First Blush: Shelby County Schools Estimate $79-Million Budget Shortage

September 30, 2015 – Shelby County Schools’ (SCS) initial look at the 2016-2017 budget shows a $79-million dollar shortfall.

Superintendent Dorsey Hopson says the among the reasons for the shortage are:

  • $7.9-million decrease in revenue due to the state’s Achievement School District increasing enrollment within the Shelby County School district, money follows the student in public schools,
  • decrease of 1106 students in the current school year. Again because a large amount of funding is based enrollment, this years count affects the amount of revenue which will be received next year,
  • SCS wants to increase teacher compensation another $5.5-million beyond the same amount alr4eady made for equivalent step increases,
  • benefits to employees are expected to increase $7-million,
  • the Teacher & Leadership Effectiveness/Gates Foundation grant ends,
  • SCS wants to expand schools in its iZone in which schools get extra intervention strategies, including a longer school day, in an effort to raise academic performance in schools at the bottom of academic ratings.

It should be noted that in recent years Shelby County Schools’ initial look at upcoming budgets have repeatedly shown millions of dollars in shortfalls, but through cuts and additional revenue the budget has been balanced, as required by law.

This fiscal year, SCS got an extra $7.9-million from Shelby County and, according to the district, also used $36-million in its fund balance. Whether the county will supply more money for the next fiscal year is unknown while the amount of money in the fund balance, a reserve fund of dollars not spent, has been already reduced by that $36-million.

Financial experts and observers do not consider the $72-million estimated shortage as a realistic figure as it relates to the final budget. But SCS points out it has been cutting positions and programs in recent years and it is becoming much more difficult to find places to cut spending without adversely affecting learning in the classrooms. Hopson cites the fact that 80 percent of the budget is in salary and benefits for employees and that the central office staff, where many often look to cut, now is only two percent of the budget. In addition to central office staff reductions, he also noted that in the past three years SCS has closed 17 schools, outsourced services, the largest being busing and custodial work, even reduced the Foreign and World Langue course offerings.

Meeting with board of education members September 29, 2015, Hopson said it is his intent to collaborate more closely with the board while the fiscal year 2017 budget is crafted rather than presenting it later in the process. He asked board members to outline its priorities so that he can attempt to match them to the budget and for them to make suggestions for additional cost reductions.

The administration’s proposed budget is typically presented to the board of education in February. Following review by the board and community meetings, the board is usually asked to approve the budget in late March or early April. It is then presented to the Shelby County Commission, which provides about $381-million of the funding for the school system. The new fiscal year begins July 1, 2016, and the budget should be approved by all parties by then but a continuation budget which allows the school system to continue spending at the previous budget’s rate is possible if it takes longer to finalize the spending plan. The state wants a copy of the approved budget by August 1. If the state does not receive an approved budget by October, it can begin withholding its funding for the district.

Shelby County Schools has recently sued the State of Tennessee claiming the funding it receives from the state is unconstitutionally lower than it must be. Several school districts in east Tennessee have filed a similar lawsuit. Regardless of the eventual outcome of those legal challenges, they are not expected to affect near term school budgets because they could take years for final judgments to be made.


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