dismissed as the district cites ongoing changes to the proposals.

“In the first meeting, (Chief Academic Officer Heidi) Ramirez laid out all of the proposed cuts that we were facing at the time, and we were basically throwing things up in the air, if you will, so we could get a really good feel from board members as far as what they would support and what they wouldn’t,” explained district spokeswoman Natalia Powers.

Superintendent Dorsey Hopson presents a budget update to a small audience Monday.
Superintendent Dorsey Hopson presents a budget update to a small audience Monday.

Asked for specifics about cost savings from school closures, Powers referred to an explanation from district finance chief Lin Johnson. “… Along this process, there’s a lot of cleanup that takes place, in the sense that just little things that are found along the way that adjust and change the numbers a little bit,” she said.

At Monday’s community budget session, the lack of specifics was problematic for Aleace Scott, a kindergarten teacher at Hickory Ridge Elementary School and one of the few people to show up. She said she tries to keep up with school board decisions, but thinks teachers won’t have complete information before a budget is approved.

“Now, all I hear about the budget is what you’re cutting,” she said of the district. “We need to be involved in the whole process, not just when you’re talking cuts… (District leaders) need to be more transparent about what’s going on.”

School Finance

Teacher raises would survive $211 million cut from Indianapolis Public Schools funding request

PHOTO: Scott Elliott

Indianapolis’ largest school district cut about $211 million Tuesday from its request for extra funding, in a bid to win public support for the proposal.

That lower price tag comes with tradeoffs, district officials said. Even if voters approve the new plan, the district would dip into its cash reserves, put off building maintenance, and ditch expanded transportation plans, such as additional busing for students who move partway through the school year.

The new request also reduces how much the district would raise to pay for services for students with disabilities, though it was initially unclear by how much and how that could affect students.

But district officials said they still expected to be able to give raises to teachers if the referendums pass.

The scaled-back request would raise about $725 million over eight years, significantly less than the initial proposal of nearly $1 billion.

The board voted 6-0 in favor of reducing the amount of money the district is seeking, backing off the number members approved two months ago.

Board member Kelly Bentley said many school districts around the state have asked taxpayers for more money.

“We all own property in IPS. None of us want to see our taxes go up,” she said. But, she added, “I am confident that it’s money that’s going to be well spent, and it’s money that is necessary.”

Instead of pulling back spending on teachers and school staff, the district is making the new plan work by adjusting revenue expectations, said Chief Financial Manager Weston Young. The proposal is built on the assumption that state revenue will increase 1 percent each year, and the district will no longer hold as much money in reserves, he said.

“We are still committed to our students through our compensation for teachers and the wraparound services that serve those kids,” Young said.

Reducing the request could help build enthusiasm for the tax increase, which has not gotten much vocal community support. Instead, the referendums have been met with some concern over the size of the ask. But even though they have pared down their plan, district leaders will still need to persuade voters in May to raise their own taxes.

Superintendent Lewis Ferebee said the new plan is a balancing act between what taxpayers can bear and the cost of providing the level of service that families need. Ultimately, he said, the tax increase would pay dividends by helping the district prepare students for college and careers.

“This is one of those situations where you pay now or you pay later,” he said.

The move cut the potential tax increase for homeowners in IPS to $0.58 per $100 of assessed value, down from the initial proposal of $0.73. For taxpayers with houses at the district’s median value — $123,500 — the new plan would increase property taxes by $17.70 per month for operating expenses and $5.54 per month for building improvements, according to the district.

The referendum the board reduced would pay for operating expenses, such as teacher salaries, and under the new request, it would raise about $66 million per year for eight years. That’s down from the initial request of about $92 million per year.

Under the new plan, about $49 million of the money raised each year would go to staff pay, while the remaining $17 million would help pay for services and supplies, regular maintenance, and transportation.

A second measure, which was not changed, would pay for about $200 million in improvements to buildings, primarily safety updates such as new lighting and door security. Both measures are expected to go before voters in May.

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.