Higher Stakes

Why the 2016 budget debate is especially high stakes for Shelby County Schools

PHOTO: Marta W. Aldrich

If it seems like the school funding debate in Shelby County is louder this year than in the recent past, that’s because it is.

The budget that county commissioners are reviewing will set a new important baseline for future education funding. That makes the stakes higher for Tennessee’s largest school district to push for more money before the July 1 budget deadline.

The dynamic is centered around “maintenance of effort,” or the expectation of the minimum funding the county is supposed to give its school district. The state suspended that expectation in 2014 when six municipalities broke off from Shelby County Schools, so the county could fund the new districts’ startup costs without putting itself on the hook to sustain that funding.

The “maintenance of effort” requirement returns in 2017. Thus, whatever the Shelby County Board of Commissioners decides to give Shelby County Schools this year will set the minimum funding the county must provide next year.

That may help to explain the county administration’s apparent unwillingness to budge from its first proposal. It also may shed light on why Superintendent Dorsey Hopson has sought to engage local families and advocates in the budget process, through the hashtag #StudentsDeserveMore and proposed — but not carried out — cuts to programs with strong backers.

“We’ve had to make very difficult decisions over the past few years to ensure our cuts do not affect the classroom,” Hopson wrote in an email to the district’s employees in March to kick off the campaign. “But this year could be different.”

The new baseline proposed by Shelby County administrators for Shelby County Schools is $312 million, slightly up from last year but unchanged after Hopson’s campaign. The district’s total budget, which comes mostly from state funding, would be $954 million.

The county could in theory decrease its local school spending below the baseline if the district’s enrollment drops, as it has every year for the past decade. Enrollment declines trigger a different standard for showing maintenance of effort: The county would have to spend at least as much per student as it had in the past.

But Mike Swift, the county’s director of administration and finance, said the county would be unlikely to consider using that standard.

“We have demonstrated for many years that school funding is the first priority of Shelby County with 63 percent of all property tax collections going toward schools,” Swift said. “School enrollment has been declining for over 10 years and reducing funding to the schools was never considered.”

Once the Shelby County Board of Commissioners votes on a final budget on June 20, the Shelby County school board will adjust its spending plan to reflect the commission’s decision. That means, according to Hopson, that the district could reintroduce some budget cuts that it threatened this spring.

More money

What Colorado’s booming economy might mean for the state education budget

More money is forecast to appear below the gold dome (Denver Post photo).

Gov. John Hickenlooper wants to put an extra $200 million into education next year and another $100 million in the 2019-20 fiscal year, but a lot of that money could go to offset hits to districts from anticipated reforms to the state’s pension program and reductions in local tax revenue.

The proposal comes in response to new economic forecasts released Monday that show Colorado having more money than previously expected.

Legislative economists predict that lawmakers will have a whopping $1.3 billion or 11.5 percent more to spend or save in 2018-19 than is budgeted in 2017-18. The forecast from the governor’s Office of State Planning and Budget predicts similar increases in revenue. After meeting the reserve requirement of 6.5 percent, Colorado will have an additional $492 million in reserve for this fiscal year, and even with a higher reserve of 8 percent proposed for next fiscal year, the state would have an additional $548.1 million in 2018-19. 

It’s normal for the forecasts to be slightly different because the economic analysts often use slightly different assumptions. In this case, the governor’s office predicts that the additional revenue will be more spread out over this fiscal year and the next one, while legislative economists think more of the money will be coming in next year. That difference means the legislative forecast shows the state potentially hitting the revenue limits imposed by the Taxpayer’s Bill of Rights, despite lawmakers making more room under the cap just last year, while the governor’s forecast does not.

These are the numbers that the Joint Budget Committee has been waiting for to finalize its recommendations for the 2018-19 budget year. Republicans and advocates for more transportation spending have already seized on the numbers to support a plan to ask voters to approve new debt to pay for road construction and dedicate up to $300 million a year to pay off that debt.

Of course, these forecasts are also inherently speculative – and legislative economists warned these forecasts contain even more uncertainty than usual.

State Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee, summed up the message as one of caution about dedicating too much of the new revenue to ongoing expenses. The more that gets committed, the harder it will be for the state to meet all of those commitments in future years.

Those who want to see Colorado spend more on K-12 education have pushed back on the Republican roads bill out of fear that the commitment could make it harder to send more money to schools in the future.

The governor’s budget director Henry Sobanet recommended treating much of this new money as “one-time” funds that should go to “one-time” uses. In a letter to the Joint Budget Committee, he laid out a plan.

In the case of roads spending, he’s recommending an extra $500 million for road construction in 2018-19, but only $150 million in 2019-20. And in the case of education, he’s recommending an additional $200 million in 2018-19 and an additional $100 million the following year.

However, this extra money might not show up in classrooms – or rather, it might show up in a lack of cuts rather than new money.

The governor’s budget request already called for a reduction in the budget stabilization factor of $100 million. That’s the amount by which Colorado underfunds K-12 education compared to the requirements of Amendment 23. In this budget year, it’s $822 million, after a mid-year adjustment. Some of the extra money could go toward reducing it even further.

However, Sobanet said he envisions most of it going to offset reductions in local property tax revenue that will be caused by a provision of the Colorado constitution that governs the ratio between residential and commercial property tax revenue.

It’s also possible that school districts could end up having to pay more toward some sort of agreement on changes to the Public Employees’ Retirement Association, or PERA. The final form of reforms to PERA is far from certain.

“Another downgrade in the residential assessment rate means more state share to keep total per pupil spending up,” Sobanet said. “We know that since the December announcement of property taxes and since we know PERA might be on the table for something, let’s set aside some resources and make sure we can handle this.”

Indiana's 2018 legislative session

State takeover plans for Gary and Muncie could be revived as Indiana lawmakers return in May

PHOTO: Shaina Cavazos
Gov. Eric Holcomb addressed reporters Monday. He's asking lawmakers to return for a special session in May.

Lawmakers will return to the Statehouse this May after an unusual summons Monday from Gov. Eric Holcomb, and it’s possible they could revisit a controversial plan to expand state takeover of the Gary and Muncie school districts.

But Holcomb said the takeover plan should not be pushed through during a special session and should be acted upon next year. It’s been more than a decade since lawmakers held a special session in a non-budget year.

“I would prefer to wait,” Holcomb said. “I don’t believe that it rises to the level of urgency to be dealt with right now.”

The regular legislative session ended in chaos last week, with lawmakers leaving this and several other important bills unresolved when the clock ran out.

Republican lawmakers have been largely supportive of the takeover plan, and so they could revive the issue despite Holcomb’s stance. Holcomb said discussions would happen this week over what issues could be addressed during the special session.

House Bill 1315 sparked heated debate right up until the final minutes of the 2018 legislative session. The bill would have given control of Muncie schools to Ball State University and stripped power from the Gary school board. Another part of the bill would have developed an early warning system to identify districts in financial trouble.

On Thursday, House Speaker Brian Bosma said the bill was one of the important issues left on the table when the legislature had to adjourn.

But Senate President David Long also noted that the bill has been massively unpopular in some circles — Democrats were strongly opposed to it, as were teachers unions and some educators and community members.

Both Republican leaders said in statements Monday that they supported the governor’s special session request. But John Zody, the Indiana Democratic Party chairman, derided the move as wasteful and a reflection of lawmakers’ inability to finish their work on time.

“Republican leadership incompetently steered session into a wall on the last lap,” Zody said in a statement. “Now they’re asking taxpayers to foot the bill for another shot at passing their do-nothing agenda.”

Holcomb said his biggest priorities during the special session would be getting a $12 million loan from the state’s Common School Fund to Muncie schools to deal with financial difficulties stemming from declining enrollment and mismanagement of a bond issue. That loan was originally a provision in the House bill.

State Superintendent Jennifer McCormick said Monday morning that she also would support action to get Muncie schools the money they were promised. McCormick also said the early warning system could be helpful to prevent these situations in the future.

“We want Muncie to be successful,” McCormick said, adding that anything the state can do to be proactive “and get people help so we’re not dealing with more Muncies and Garys” is a good thing.

The special session could come with a steep price tag for Indiana taxpayers. Micah Vincent, director of the Office of Management and Budget, said early estimates for calling lawmakers back into session could be about $30,000 per day. But that cost “is dwarfed by the cost of inaction,” Holcomb said. It’s unclear how long the special session could last.

The governor also said he wanted to prioritize school safety legislation, another measure that didn’t get final votes before time ran out. He is calling for lawmakers to direct $10 million over the next two years to the state’s Secured School Fund. The money would allow districts to request dollars for new and improved school safety equipment and building improvements.

His plan comes in the wake of a shooting in Parkland, Florida, where 17 students and faculty members were killed last month.

The shooting also sparked activism across the country, with thousands of students protesting against gun violence in schools and calling for stricter gun regulations. Last Wednesday, many Hoosier students joined the national movement by walking out of school.