SCS faces potential $72 million shortfall

Budget shows ‘work’ to be done

Shelby County Schools could face a budget deficit as large as $72 million next fiscal year, according to Superintendent Dorsey Hopson.

Hopson went over the numbers with the school board during a work session Tuesday, saying he was not trying to “sound the alarm” but was meeting the board’s request to be more involved earlier in the budget process.

“It just shows the work we have to go through to show where we need to be,” he said.

That number includes several assumptions of losing nonguaranteed revenue streams and additions to the budget such as three schools entering the Innovation Zone and a 2 percent

cost-of-living increase for teachers, which Hopson said would cost $5.5 million.

It also assumes a loss of $20 million in per-pupil state funding due to students leaving the district, partially due to the state’s Achievement School District taking over struggling schools.

The district’s 2015-16 total budget is $1.29 billion.

Hopson said in addition to the anticipated loss of state revenue, the budget gap scenario also includes a $7 million increase in benefits costs, setting aside additional money for post-employment benefit liabilities, a possible decrease in federal grants for preschool programs and the end of several other grants.

To calculate the $72 million number, Hopson said he also assumed the district would not use its leftover fund balance, as was done last year when $36 million was pulled out of reserves to close the gap.

Major deficits are not new to SCS. The district faced a $125 million gap last year, and $103 million the year before in anticipation of losing 30,000 students to the new municipal districts and the ASD.

Over the next three years, the district is expecting to lose 3 to 5 percent of its students per year, Hopson said.

In the past thee years, the district has closed 17 schools. Hopson said another 16 are at 60 percent capacity or less.

Board member Chris Caldwell, who chairs the audit, budget and finance committee, said Wednesday the presentation wasn’t surprising.

“It just shows that we’re in between a rock and a hard place,” he said.

Caldwell said the district has tried to keep cuts away from the classroom, although foreign language offerings have already been reduced significantly. He said “everything is on the table” but that cuts that affect students directly are a “last resort.”