School Finance

Indianapolis Public Schools may ask taxpayers for more money. A three-year deficit and raises for teachers are driving the decision.

PHOTO: Dylan Peers McCoy
Indianapolis Public Schools leaders may ask the public for more funding.

With Indianapolis Public Schools slowly burning through its savings, district leaders may soon ask taxpayers for more money.

For the third year in a row, the district expects to operate at a deficit, following years of declines in state funding and growing spending on teacher pay. Now, to balance the budget, some district leaders say IPS may need to ask taxpayers for more money through a referendum.

It will be more than a year before the district can put a referendum to increase property taxes on the ballot, said Superintendent Lewis Ferebee. But with state funding stagnant or declining, Ferebee said that he believes the district will “absolutely” need to have a referendum for more funding to pay teachers at the current rate and potentially increase pay in the future.

In recent years Indiana schools have become largely reliant on state funding for operating expenses, with local money primarily paying for transportation and facilities. But districts with pinched budgets often appeal directly to residents to increase property taxes and send more money to schools. Of the 11 school districts in Marion County, eight have asked taxpayers for more funding to pay operating expenses such as teacher salaries and six were successful. The most recent district to make an appeal was Washington Township, which passed a referendum last fall.

Next year, IPS expects to spend about $22 million more on operating expenses then it receives in state, local and federal dollars. The district can make up for that gap in the short-term because it has about $57 million in savings, and it is adding millions of dollars to its coffers each year from the sale of unused buildings. But neither strategy is sustainable in the long term.

“We know we have deficits,” said Weston Young, the district’s chief financial manager. “Ultimately, much like a lot of the other local districts and state districts, an operating referendum is very much a consideration for our district.”

Before district leaders appeal to voters for more cash, however, they are aiming to cut some of the costs that are weighing down the shrinking district — which has lost thousands of students over the last decade. The biggest drain are the district’s underused schools. The district has nearly three times as many seats as there are high school students to fill them, which dramatically pushes up costs at some schools.

(Read: Empty hallways, higher costs force Indianapolis Public Schools to consider closing high schools)

Last summer, IPS leaders announced plans to close some of the district’s high schools. Ferebee said last week that the district could close schools by 2018-2019.

Board member Kelly Bentley said that closing some high schools is one way that the district can show taxpayers that it is managing its finances responsibly — and win more support for a referendum.

“I think the district has been and continues to be really good stewards of the money that we have,” she said. “We need to continue to do that so that the taxpayers feel comfortable that we are doing what we can with what we have, and there really is no other alternative.”

IPS leaders are also looking to prove their fiscal responsibility in other ways: Since Ferebee took the helm three years ago, the district has touted a focus on making sure funding goes directly to schools. Last year, consultants for the district found that spending on management and leadership had fallen to $684 per student in 2015-2016 from $876 in 2012-2013.

But IPS leadership has also spent big on some areas. The district has spent hundreds of thousands of dollars to pay outside consultants to help plan a new approach to school budgeting. And last fall, the district approved the first teacher raise in years, which increased the minimum salary for teachers to $40,000 — at a price tag of about $1.7 million per year, according to an IPS spokesperson.

If the district wants to raise teacher and principal salaries again, the district will need to have a referendum, Bentley said.

“With concentrated poverty like we have in IPS, I just think it’s a huge challenge for principals and teachers,” she said. “We just need to be able to pay them competitively. I just hope that the public will see that.”

Business of education

Memphis leaders say diversifying school business contracts will help in the classroom, too

PHOTO: Laura Faith Kebede
Winston Gipson confers with his wife and daughter, who help run Gipson Mechanical Contractors, a family-owned business in Memphis for 35 years.

Winston Gipson used to do up to $10 million of work annually for Memphis City Schools. The construction and mechanical contracts were so steady, he recalls, that his minority-owned family business employed up to 200 people at its peak in the early 2000s.

Looking back, Gipson says being able to build schools was key to breaking through in the private sector.

“When we got contracts in the private sector, it’s because we did the projects in the public sector,” said Gipson, who started Gipson Mechanical Contractors with his wife in 1983. “That allowed us to go to the private sector and say ‘Look what we’ve done.’”

But that work has become increasingly scarce over the years for him and many other minorities and women. The program designed to address contract disparities in Memphis City Schools was cut during its 2013 merger with Shelby County Schools.

A recent study found that a third of qualified local companies are owned by white women and people of color, but such businesses were awarded just 15 percent of the contracts for Shelby County Schools in the last five years.

It was even worse for black-owned construction companies, like Gipson’s, which make up more than a third of the local industry but were awarded less than 1 percent of contracts.

The disparity is being spotlighted as the city prepares to mark the 50th anniversary of the death of civil rights leader Martin Luther King Jr., who was assassinated in Memphis while trying to fight for the rights of minority workers in 1968.

On Jan. 25, Chalkbeat will co-host a panel discussion on how Shelby County Schools, as one of the city’s largest employers, can be an economic driver for women- and black-owned businesses. Called “Show Me The Money: The Education Edition,” the evening event will be held at Freedom Preparatory Academy’s new Whitehaven campus in conjunction with MLK50 Justice Through Journalism and High Ground News.

Community leaders say school-related business contracts are a matter of equity, but also an education strategy. Since poverty is a crucial factor in why many Memphis students fall behind in school, the lack of job opportunities for their parents must be part of the discussion, they say.

The district already is taking steps to improve its record on minority contracting, starting with setting new goals and resurrecting the city district’s hiring program.

Big district, big opportunity

Shelby County Schools is Tennessee’s largest district. With an annual budget of more than $1 billion, it awards $314 million in business contracts.   

An otherwise dismal 1994 study of local government contract spending highlighted Memphis City Schools’ program to increase participation of historically marginalized businesses as one of the county’s most diverse, though some areas were cited as needing improvement. The same study criticized the former county school system, which lacked such a program, for its dearth of contracts with Minority and Women Business Enterprises (MWBEs).

But when the two districts merged in 2013, the program in Memphis City Schools disappeared.

“We had to cut, cut, cut,” said school board member Teresa Jones. “We were trying to stay alive as a district. We did not focus as we should have.”

Jones, a former school board chairwoman, said it’s time to revisit the things that were working before the merger. “We have to get back,” she said, “to make sure there’s equity, opportunity, access, and an atmosphere that promotes business with Shelby County Schools.”

District and community leaders say the consolidated district has lost its ability to develop relationships with qualified minority-owned businesses.

“There was an infrastructure where African-Americans felt comfortable enough approaching the school system” for work, said Melvin Jones, CEO of Memphis Business Contracting Consortium, a black business advocacy group formed in 2015. “There was trust. During the merger, they dropped the infrastructure.”

Brenda Allen

Without the outreach, “we’re seeing the same vendors,” said Brenda Allen, hired last summer as procurement director for Shelby County Schools after working in Maryland’s Prince George County Public Schools, where she oversaw a diversity contracting program.

“We’re not marketing the district like we should,” she told school board members in November.  

Shelby County Schools is not alone in disproportionately hiring white and male-owned companies for public business. Just 3 percent of all revenue generated in Memphis goes to firms owned by non-white people, even though people of color make up 72 percent of the city’s population, according to a 2016 report by the Mid-South Minority Business Council Continuum.

Not coincidentally, district and community leaders say, Memphis has the highest rate of young adults who aren’t working or in college, and the highest poverty rate among the nation’s major metropolitan areas. About 60 percent of students in Shelby County Schools live in poverty and all but three of the district’s schools qualify for federal funding for schools serving high-poverty neighborhoods.

Jozelle Luster Booker, the CEO of the Council Continuum, developed an equity contracting program for the city utility company following the 1994 study that was so critical of the city. The program funneled half a billion dollars to minority-owned businesses — an example of how government policies can promote equitable contracting, and grow businesses too.

“When that happens, you could basically change the socioeconomic conditions of that community, which impacts learning,” Booker said. “They’re ready to learn when they come to school.”

Shelby County Schools plans to hire a consulting firm to help develop a procurement outreach program and set diversity goals for its contractors and subcontractors. The program will launch in July, and Allen plans to hire three people to oversee it.

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

The district also is part of a city-led group that provides a common certification process for businesses seeking contracts with city and county governments, the airport, the transit authority, and Memphis Light Gas & Water. The city’s office of business diversity and compliance also has a list of qualified minority businesses, offers free business development courses, and accepts referrals from other government entities to reduce redundancy.

“As you spend public dollars, you always want those dollars to be spent in your neighborhoods because that money comes back into your economy,” Allen said. “When people have jobs, you should see crime go down. You should see more people wanting to do business in the community if you have a good program.”

Leveling the playing field

In order for it to work, there has to be consistent reports, measures and, most of all,  accountability, according to Janice Banks, CEO of Small Planet Works, who helped the district with its disparity study.

Gipson agrees.

A wall of his second-floor Memphis office is lined with photos of some of his most significant projects during his 35 years of business, including a multimillion-dollar mechanical contract with AutoZone when the Memphis-based car part company moved its headquarters downtown in the early 2000s.

The work was made possible, he said, because of public sector jobs like constructing nine schools under Memphis City Schools. But that work evaporated after the merger. “It’s mostly been Caucasian companies that do the work (now),” he said. “It’d be one thing if you didn’t have anyone qualified to do it.”

Shelby County Schools will have to show commitment, he said, if it wants to level the playing field.

“You have the mechanism in place to make a difference,” he said. “Now do you make a difference with that mechanism or do you just walk around, beat your chest, and say we have a disparity study and let things run the way they’ve been running?”

“If you don’t make it happen, it will not happen,” he said.

money matters

More money for poor students and cuts to central office: A first look at the Denver school district’s budget plan

PHOTO: Denver Post file
Lisa Ragan reads to her third-grade class at Marrama Elementary School in Denver.

Denver district officials are proposing to cut as many as 50 central office jobs next year while increasing the funding schools get to educate the poorest students, as part of their effort to send more of the district’s billion-dollar budget directly to schools.

Most of the staff reductions would occur in the centrally funded special education department, which stands to lose about 30 positions that help schools serve students with disabilities, as well as several supervisors, according to a presentation of highlights of a preliminary budget.

Superintendent Tom Boasberg said he met with some of the affected employees Thursday to let them know before the school hiring season starts next month. That would allow them, he said, to apply for similar positions at individual schools, though school principals ultimately have control over their budgets and who they hire.

The reductions are needed, officials said, because of rising costs, even as the district is expected to receive more state funding in 2018-19. State lawmakers are poised to consider several plans this year to shore up Colorado’s pension system, all of which would require Denver Public Schools to contribute millions more toward teacher retirement.

The district will also pay more in teacher salaries as a result of a new contract that includes raises for all teachers, and bonuses for those who teach in high-poverty schools.

In addition, the district is projected to lose students over the next several years as rising housing prices in the gentrifying city push out low-income families. Fewer students will mean less state funding, and fewer poor students will mean a reduction in federal money the district receives to help educate them. It is expected to get $600,000 less in so-called Title I funding next year.

The presentation given to the school board Thursday night included a breakdown of the proposed cuts and additions to the 2018-19 budget, which is estimated at $1.02 billion. Not all details or exact figures were available because the budget proposal won’t be finalized until April.

Superintendent Tom Boasberg said the changes reflect the priorities for the 92,600-student district, including spending more money on high-needs students, giving principals flexibility with their own budgets, and improving training for new teachers.

The proposed additions include:

  • $1.5 million to provide schools with between $80 and $180 extra per student to educate the district’s highest-needs students, including those who are homeless or living in foster care. Schools with higher concentrations of high-needs students would get more money per student. The district began doling out extra money for “direct certified” students this school year. But officials want to increase the amount next year, in part to account for undocumented students with high needs, who they suspect are being undercounted.
  • $1.5 million for pay raises for low-wage workers, such as bus drivers and custodians. Given the state’s booming economy, the district, like others in Colorado, has struggled to fill those positions. In 2015, the district raised its minimum wage to $12 an hour.
  • $1.47 million to provide every elementary school with the equivalent of at least one full-time social worker or psychologist, which some small schools now can’t afford. A tax increase passed by voters in 2016 included money for such positions. School principals could decide whether to spend it on one full-time person, for example, or two part-time people.
  • $408,000 to provide all elementary schools with “affective needs centers,” which are specialized programs for students with emotional needs, with the funding for an additional part-time paraprofessional, though principals could spend the money the way they want.
  • $600,000 for “tools to decrease out-of-school suspension, eliminate expulsions, and decrease habitually disruptive behaviors for our younger learners.” The presentation did not include specifics. The school board voted in June to revise its student discipline policy to limit suspensions and expulsions of preschool through third-grade students.
  • $293,000 to hire more eight more “behavior techs,” who are specially trained to help students with challenging behaviors. The district already has seven. They are “sent to schools for weeks at a time to help teachers and principals stabilize classroom environments.”
  • $232,000 for programs to train new teachers. One idea, Boasberg said, is to have teaching candidates spend a year in residency under a master teacher in a high-poverty school.

The proposed reductions include:

  • $2.47 million in cuts to the number of centrally budgeted “student equity and opportunity partners,” who are employees who help schools serve students with special needs.
  • $1.25 million in eliminating more than a dozen vacant positions in the student equity and opportunity office, which oversees special education, school health programs, and more.
  • $317,000 in reductions in supervisors in that same department.
  • $250,000 by eliminating contracts with an outside provider and instead serving a small number of the highest-needs students in a new district-run therapeutic day school.
  • $681,000 in staff cuts in the district’s curriculum and instruction department, which provides resources to schools. The presentation didn’t include specifics.

The district is also proposing some revenue-neutral changes. One of the most significant would allow struggling schools to better predict how much extra funding they will receive from the district to help improve student achievement. To do so, district officials are proposing to move several million dollars from the “budget assistance” fund to the “tiered supports” fund.

Low-performing schools designated to be closed and restarted would receive three years of consistent funding: $1.3 million over that time period for elementary schools, and $1.7 million for middle and high schools. If after three years a school’s performance had improved, it would be weaned off the highest funding tier over the course of an additional two years.

The school board is expected to vote on the final budget for 2018-19 in May.