Funding Education 101 – Part 2 – Where the Money Goes

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Last time, we looked at where the money for public education in Shelby Co. came from. As a reminder, this wasn’t the full budget of the two systems, but the “General Fund”, which is where the money for the nuts and bolts of education comes from.

This time, we’re going to look at something a bit more complicated. Where the money goes. Because this is complicated I’ve consolidated some categories to make things easier. At the end of this post, I’ll give some detail about what the categories cover specifically, but for the purposes of right now, taking a more “top line” view may be better to get things going.

With that in mind, here are the numbers:

Categories: Administration (General Administration, Fiscal Services, Other Support Services), Principal/Support (Office of Principal, Student Support), Instruction (Instruction, Instruction Support)

One thing that’s interesting to note: The total expenses of both districts amounts to $1.26b. That’s just $40m less than the $1.3b the USB is currently budgeting. Suddenly doesn’t make that number seem so crazy.

Something else to consider is that the USB isn’t asking for $145m more from the County Commission. They can’t divine where or how revenue is going to look anymore than I can divine Powerball numbers. They can figure out how much stuff costs, and let the Commission know how much they need to operate. That, by the way, is how budgets are negotiated.

More astute readers will notice that MCS is operating in the red this year. This is not a new thing. They’ve been operating in the red for several years. In fact, MCS’s reserve fund has plummeted from a beginning balance of $304m in 2008 to under $130m as of this year. (SCS has also been using reserves to the tune of $6.5m this year.)

Bleeding Money?

For as long as I can remember, there’s been a meme about how wasteful MCS is. Apparently, they’re just blowing money on ridiculous things, to hear some folks tell it. But if you remember from last time, I talked about the how much things cost for an aging school district, and I think this spreadsheet lays it out pretty well.

From the looks of this spreadsheet, it doesn’t seem like there’s that much difference in the two, as it relates to overall costs of the Administration, school staff, etc.

If anything, SCS spends more in all of those categories as a percentage of total expenses.

There are two areas of difference: Instruction and maintenance.

If you take the amount MCS pushes into Charter schools and add it to instruction, instruction is virtually identical.

However, MCS pays almost 12% of their total budget on maintenance. A lot of this is due to aging schools, or schools that are underutilized. If MCS spent the same percentage of budget, as they do on almost everything else, as SCS on maintenance, that would free up an additional $37.5m in the budget for all kinds of things.

Back to the Deficit

In the first spreadsheet above, I noted that MCS has had to tap into its reserves to the tune of $33m this year, just to maintain the current level of service. This has been happening for some time. Current reserves are less than half of what they were in 2008, down to $128m from $262m. Some of this is due to the $50m+ owed by the City of Memphis. But the lion’s share is due to the County Commission consistently underfunding MCS compared to SCS. Here’s an example from the 2010-2013 budget years:

As you can see here, the County has consistently, over the past 4 years, funded the City schools less, as a percentage of BEP than the County Schools. Sure, both numbers are more than the minimum, but the lack of true parity turns into real money in short order. $63m of real money in fact.

If you take that $63m gap from the County Commission, add it to the $55m owed from the City of Memphis, and then tack on the additional cost of maintaining older buildings $37m you come up with $155m, or an amount nearly identical to the amount MCS has had to tap into reserves over the same time period.

What’s most interesting to me is that there is no local politician that I’m aware of, that has been elected while running against education. Everyone holds it up as a positive that is vital to the future of our community. Everyone, that is, until it comes to paying for it. That’s where you get all the fighting.

No politician, in their right mind, wants to come before the voters and hold up a tax increase as a crowning achievement. Which puts education where it really is for politicians, a tool to manipulate. A rhetorical flourish. An easy source of agreement.

Key Takeaways

So what have we learned from this round of Funding Education 101:

1. MCS and SCS have very similar funding schemes when it comes to their budgets.
2. If SCS was the “efficient” district, then by default MCS must be as well.
3. Both districts have been using reserves to maintain services. (I didn’t talk about it but SCS has used nearly $24m of reserves in the past 2 years. They do not publish their reserve balance as far as I know.)
4. Both districts expenses combined are currently $1.26b, just $40m less than the $1.3b the USB is asking for.
5. MCS has older infrastructure and therefore greater maintenance costs to the tune of $37m/yr.
6.The Shelby County Commission has been appropriating a greater overage of BEP to SCS than MCS for the past 4 years, which translates to $63m less revenue for MCS.

One thing that hasn’t been discussed is the issue of efficiencies. This is something that the County Commission is consistently asking for. Its understandable, but from looking at both budgets and comparing them side by side, they’re really pretty lean, unless you want to start paying teachers less, which is no way to attract and retain talent to the district.

In this epic post, Schooling Memphis takes on the efficiency issue. Scroll down to #7 and take a gander.

As I showed above, the long hard fact is that MCS is as, if not more efficient than SCS. What County residents, led by USB member David Reeves, are saying is they don’t want to do without…something MCS has been doing for a very long time. Interesting dynamic, especially in what will most likely be a very tight budget year.

Conclusion

So that pretty much takes care of the primer on the “General Fund” budget. I could spend a week on the “Special Revenue Fund” budget, but here’s all you really need to know. Almost all the money is Federal, and most of it pays for nutrition. Over 90% of MCS students qualify for free or reduced lunches. For some of the least fortunate kids, the breakfast and lunch they receive at school are the only real stable meals they get.

This kind of deep seated problem isn’t something the schools can fix. All they can do is react and try to mitigate the problem. That’s what “Special Revenue Funds” do.

I’ll go back to a couple of paragraphs from my first post:

Shelby Co. deserves and needs a public educational system that is equipped to play a positive role in a reversal of fortune for the 30.3% of children in our community that currently live in poverty (Source). There’s no way to know if the new system will be able to overcome the challenges of generational poverty and low educational attainment, but if those were our goals, rather than blame-storming for political gain, we would be one step closer to achieving it.

But as long as our elected officials choose to play politics with public education…from the State Legislature to local government, we’ll be fighting the wrong fight…and the children will suffer for it.

There’s not a single issue, from zoning and planning, to neighborhood revitalization, to employment opportunities, to crime, that doesn’t impact education. Kids only spend 17% of their year in school (180 days, 8 hours a day). The rest of the time they’re in their neighborhoods and the environment those neighborhoods provide.

The absolute lack of any kind of long-term vision from both the City and the County (they share a planning department after all) to address the dire conditions in many neighborhoods in this community not only tells a story about how our governments see the less fortunate, but it also shows how little they understand about their own tax structure.

For years we’ve heard that the hollowing out of the City core is part of the problem with the budget scenario in Memphis. Yet for as long as that discussion has been going on, little has been done. This problem is about to raise up and bite the County government next. Thousands of properties, left to neglect, will be valued in this assessment at a lower value than they should be. If the City and County were truly protecting their interests, both in terms of tax rate and the quality of our neighborhoods they would be out there fighting their butts off to stop this trend. That’s not really happening.

This will not only depress our ability to fund our schools, but also make the job that much harder by allowing conditions to persist that research shows, depresses educational outcomes, as well as opportunities for the parents of those children.

Its a damn shame that no one on either body can get their head wrapped around this…because this lack of vision, more than anything else, is what’s keeping our community, including all the suburbs that behave like they’re somehow immune from the problems, from being the Shelby County it could be.

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