13. Representatives of Memphis City Schools will be back in court soon to argue that a judge should force the school district and the Memphis City Council to negotiate new terms of a crucial funding deal.
But the circumstances MCS detailed in a court filing last week to show why the school district believes mediation is necessary have since changed in an important way.
The school district wants a court to force MCS and the city council to begin mediation to negotiate a compromise that preserves $423 million in state funding for the city schools. The deal they have now is a funding arrangement that was crafted at the same time the two sides remained locked in a pending Shelby County Chancery Court lawsuit over school funding.
Under the terms of the current funding compromise – which has the state’s blessing – the school district would be able to submit a balanced budget to the state even though the city council earlier this summer cut $66 million in funding to MCS. The City Council’s funding cut is what led to the school district’s lawsuit.
The deal approved by the state to keep the $423 million flowing to MCS took what had been described as a potential fiscal crisis off the table. Both sides will be back in court this morning, however, because MCS doesn’t like the terms of that deal.
Not only does MCS not like the terms of the funding deal, but in asking for the mediation, the school district pointed out that no decision about accepting the deal had yet been made by either MCS or the city council. MCS also argued that the nature of the opposing parties made it difficult to “effectively negotiate an agreement.”
“The State Department of Education has approved an outline for meeting maintenance of effort requirements,” the school district’s motion reads. “However, neither the Memphis City Schools nor the City Council has agreed to any arrangement which allows the Memphis City Schools to submit a legal budget and to avoid a … crisis.”
That’s no longer the case. The city council on Tuesday formally approved the terms of the funding compromise approved by the state.
Two weeks ago, the state commissioner of education gave his OK to the compromise deal, which had been weeks in the making. And while the compromise does not address the $66 million hole left by the council’s decision, it still keeps MCS from automatically losing the state’s larger funding contribution.
The fine print
Under the terms of the arrangement, MCS would transfer $57.5 million from its reserve funds to the city to settle a countersuit from the city over unpaid bond debt. The city, in turn, would give that money back to the school district so MCS can submit a budget to the state that maintains the school district’s state-mandated funding obligations.
But since the state’s acceptance of that plan was announced at the city council’s public meeting on Aug. 5, MCS officials have insisted the plan is unacceptable. They argue that the deal is not a genuine compromise because there is no net gain for the school district and because the district still will be forced to deplete the school’s reserve funds over time as a result of the council’s $66 million cut.
In an editorial written by school board president Tomeka Hart that appears in next week’s edition of The Memphis News, she argues: “When the transaction is final, the ‘financial position’ of MCS will not have changed, and it is easy to see that MCS will still have to make major cuts to its budget.”
Said Irving Hamer, the school district’s deputy superintendent of academic operations: “It’s very clear to me this is not full funding. This is what I call a pass-through. The money is coming from us, to the council then back to us. And that doesn’t correspond to my understanding of what full funding means.”
Context of compromise
But that misses the point of what the compromise was intended to do, the city likely will argue when the motion to compel mediation is heard Sept. 12.
“The issue of resolving the proposal with the state was never intended to encompass the $66 million. That is not on the table,” city council attorney Allan Wade said this week. “That is what they are arguing will make them financially unsound going into the future. That is a discussion we can have for another day, but that is not impacted in this proposal.
“This (compromise) is not intended to solve every problem MCS has. That’s what the lawsuit is about.”
At a council committee meeting Tuesday, council member Wanda Halbert rebuked MCS officials for criticizing a deal she said they had a hand in shaping.
“This compromise, or this agreement, was not reached by the city council alone. You all had representatives there,” she said. “And now to come back because you realize that whatever decision was made… that it doesn’t necessarily help you in the way you thought it would – there’s always a different way to approach it and deal with it.”
Final briefs in the chancery court school funding lawsuit were due this week. Chancellor Kenny Armstrong has not yet set a date to hear closing arguments....