(The following press release is published as it was received by the Main Street Journal.)

FOR IMMEDIATE RELEASE
September 23, 2009

CONTACT
Mike Carpenter
331-0153

Commissioner Carpenter Releases Proposal for Single Source Funding of Memphis and Shelby County Schools

(Memphis) – Shelby County Commissioner Mike Carpenter, a leader in the search for solutions to local school funding, today released a comprehensive proposal that would shift funding for Memphis and Shelby County schools to the county tax base. The plan calls for an agreement between the City Council and County Commission that over a four-year period would relieve the City of its current funding obligations, reduce the City property tax rate and achieve tax equity among Memphis and Shelby County taxpayers in regard to education funding.

“The education of every child in Shelby County is the responsibility of every taxpayer,” said Carpenter. “The economic and social health of our community depends in large part on the education we provide to our children, but no segment of the community should be asked to pay a disproportionate share.”

Under the proposal, the County would assume responsibility for funding $78.3 million that the City Council eliminated from its budget for Memphis City Schools. This amount and the funding obligation are the subjects of an ongoing lawsuit between Memphis City Schools and the Memphis City Council. However, because state law requires that education funds provided by the County must be distributed according to Average Daily Attendance (ADA), Shelby County Schools will receive nearly $35 million annually from the deal. The total dollars placed on the County tax rate would be slightly more than $113 million dollars.

“This agreement simplifies funding for schools and complies with state statutes,” Carpenter said. “Taxpayers will obviously pay more County taxes to fund the additional, but City taxpayers will get a tax reduction from the Council.”

Carpenter’s proposal relies on the growth in property values over a four-year period, increases in the growth of sales tax collected and two modest property tax increases in the final two years of the agreement. Property tax collections grow annually by an average of 1.5% and at reappraisal by nearly 15% cumulatively. Carpenter’s plan calls for a property tax increase of .04 in Fiscal Year 2012 and .08 in Fiscal Year 2013. Then the County Commission would hold the rate at $4.18 in Fiscal Year 2014. This would generate the required $113 million the two systems would need annually.

“Because the county relies on this natural growth to cover the cost of inflation and increase funding for programs, we will have to make some serious adjustments in our budget over the next four years combined with these small tax increases to meet the need,” said Carpenter.

If adopted, the impact on a Shelby County taxpayer with a $200,000 home would be $268 more annually in property taxes after the 4th year of the plan. However, city residents would save at least that much on their city property taxes.

“The impact on county taxpayers is not inconsequential,” said Carpenter. “I take this very seriously. However, this plan levels the playing field, provides $35 million more to county schools and 90% of the tax increase goes directly to fund our schools, not to the County general fund.

While it is doubtful that it can be mandated, Carpenter says that he will call on Shelby County Schools to use a substantial portion of this new funding for school capital needs. Carpenter says that the County can’t afford to become the single source funder for operations, while at the same time adding debt for school construction.

“I think this would be a show of good faith by Shelby County Schools to use much of these new funds for capital projects once they have received them,” said Carpenter. “SCS is clearly receiving a windfall and we cannot meet the capital needs and increase operations spending by this large amount.”

Finally, the proposal would cease to be in effect if the City Council wins the lawsuit with the Memphis City Schools. Carpenter says that winning the lawsuit would mean the City Council is not required to fund the $78.3 million. The County would become the de facto single source funder, but would not necessarily be required to fund the $78.3 million.

“This would create the need for a new conversation about school funding and whether or not $78.3 million is the right amount of funding for Memphis City Schools,” Carpenter said. “If the funding paradigm changes that dramatically, then we need to pause and reevaluate what needs to happen going forward.”

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