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.

tabling SALT

Here’s how the Republican tax plan could threaten New York’s education funding

PHOTO: Kevin P. Coughlin-Office of the Governor/Flickr
Mayor Bill de Blasio and Gov. Andrew Cuomo at a press conference in 2014.

Republican lawmakers in Washington appear poised to approve sweeping tax legislation, which New York Governor Andrew Cuomo has dubbed an “economic death blow” to the state.

That blow, advocates say, could punch a hole in school budgets.

Schools across New York are already shortchanged billions of dollars, according to school-funding advocates, even as the state faces a $4.4 billion budget gap. The tax plan, if approved, has the potential to divert even more state and local funding from schools.

“I’ve been dealing with the state budget for more than 30 years and this is as volatile and uncertain as anything I can recall,” said Bob Lowry, deputy director of the New York State Council of School Superintendents.

The House and Senate must still combine their tax bills and pass a final version. Below is a guide to some of the worst-case scenarios for New York schools if that happens.

“Downward pressure” on local taxes

A provision of the tax plan would sharply reduce state and local tax (often called SALT) deductions a proposal that would hit high-tax states like New York hardest. The average SALT deduction in New York is $22,169, according to a report form the Governor Finance Officers Association, using data from 2015.

Advocates worry that voters whose tax burdens rise without the deductions will be less inclined to sign off on increases to their local school board budgets, which voters approve in most parts of the state. In New York City, school funding may be more insulated because residents do not vote on a budget.

However, the city could feel pressure to offset the lost SALT deductions by lowering local income taxes — a move that could shrink budgets across city agencies, including the education department.

“It stands to reason that there will be downward pressure for us to reduce our local taxes, which in turn would create less revenue for city services,” said New York City spokeswoman Freddi Goldstein in an email.

Flight of the super taxpayers

A small number of super-wealthy New Yorkers help keep the state and city governments afloat.

In New York City, about 25,000 families contribute more than 40 percent of the city’s personal income-tax revenue, according to the most recent figures analyzed by the city’s Independent Budget Office.

Their tax burdens could balloon without the SALT deductions, spurring a rush to lower-tax locales. While some experts said a mass exodus is highly unlikely, in a district where approximately 57 percent of school funding comes from the city budget, any significant loss of tax revenue could strike a serious blow to school funding.

“People who live on Park Avenue are not going to move to Alabama to pay lower taxes,” said Michael Borges, executive director of the New York State Association of School Business Officials. “But they may move to Scarsdale because they don’t have to pay a city income tax.”

A three-way “tidal wave of disaster”

Lost local revenue isn’t the only way school budgets could take a hit. In fact, it could be part of a triple whammy.

The tax plan would leave the federal government with a gaping $1.4 trillion deficit. Experts expect lawmakers may eventually plug the hole by slashing spending on healthcare and possibly other programs like education.

“It may result in lower federal funding for everything,” said George Sweeting, deputy director at the city’s Independent Budget Office. “If that happens, that would have an impact on federal funding for New York City.”

Still, school districts only get a fraction of their funding from the federal government. In New York City, federal money accounts for just 6 percent of school spending. (By contrast, 37 percent of the city’s education funds come from the state.)

However, federal spending cuts could have an indirect impact on New York’s education funding. If Washington provides less healthcare funding, for instance, New York could have to pick up the tab — creating a ripple effect, where it would have less to spend on schools.

The federal pressure would come at the same time New York is already facing a $4.4 billion budget deficit. Officials from Governor Andrew Cuomo’s office say the tax plan would be a blow to New York — but they also insist that Cuomo is committed to funding education.

Still, schools are staring at a “loss of federal aid, a loss of state aid, and a loss of local revenue,” Borges said. “It’s like a tidal wave of disaster.”

An under-the-radar change would cause “significant harm”

Finally, a little-noticed bond issue in the tax plan could cause New York schools pain.

Congressional Republicans would remove provisions that help schools borrow money for school construction projects, according to a letter signed by Board of Regents Chancellor Betty Rosa and State Education Commissioner MaryEllen Elia. The loss would “significantly harm districts’ finances,” it reads.

This measure would have a devastating impact on schools, school districts, local taxpayers and, most significantly, our students,” the letter continues. “That impact would be felt most dramatically by districts in poverty; in other words, the districts that would be hurt most are those that can least afford it.”

School Finance

How to pay for special education is a growing concern across Michigan

Funding special education is a problem felt sharply in large cities like Detroit, where 18 percent of students enrolled in the city’s main school district have diagnoses that entitle them to extra support.

Education leaders across Michigan are increasingly sounding an alarm over the way the state funds special education.

A report from the lieutenant governor’s office last week blasted current the state’s current funding formula for shortchanging schools by almost $700 million a year. And a coalition of powerful Detroit leaders said it would make lobbying for changes to special education funding one of its top priorities as it tries to improve education for Detroit kids.

Currently, schools are required to provide students with special services and therapies but are only funded for a fraction of their expenses.

It’s a problem that’s felt sharply in large cities like Detroit where 18 percent of students enrolled in the city’s main school district have diagnoses that entitle them to extra support. (In contrast, just 9 percent of charter school students in Wayne County have special ed diagnoses).

A new report from Michigan State University Professor Sarah Reckhow and Craig Thiel from the Citizens Research Council of Michigan, a public policy research organization, looks at why the current structure for funding students who are disabled and have special needs in Michigan may derail the comeback of Detroit’s main district, and how it handicaps all schools in the state. 

Read it here: