When complex issues evolve into campaigns, facts can dissolve into sound bites – concise statements that sometimes help provide digestible information, but that generally omit context and nuance. In recent weeks, I’ve seen research I was involved in curiously morph into a set of competing sound bites used to support both sides of a debate.
In 2008 I contributed to a research study titled, “Impact of a Special School District on Memphis and Shelby County.” It’s the same study that has been referred to in the media recently with much more sensational phrasing like, “the study that prompted the MCS charter surrender,” or “the charter surrender study.” The truth is, we did not examine whether the Memphis City School board should surrender its charter. In fact the word “surrender” doesn’t appear in the study at all. It’s not a charter surrender study, nor is it a school consolidation study. (The words “consolidate,” “merge,” or “unify” don’t appear either.)
When the study was conducted (about 3 years ago), Shelby County Schools was considering pursuing legislation that would allow them to convert to a special school district. We were commissioned by both school boards to examine the potential fiscal impacts of that change on the two districts and on residents of Memphis and Shelby County. So it’s not a study of school consolidation, or charter surrender. At this point, it is more useful to think of it as a study of what might happen if a school merger does not occur (i.e., if MCS remains intact and SCS becomes a special school district). The study is more valuable in pointing out questions that need to be asked than it is in providing answers.
When the research was commissioned, there was no certainty in terms of exactly how a special school district would be implemented – e.g., where the boundaries would be set, or how local funding from property taxes would work. Because there were several unknowns, we were asked to examine multiple potential scenarios or alternatives. The potential fiscal implications of the creation of a special school district are varied, depending on which scenarios play out. One important question that most people want answered is some version of this: Would the creation of a special school district create imbalance between the two districts in terms of local property tax revenue and tax rates? The answer is: it depends.
This has allowed both proponents and opponents of the charter surrender to rely on the study in making their case. (Some have said it’s like the bible in that way.) But in making their arguments, each side hypes one part of the findings while ignoring the other, confusing voters with partial information. So here’s the whole story.
Among the scenarios, we were asked to consider two alternative mechanisms for the collection and distribution of local property taxes for education. The first property tax alternative considered in the study (which we refer to as “Property Tax Alternative 1” or “Countywide Levy”) is similar to the status quo. In this scenario, Shelby County government would serve as the primary local funding source for both MCS and the Shelby County special school district. Shelby County government would continue to levy a property tax for education, and revenue from that tax would continue to be allocated to each district based on its average daily attendance, as it is now (e.g., if Memphis City Schools has 73 percent of the county’s students, it would receive 73 percent of the revenue generated by the countywide property tax for education). The Shelby County special school district would be able to levy an additional property tax within its boundaries as a supplemental revenue source (much like MCS receives supplemental revenue from City of Memphis taxpayers). Under the assumptions of this property tax alternative, the creation of a special school district would not create any new imbalance in property tax revenue per student between the two districts. The countywide property tax revenue per student would be remain equal for Memphis City Schools and the Shelby County special school district, because that revenue would continue to be distributed to the two districts in proportion to share of countywide enrollment.
How you feel about this scenario depends, in part, on how you feel about the status quo.
The second property tax alternative we were asked to consider (which we refer to as “Property Tax Alternative 2” or “District Levy”) is very different from the status quo. In this scenario, with the creation of a Shelby County special school district, Shelby County government would discontinue using property taxes to fund schools – instead, each district would levy its own property taxes as a primary local funding source. This second property tax alternative would create a revenue imbalance in the two districts due to the ratio of available tax base to school enrollment that would exist in each. For example, in the short term Memphis City Schools could have 73 percent of the countywide students, but its taxing base would represent only 62 percent of the countywide assessed value. As a result, the available property tax revenue per student would be lower for Memphis City Schools than it would be for the special school district. (MCS would have a bigger tax base, but would also have a lot more students to support.) This means that a 1 cent tax levied within the MCS boundaries would raise a much smaller amount of revenue per student than the same tax levied within the Shelby County special school district boundaries. As a result, in order for MCS to replace the revenue that currently comes from the countywide property tax, district residents’ tax rates would have to go up. The Shelby County special school district could replace the revenue that currently comes from the countywide property tax with a rate lower than what its residents currently pay.
These two property tax alternatives were developed as part of the scope of work by the two school districts. They were not presented as “plans,” but were examined as potential outcomes. The two local financing alternatives are essentially points in a range. The study was intended as a tool – to provide information for the two districts to work through the special school district issue together. You can’t find common ground without recognizing the ends of the spectrum. Unfortunately, a search for common ground has not been realized.
We were not asked to consider the political or legal feasibility of either local finance alternative, but there are varied opinions on that issue. Given the political wrangling and legislative actions that have already occurred, it is probably safe to assume that anything is possible. There are certainly examples in Tennessee in which county government does not levy a tax for schools and local funding is instead provided directly by property taxes within multiple special school districts (as it would be in property tax alternative 2). Since MCS is not a county school district, but a type of special school district, such an outcome seems like a possibility in our case, if SCS were to gain special school district status with taxing authority. But at least one legal opinion asserts that property tax alternative 2 would not occur. Shelby County Attorney Kelly Rayne has recently stated that even if Shelby County Schools were converted to a special school district with taxing authority, Shelby County government would still be required to continue funding Memphis City Schools through a countywide property tax. If this were the case, it seems possible that school-related tax rates would go up for special school district residents and go down for MCS residents. Special school district residents would have to pay the countywide tax to maintain funding to MCS while also paying the rate to fund their own district. It is not hard to imagine the legal battles that this would create, since non-Memphians in Shelby County would be paying two separate taxes to support two separate school systems. (Yes, non-Memphians currently support two systems, but they do so through one tax, which is split between districts. And Memphians currently support the same two systems.)
At this point, there are no real answers regarding what the impact of a special school district would be, only possibilities – and lots of questions. If you are voting on the charter surrender issue in reaction to what a Shelby County special school district would mean, you have to make a decision about something that hasn’t fully been determined. The details of how a special school district would be structured and implemented would be laid out in a private act, with concurrence of the Shelby County delegation and approval of the state legislature. So, perhaps the thing to do is to consider which implementation scenario seems most likely.
But we must also recognize that limiting the decision to the issues considered here places the focus squarely on money and what the impact would be on the wallets of adults, rather than on what it would mean for our children and the future of our community. So consider the issues laid out here, seek answers to the questions raised here, but don’t lose sight of the broader issues and the critical role that quality public education plays in creating opportunities for all of the residents of our community.
If you want to read the entire “Impact of a Special School District on Memphis and Shelby County,” the Commercial Appeal has it posted here.