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VOL. 126 | NO. 143 | Monday, July 25, 2011

Schools Funding Compromise Must Overcome Distrust

By Bill Dries

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The city of Memphis and the Memphis City Schools system have some time – but not a lot – to see if a very tentative school funding compromise can grow roots.

But downtime has never been the friend of either side in the three-year dispute that began when the then-newly elected council cut funding to MCS in April 2008.

MCS board members cancelled a Friday, July 22, meeting in which they were to vote to restore a firm Aug. 8 start date for the new school year.

The meeting was cancelled on the advice of the school system’s attorneys, and no new date has been set.

Cash said in a written statement the attorneys for MCS and the city "are in the process of working out the details of a potential agreement in order for us to open school on time."

"It must be emphasized that there is no binding agreement until both governing bodies have taken public action, approved the agreement and officials signed off on same," he continued. "It remains this board's and administration's expectation that school will begin on its originally scheduled date of Aug. 8."

Memphis Mayor A C Wharton Jr.’s office had no comment Friday on the postponement.

It is an indication of just how tentative the compromise is that emerged during the Thursday council committee session.

The heart of the agreement is an installment plan for paying the city school system the funding it is due for the fiscal year that began July 1. The council, at a meeting Aug. 2, will vote on a resolution that would put the city’s funding of MCS at less than the $78 million sought by the school system. The amount would be about $68.4 million, based on state numbers showing student enrollment has dropped by 2,508 students.

The city would make a first payment of $15 million for the current fiscal year on Aug. 15. The payment is a combination of $10 million set aside in the city’s budget that was to go to paying the $57 million the city owed from 2008 when it cut MCS funding. Payment of that amount would wait on a final Chancery Court ruling on larger issues. The reallocated $10 million was to be coupled with $3 million Wharton agreed to come up with for MCS this week and another $2 million from elsewhere, possibly the city reserves.

The monthly payments after that would be calculated on the past history of when the city has historically made revenue payments to MCS.

“We go back and look at disbursement from the Memphis city government to Memphis City Schools,” Wharton said. “We look at disbursements from FY (fiscal year) 2000 to FY 2011. We then come up with what the average installments have been for that period of time and then we’ll determine what the installments for FY 12 will be. We will equal it out so every month MCS will know that 30 days following the close of the month, they’re going to get a check in 'X' amount of dollars.”

The agreement to base payments on when they have been made in the past is central to how the 3-year-old school funding dispute got to the point that it threatens the start of the school year. And differences remain on enrollment estimates that could flare up at any time, threatening the compromise.

MCS attorney Dorsey Hopson told council members Thursday that school system superintendent Dr. Kriner Cash asked him six to seven weeks ago about when the money would start to flow. Hopson said it was at that point that he told Cash it “was time to be concerned.”

“We did not have an agreed-upon payment schedule,” MCS board president Martavius Jones said after Thursday’s breakthrough. “We’re going to determine how much was paid in September and how much was paid in October. We’re going to use that average to have somewhat of a permanent payment schedule for this next fiscal year.”

The first signs of a problem came in a telephone conversation Friday, July 15, between Wharton and Cash.

Wharton’s chief administrative officer, George Little, was listening in with the knowledge and consent of Cash as the two leaders talked about when MCS would get funding from the city of Memphis for the fiscal year that began July 1.

The City Council wasn’t scheduled to approve the MCS budget until its Aug. 2 meeting.

Wharton said he told Cash the money was go to MCS as the revenues came in from taxpayers. He noted that Cash said the school system couldn’t continue to operate like that. It’s something Cash has said before numerous times.

By Tuesday, when the MCS was hours away from voting to delay the Aug. 8 start of the school year if it didn’t have full funding at the outset from the city of Memphis, Wharton had talked with his attorneys.

There had already been some debate that paying MCS anything might undermine the city’s legal position in the federal court schools consolidation case. The city maintains MCS ceased to exist when the city council ratified the MCS board vote in January to surrender its charter.

“The chances of jeopardizing the city’s position – they felt they could work around it,” Wharton said later. “I simply did not want to disburse the $3 million only to have somebody say, 'That was crazy of you. Didn’t you know they were out of existence?'”

The city’s legal concern is that a payment to MCS could be seen as a commitment and a requirement to continue to fund a consolidated city-county school system under the state maintenance of effort law.

The $3 million payment may have accelerated the school system’s move toward an ultimatum that went from a resolution Monday demanding $9 million it says it is owed from the fiscal year that ended June 30 to the resolution a day later demanding $55 million in funding before the school year could start.

Wharton said he wasn’t surprised by the board’s action.

MCS board member Jeff Warren accused the council of drinking “Wade Koolaid” in a Facebook posting this week – a reference to City Council attorney Allan Wade.

“(He) still has the council convinced that they do not need to pay us,” Warren wrote. “They are better politicians than I am. We are at the point that unless we as a community make them pay, we will lose the best in MCS.”

The board and Cash have felt like they have been close to payment plans with Wharton, only to have the tentative deals disintegrate once they reached the council committee room.

Cash in particular has been visibly distraught in the encounters as Wade and council members insisted on a different accounting of what is owed and who owes it.

At one point the council rejected a tentative deal saying the city should seek the appointment of a mediator to get an amount somewhere in the middle.

“I believe Mayor Wharton wants to help us,” Warren wrote, “but is hamstrung by a council that has been misled by an attorney who does not have our children’s best interests at heart.”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047
FORECLOSURE NOTICES 20 39 190
BUILDING PERMITS 0 305 3,056
BANKRUPTCIES 17 135 753
BUSINESS LICENSES 0 53 329
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0