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VOL. 131 | NO. 121 | Friday, June 17, 2016

County Schools Funding Compromise to Be Tested

By Bill Dries

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Fragile is probably the best way to describe the compromise that emerged this week from county commissioners to fully fund the Shelby County Schools budget for the fiscal year that begins July 1.

The plan that closes a $27.4 million gap between what the school system wants and what Shelby County Mayor Mark Luttrell proposed in April had eight votes on the 13-member commission in Wednesday, June 15, committee sessions.

Then it had six.

And as some commissioners departed early while committee meetings that ultimately lasted 8 1/2 hours kept running, it became clear that there will be at least one attempt to undo the budget compromise Monday.

That’s when the full commission meets to vote on the county’s operating budget, including the level of funding for all seven of the county’s public school systems, and takes the second of three votes on the county property tax rate.


Toward the end of the Wednesday, June 15, budget session, commissioner David Reaves, who returned to the long-running committee discussion after the compromise was struck, said other commissioners “gave away the farm” in the deal.

“I don’t support giving away all of this money to education,” he said. “I think we have enabled them by doing this. I think we have enabled them not to make decision they need to make.”

Commission chairman Terry Roland, however, was reluctant to reopen the entire compromise and restart at square one.


“I don’t want the six or eight hours that we worked on the schools budget to go for naught,” he said. “I can’t just throw that out the door. I want to vote on it.”

Roland was instrumental in shaping the compromise between county government and Shelby County Schools.

County funding for local education is distributed among the county’s seven public schools systems based on average daily attendance. The SCS share of that is 78 percent.

County government funding is 45 percent of the total revenues SCS gets to fund a budget that is just under $1 billion. Federal and state government funding is the bulk of the school system’s revenue.

The gap in what SCS wanted and what Luttrell’s administration originally proposed was closed mostly by allowing all seven school systems to use $16 million in county wheel tax revenue for operating expenses instead of capital expenses.

That half of the $32 million in wheel tax revenue shifts from going toward county debt to local education.

Luttrell wanted that half of the wheel tax revenue going to schools’ capital projects. The other half already goes to schools’ operating expenses.

The wheel tax shift to operating and the county administration’s better estimates of sales tax revenue growth whittled the budget gap to $7 million.

Commissioners debated taking all of the $7 million from county government’s reserve fund and then debated just taking half, $3.5 million, from the reserve.

Luttrell and his administration argued it could jeopardize the county’s bond rating.

“It is just not a prudent thing to do,” said county finance director Mike Swift. “We have helped them a lot. They are asking for over an 11 percent increase from us. That is not realistic. … You need to come up with a revenue source.”


But commissioner Heidi Shafer argued that the administration used the excess from revenue streams dedicated to local schools a year ago to refinance the county’s debt.

Swift and chief administrative officer Harvey Kennedy said schools got all of the specific dollar amounts the commission approved for education in the budget then.

Nevertheless, Shafer and commissioner Eddie Jones argued that using that excess money for schools was what the commission intended to happen.

“This is no new thing,” Shafer said. “I’m having difficulty with the way the money has been moved around like a shell game. This money could be what closes the gap and there’s a lot of it.”

Ultimately, the budget committee recommended the administration find an extra $3.5 million from wherever it can in the new county budget and that the school system use $3.5 million from its reserve fund.

“I think we’ve got to pay some respect to our chief financial officer,” commissioner Mark Billingsley said in suggesting the 50-50 split of the remaining $7 million. “We are digging deep and we celebrate a victory for education.”

Billingsley had floated the idea of keeping pay raises for teachers as well as county government employees in the new fiscal year, but reducing the percentage of each. But it didn’t get any traction.

SCS Superintendent Dorsey Hopson and SCS board president Teresa Jones indicated the school board is likely to approve the use of $3.5 million from school system reserves.

Hopson also praised the commission for the work on the compromise.

Meanwhile, the Shelby County Sheriff’s Office asked the commission to add another $4 million to the operating budget to hire more deputies and buy more department vehicles, saying those items had been left out of the budget.

The administration and sheriff’s office were to work before Monday’s commission meeting to identify funding.

But there were other forces pulling at the compromise Wednesday, including possible requests from other areas of county government for increased spending that were initially denied either by the administration or the commission.

Commissioner Walter Bailey thinks the stable $4.37 county property tax rate should be raised. Reaves said he will propose reducing the stable rate.

PROPERTY SALES 107 331 6,877
MORTGAGES 60 239 4,368
BUILDING PERMITS 190 508 16,423
BANKRUPTCIES 22 136 3,532