Shelby Co. owes schools millions
Shelby County’s six suburban school districts are owed millions of dollars by the county for capital improvement projects, district and county officials have confirmed. The financial system intended to keep spending equitable between all Shelby County’s public schools has also resulted in an almost two-year funding backlog.
Superintendents have said the inconsistent funding makes it difficult to plan for large projects or forces them to stretch out improvements, making projects longer and potentially more expensive.
Germantown Municipal School District Superintendent Jason Manuel said the district hadn’t received the full amount of funding owed to them for the past two fiscal years. Currently, the district is owed about $5.2 million, he said.
The fiscal logjam is due to the fund
ing system set up when the suburban school districts seceded from Shelby County Schools and formed their own district in 2014. When SCS gets money for capital improvement projects, the suburban districts are allocated a portion. Germantown, for example, gets 4.24%.
However, if the county’s largest school system doesn’t draw down the funds it has been allocated in a timely manner or doesn’t use all the money it has been given, the suburban districts might get their payments late or not at all.
That makes it difficult for suburban school officials to know when — or if — capital improvements funding will come their way if the projects being done by SCS get behind schedule.
Josh Cathey, Germantown schools chief of operations, said the strict county rules on how the funds can be used and the uncertainty of when the money will be received make it difficult to plan for large projects.
“You can’t tell a contractor, ‘We’ll pay you back over the next two years as we get this funding,’” he said.
Manuel said the district had “a whole list” of projects that had to be put off because of the funding uncertainty.
The Shelby County Commission cannot give money to only one school district. When Shelby County Schools receives money from the county, the commission has to give a proportional amount to the municipal school districts as well. That amount is based largely on attendance, but takes other factors, like the number of special education students, into account, according to suburban school officials.
The funding for the municipal districts doesn’t come out of SCS’ piece of the pie. The commission has to budget in the municipal districts’ capital funding on top of the money for Shelby County Schools. That money can only be used for capital projects, and the school districts have to be able to show the county commission how every dollar was spent.
SCS communications director Natalia Powers said in an email that the district is reimbursed for capital projects by the county after the projects are completed and the school district provides documentation of the expenses to the county.
“Shelby County and SCS administrators meet on a regular basis to provide greater transparency on budgets, capital projects, spending and funding needs,” she said. “Those updates include details on remaining funds on completed capital projects, reallocation of appropriated capital funds to new or other projects within the first year and capital project balances from current or prior appropriations that have been fully or partially obligated by contract shall remain available in future fiscal years.”
As of April 30, Powers said SCS had spent $16.2 million of the $90.3 million the school district had been awarded for the 2019 fiscal year.
Search for solutions
Shelby County Commissioner Michael Whaley said several solutions have been discussed, the simplest being prodding Shelby County Schools to complete projects in a timely manner.
“We have really tried to push SCS on encumbering those funds quicker,” he said. “(Municipal districts) should see much faster and larger reimbursements going forward.”
Whaley said the issue was getting more discussion and attention at the county level and that he was interested in pursuing more robust solutions to help suburban school districts get their capital improvement funds on time.
Meanwhile, Cathey said the school district often has to find other ways to pay for capital projects, like dipping into reserves. However, when the funding does come through from the county, it has to be put directly into another project. School districts are legally barred from using it to replenish their general funds, even if money was taken from the general fund to pay for capital improvements. “The challenge we have with how we use this funding, is they’re very strict,” he said. “It has to be used for capital improvement.”
Other districts have also found different ways to pay for capital projects. Much of the funding for Collierville’s new $90 million high school came from a bond sale. The city’s taxpayers will pay back the debt through sales tax and a property tax increase approved by the town board of mayor and aldermen several years ago.
Collierville Schools outgoing superintendent John Aitken declined to discuss capital projects funding. Representatives of Bartlett City Schools and Arlington Community Schools did not respond to requests for comment.
Germantown Municipal School District Superintendent Jason Manuel said the district hadn’t received the full amount of funding owed to them for the past two fiscal years. Currently, the district is owed about $5.2 million, he said.
Unreliable funding
Lakeland School System Superintendent Ted Horrell said the suburban school districts have had productive discussions with the county about the issue and he was optimistic about the talks, but his school district is still owed about $1.3 million from the last two fiscal years. He said he has never relied on the funding — due to its unpredictable nature — and hasn’t counted on it while drafting district budgets.
Horrell said that while Lakeland Schools hasn’t been unable to address major capital projects, the district misses out on the ability to save money on projects by addressing multiple issues at once with the same contractor. Instead, what could be one large project has to be broken down into smaller pieces, done over multiple fiscal years. Each one of those projects has to be put out to bid separately, taking more time and potentially incurring more cost.
Millington Municipal Schools public relations supervisor Stacy Ross said in an email that the district was owed about $2.2 million from the past two fiscal years.
And a county clawback provision related to SCS reducing spending means they will never see about $40,000 of that total.
“As these funds are vital to the success of our capital and financial planning, we have respectfully requested a commitment of payment of the allocated funds to Millington Municipal Schools by (fiscal year) 2019 year end,” she said. “However, we have been unsuccessful at obtaining this commitment from Shelby County Government.”
Whaley, who has a background in education and chairs the county commission committee on education, said the county could explore giving capital improvements funding in two parts to help avoid the clawback scenario Millington schools are facing — which happens when SCS doesn’t spend all the money that has been allocated.
He said he is also interested in pursuing wholesale changes to the funding system that would allow the commission to invest in specific projects in school districts based on what the most pressing needs are, with some guidance from attendance figures to keep funding equitable between districts. But making a change that large would require approval from Nashville.
For now, prompting SCS to use the money it has been allocated remains the most straightforward option.
“We want those projects to be done quicker so that kids can benefit from them,” Whaley said.
Corinne Kennedy is a reporter for The Commercial Appeal. She can be reached via email at Corinne.kennedy@ Commercialappeal.com or on Twitter @Corinneskennedy.