Describing finances for Shelby County Schools as “calamitous,” Superintendent Dorsey Hopson wants to lay off 235 employees, outsource some maintenance support and pull $25 million from the district’s savings account to help offset an anticipated $125 million deficit next school year.
He also proposes asking county commissioners for an additional $15 million to stave off more cuts.
Hopson and district administrators presented their proposed budget to school board members Wednesday during a six-hour retreat that ran well into the evening.
The superintendent acknowledged that the cuts eventually would impact classrooms in Tennessee’s largest public school district.
“Given where we are now, there’s nothing that’s not on the table,” said Hopson, now finishing his second year on the job.
District administrators blamed most of the cuts on the projected loss of an additional 2,657 students to a growing crop of charter schools and the state-run Achievement School District (ASD). They also pointed to increased health care and pension costs, a 4 percent decrease in local sales and property tax revenue, and the expiration of significant grants, including the federal Race to the Top initiative and philanthropic money from the Bill & Melinda Gates Foundation.
In all, the district – which is the nation’s 14th largest and one of Shelby County’s largest employers – plans to spend almost $937 million to educate 109,192 students during the 2015-16 school year, down from just over $955 million this school year.
Last year, the district had to cut about 20 percent of its budget when six suburban municipalities split from the district and created their own school systems.
Unlike last year, however, when each department made blanket cuts, Hopson is attempting to make precision cuts aligned with district-wide goals to improve the graduation rate and academic outcomes for children.
During lengthy presentations, department leaders described how they would combine resources, forego building repairs and cut services, among other things.
But because the district spends about 80 percent of its revenue on salaries and benefits, the vast majority of cuts would come from shrinking its roster of more than 8,000 employees. More than half of the layoffs would come from its academic department, which is the district’s largest. Chief Academic Officer Heidi Ramirez proposed laying off 154 special education staff, a dozen teachers and at least three assistant principals.
Board members already are considering whether to close two schools and pull hundreds more students from three other schools that are being taken over by the ASD. That would save the district another $14 million.
Board members described their frustration over dealing with a relentless cycle in which the district loses students and funding to the ASD, which necessitates making budget cuts that hurt test scores, which lead to more schools being taken over by the ASD. The district will lose $18.4 million in state funding and another $4.7 million in local funding because of the ASD, according to the budget proposal.
The state allows the ASD to take control of schools that academically fall in its bottom 5 percent of schools. One-third of Shelby County Schools fit into that category.
Besides the ASD, district administrators have handed over another $88 million to 14 charter schools that they’ve authorized in the last decade. During Wednesday’s presentation, several board members asked Hopson to report back on how the charter sector and ASD’s presence have impacted the district’s budget.
Another 54 layoffs would come from business operations. Board members expressed dismay when Hitesh Haria, chief of business operations, proposed outsourcing maintenance services such as plumbing, carpentry and roofing. The board has received hundreds of complaints from parents about bus and janitorial services that were outsourced in recent years.
“In the past, we outsource and then we walk away,” said board chairwoman Teresa Jones. “We want choices. We don’t want business as usual.”
Another controversial proposal is to use $25 million in reserve funding, a move that could lead to more drastic cuts down the road. The district has $179 million left in its “rainy day” account, about 15 percent of its total revenue. Last year, the district tapped $9.5 million from that source.
“We saw Legacy Shelby County continue to dip into their reserves and it was proven not sustainable,” said board member Kevin Woods, referring to the school district that existed before the 2013 merger of city and county schools.
The board now must decide whether to approve the budget proposal or ask administrators for revisions. The next budget hearing is scheduled for March 26.
The 2015-16 budget process began as the district ended one funding quarrel with local officials and began another funding quarrel with the state. In January, the district reached a $41 million settlement with the Memphis City Council over a school funding dispute that began in 2008 before the school merger. In February, the board voted to explore whether to take the state to court for millions of dollars in underfunding over the years.
The board has targeted April 21 to approve a budget for recommendation to the Shelby County Commission, which also must approve the spending plan.
Asking commissioners for an additional $15 million could prove contentious, board members acknowledged, considering that the commission also must distribute funds to the county’s six new suburban school districts.
“We have to show we’ve been efficient and strategic with our dollars,” Hopson said, anticipating a fight. “At some point, it’s going to require some more resources.”
Read a detailed list of the district’s budget cuts here.
Contact Daarel Burnette II at dburnette@chalkbeat.org or (901) 260-3705.
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