It's not just the classroom

Disparities persist in how Memphis schools contract with businesses, study shows

PHOTO: Brad Vest/The Commercial Appeal
Bricklayers from TopCat Masonry Contractors LLC work on an apartment complex in downtown Memphis in 2014.

Although black-owned businesses make up more than a third of the local construction industry, they were awarded less than 1 percent of Memphis school contracts in the last five years, according to a new study.

That’s the most egregious finding from a consulting group commissioned by the school board last year to measure disparities in how Shelby County Schools does business — particularly with companies owned by white women and people of color.

The study, presented Tuesday to school board members, recommends that the district create an outreach program to try to close that gap. If the board adopts the findings next week as expected, such an initiative could be the next step.

The study highlights an equity issue in a district that’s focused more typically on eliminating inequities in the education of children. But as Tennessee’s largest school system, Memphis’ fifth largest employer, and the overseer of a $1 billion budget, Shelby County Schools has an obligation to manage its business dealings in an equitable fashion, too, said Shante Avant, chairwoman of the school board.

“Wherever there are inequities, whether it’s academics or where we spend money, … all those are part of how we improve our city,” Avant told Chalkbeat ahead of the report’s release.

Specifically, the study compared the percent of businesses owned by white women and people of color who are “willing and able” to do work for the school district to the amount of money spent with those businesses from 2011 to 2016.

Here’s a quick summary. (For a more detailed chart, scroll to the bottom of this page.)

Business owners interviewed by researchers identified several barriers encountered when attempting to work with the district. Almost half cited competing with large firms as the biggest concern. (Nationwide, only 4 percent of black-owned businesses have more than one employee.)

The district commissioned the study last fall from MGT Consulting Group based in Tallahassee, Florida, under a $254,000 contract. The group reports completing more than 200 such studies, including one in 2012 for the Memphis utility company.

In anticipation of the findings, Shelby County Schools recently hired Brenda Allen as its procurement director to spearhead efforts to close the gap. In addition to recommending the new initiative, the study recommends hiring three more people under Allen to assist with “outreach, reporting, and monitoring” to increase contracts with businesses owned by white women and people of color.

The consultant said the district’s procurement team should “document their outreach efforts and the reasons why they may have rejected qualified” businesses.

The findings reflect disparities countywide. More than half of Memphis businesses are black-owned, but generate less than 1 percent of the city’s business revenue, according to the 2012 U.S. Census of Small Business Owners. Five years earlier, the number was closer to 2 percent. And similar gaps in county government spending were found in a 2016 study.


High Ground News: Memphis pushes to level the playing field for black entrepreneurs


The report commended the leadership of Shelby County Schools for its desire to decrease disparities in business contracts after years of inattention to the issue — and relatively soon after the 2013 merger of city and county schools.

You can read the full report here.

Want to learn more? Join High Ground News, Chalkbeat Tennessee and MLK50: Justice Through Journalism on Jan. 25 for “Show Mem The Money: The Education Edition,” a conversation with Memphis education leaders about how the business of education can be an economic driver for women- and black-owned businesses as one of the city’s largest employers.

School Finance

Indiana lawmakers over-promised money for schools to teach students learning English by nearly $50 million

PHOTO: Shaina Cavazos
Amy Peddie, an English as a new language teacher at Southport High School, helps a student on an assignment in her class.

When Indiana’s legislature wrapped up the state budget in 2017, educators celebrated a record $32 million headed to support students learning English as a new language, including considerable bonuses for schools with the highest concentrations of those students.

But what school leaders didn’t immediately realize was that because of a calculation error, state lawmakers had not budgeted enough money to give the schools the extra dollars they were told to expect — it would have cost another $50 million to pay for the promised bonuses.

“It is a pretty significant difference,” said Kathy Friend, chief financial officer for Fort Wayne schools, which serves about 2,600 English-learners. “We didn’t realize it until after the allocation came out.”

The shortfall appears to have been due to a number of factors. First, more schools than expected applied for the funding to support students who need more intensive services. But the amounts the state promised to fund per student to schools with the largest shares of English-learners were also incorrectly calculated, a spokeswoman for Senate Republicans told Chalkbeat. If the data error had been caught earlier, the staff member said, the numbers promised in the initial budget would more closely reflect the dollars schools ended up receiving.

“It was definitely not intentional,” said Rep. Bob Behning, a Republican from Indianapolis who chairs the House Education Committee, who said he didn’t realize there was an issue until schools approached him in the fall.

It’s not unusual for the state not to fund all of what they initially promised if, for example, enrollment spikes or revenue dips. When that happens, the law says, each district or charter school’s funding amount should be reduced proportionately. But because they were expecting larger bonuses than other districts, large urban public school districts and charter schools that tend to serve bigger shares of students learning English felt the deepest effects of the miscalculation.

Chalkbeat’s review of the funding data shows the state would have had to set aside about $80 million to meet the per-student expectations it set out in the 2017 budget, $47.5 million more than what lawmakers ended up budgeting. The original plan called for increased funding for students learning English to $250 and $300 per-student, depending on the year in question.

In addition to the base amount, districts and charter schools with higher percentages of students were supposed to get even more on top of that — upwards of $900 per student if they had between 5 percent and 18 percent of their population learning English, and upwards of $1,200 if it was more than 18 percent. In actuality, the schools got between $140 and $177 per-student in 2018 on top of the base, and $22 and $28 per-student extra for 2019.

Behning said lawmakers had an opportunity to backfill the dollars to schools with proportionately more English-learners, but they did not. Last year, a highly publicized shortfall in basic state aid to schools made a splash so big that lawmakers came together in a non-budget year to ensure it was filled, approving another $100 million to go to schools’ general funds.

Lawmakers decided not to bump up the funding for English language-learners because while the specifics of the calculations were based on incorrect data, the Senate spokeswoman said, $32 million was the correct total amount the state wanted to spend.

To be sure, all Indiana schools with English-learners received more money per-student from the state under the 2017 budget than in years prior. Friend said she and her colleagues were happy that lawmakers had upped the funding, recognizing the needs of districts like hers that have many students learning English.

The incorrect budget calculation would have given the district about $2 million more over the two years than the $1.5 million they received. But Friend said the difference in expected versus received dollars doesn’t mean the needs of Fort Wayne’s English-learners aren’t being met.

Rather, school leaders have to use more money from their overall state funding to provide the needed services, so across the board, there’s less to go around. Friend said the district spends $4.5 million on English-learners from its general fund. Some additional money comes from the federal government or local sources. Much of the English-learner-specific money the district gets from the state goes toward paying teachers and teaching assistants, with some also going to pay for instructional materials, interpreters used to communicate with parents, and teacher training.

“We aren’t going to make a choice for what we need to do for these students based on how much money we get,” Friend said. “We have to do what we have to do to serve them. What (the extra funding) does is it relieves the general fund for all the other non-ELL students.”

But, it’s also not a small sum, she said. In 2018, Friend said, the district thought it would receive three-quarters of a million dollars more than it did.

“You can’t sneeze at $756,000,” Friend said. “That’s a lot of money that just plays into the overall program or planning that we have as a district.”

In Marion County, several districts were affected, including Perry Township, which saw the biggest difference in actual vs. expected dollars of any district or charter school in the state. Chalkbeat’s analysis shows the district could have expected about $9 million under the incorrect formula. State data shows it received about $2.6 million. Indianapolis Public Schools, the state’s largest district, received about $2.8 million, more than $6 million less than anticipated.

State Superintendent Jennifer McCormick has called for more funding for English-learners next year, upping the current $300 per-student amount to $450 per-student. But in a year when lawmakers are already saying revenue is exceptionally tight, it’s not clear this funding will be a priority as it competes with teacher pay, preschool, and funding for the Department of Child Services.

Lawmakers have taken major steps to increase ELL funding in years past. After a Chalkbeat project showed how schools were increasingly trying to serve growing numbers of English-learners across the city, the legislature more than doubled funding in 2015 to about $21 million, up from $10 million in 2013. Since 2006, the total number of students learning English in Indiana schools has increased by 77 percent. Today, public schools enroll 47,672 students learning English as a new language.

At what cost

Adams 14 looking for grants first, as it prepares to pay for an external manager

First grade students practice reading in Spanish in their biliteracy classroom at Dupont Elementary School in Adams 14. (Photo by Yesenia Robles, Chalkbeat)

About to embark on a search for a manager to run its district, Adams 14 officials have been looking at how to pay for that external management.

Although the state ordered that the district hand over management to a third party, following years of low performance, the order doesn’t come with money. Many community members have been wondering where the funds will come from.

Sean Milner, the district’s executive director of budget, operations and construction, said the best guess district officials have right now is that external management could cost $600,000 per year.

The cost of the contract isn’t yet clear. It’s hard to even estimate the cost since Adams 14 is the first district the state Board of Education has ordered to seek outside management.

The actual cost won’t be pinned down until after a group is selected and a contract is negotiated. The district will call for proposals requesting to know the qualifications of interested outside groups, but those will not include the cost of their work. The Colorado State Board of Education must vote to approve the selected manager before the district proceeds with a contract.

It’s possible the district will get help, at least to cover a portion of the management costs.

Adams 14 officials already applied to the state for a grant of up to $200,000 per year. There are no guarantees that Adams 14 will get that money, as they are competing with other districts that need help improving.

Colorado Department of Education officials would not comment on applications under review, but said that districts like Adams 14 that are following State Board directives receive priority for what the state calls Transformation grant dollars.

Officials are also searching for other grants to cover another $200,000. If they are successful, that could leave about $200,000 for the district to cover.

District officials said they hope that by shifting money they might be able to free up enough money from the general fund, without having to make large budget cuts. Work on the budget for 2019-20 is just beginning.

And if need be, district officials said they have informally received the school board’s verbal approval to use some of the district’s $14 million reserves.

So far, officials have looked at other districts that have gone through similar contracts in Indiana and Massachusetts. Those districts are larger than Adams 14’s 7,500-student-district. In their estimates, Adams 14 officials are also considering there may be extra costs associated if a selected partner isn’t local. The possibility also exists that Adams 14 may choose a public entity such as a school district, (Mapleton has already expressed interest), and those contracts could cost less.

Community members have asked if certain district positions, especially that of the superintendent, will duplicates the job of the external manager. Board member Bill Hyde wondered at a public board meeting earlier this year if the district would be paying twice for the same work.

Just earlier this year, the Adams 14 school board raised Superintendent Javier Abrego’s annual salary to $169,125.

The school board, which retained ultimate authority to hire or fire anyone in the district, may have to consider district positions as it finalizes the 2019-20 budget. Or the external manager, once on board, could make recommendations about staffing.

The state order requires that the district’s contract with an external manager start by July, but district officials are planning for an earlier start, potentially in March or April.

If that happens, the district would amend the current school year’s $130 million budget to use curriculum funds to pay for the outside manager for the remainder of this school year.

Officials said they’re being conservative in new spending, given that whoever comes in to run the district soon might have new ideas about programs or curriculum.

“We’re not stopping anything we have in progress,” Milner said. Some teacher training for curriculum still has to happen, for instance, he said. “But if there were new items to put in place, at this time we’re kind of holding off.”