As a member of Shelby County’s schools merger team, Shelby County Mayor Mark Luttrell came straight to the point at a Jan. 9 meeting of the Transition Planning Commission’s finance committee.
If county taxes for education must go up — primarily to make up for the $68 million Memphis will no longer be obligated to contribute to schools after administration of Memphis City Schools is transferred to the county by 2013-14 — the task will fall to him to make the political pitch.
So he challenged the committee to deliver strong, justifiable numbers.
“However this budget goes, if we ask for a huge tax increase or if we don’t, I’m going to be the one out there on point because I’ve got to go to the County Commission for it,” Luttrell said.
Crowded into the conference room at Shelby County Code Enforcement were members of the committee presided over by chairman Staley Cates, the philanthropist who has earned a reputation as one of the best mutual-fund managers in the country.
In addition to the chief financial officers for MCS (Pam Anstey) and suburban Shelby County Schools (Anita Hays), there were Bill Rhodes, CEO of AutoZone; Christine Richards, FedEx’s executive vice president general counsel and secretary; David Pickler, former SCS board chairman who is owner of Pickler Wealth Management; and, Marlin Mosby, whose Public Financial Management firm has for many years served as financial adviser for Shelby County, Germantown, Collierville, Bartlett and Memphis.
Given the the financial brain power and expertise collected on the committee, no one was conceding the idea that higher taxes for education are inevitable.
“I would challenge the notion there is going to be an increase,” Richards said. “There are a ton of efficiencies that can be gained.”
Also in that room were representatives from Boston Consulting Group, the international firm assisting the TPC and being funded by some of the county’s biggest employers and influential foundations. Two of the key BCG consultants, Reggie Gilyard and Lane McBride, contributed chapters to the Harvard University Press book, “Stretching the School Dollar: How Schools and Districts Can Save Money While Serving Students Best.” Gilyard told the committee that BCG would deliver numbers from both systems that provide “apples to apples” comparisons. That will require an in-depth analysis.
A superficial gauge of how large a unified county school district could be means simply adding the MCS operating budget ($884.7 million this year) and to the SCS operating budget ($387.3 million in 2011-12) to get $1.27 billion.
But assume the Memphis taxpayers’ legal obligation to fund Memphis schools goes away, and $68 million of current revenues disappears.
Though that may just be 5.3 percent of those budgets, it is actually 15.8 percent of the $429.7 million in local funding (Memphis and Shelby combined). Spreading that $68 million across the entire county, Anstey said, would require a 45-cent rise in county property taxes.
How the budget would be affected by potential losses of suburban students — funding is tied to enrollment numbers on a per-pupil basis — is among many items outside of the committee’s control.
And as those who work in the school systems well know, there is no guarantee that the Shelby County Commission would be willing to raise funding.
Since its 2008 budget, the county has kept funding for MCS and SCS operating budgets static — a combined $361,288,000 in local funding to public schools. That has happened even as total county revenues and tax income has increased.
In other words, education funding as a share of the county budget has been falling.
“And every year, the cost of doing business continues to increase,” Anstey told the committee.
Most of those increased costs are related to salary.
County Commissioner Mike Ritz believes the commission’s Memphis majority makes it likely a tax increase would be supported to cover the $68 million City of Memphis contribution that eventually will go away. During negotiations in 2009 to create a single-source funding model for MCS and SCS, Ritz said a deal was on the table to make that swap official anyway — increase county taxes and decrease city taxes.
But SCS did not support the deal, and those who eventually pushed MCS to surrender its charter said failure of single-source funding was a key driver.
Ending double taxation of Memphians for education was a key issue in the referendum to transfer MCS administration to the county.
“We were ready to go with that recommendation,” Ritz said early this month. “Now it’s going to get done anyway — in 2014 we will probably pick up the additional funding.”
As Luttrell well knows, higher county property taxes tied to schools could come as a shock to a county that has not asked taxpayers for any additional education funding since 2008.
It also appears referendums are imminent in suburban cities interested in raising their city taxes to pay for breakaway municipal districts.
But even if municipalities form their own districts, residents would still pay the full county education tax, even if they resided in an area that had broken away from the county school district. In essence, the double-taxation dynamic would flop, so that suburban municipalities could be funding two systems.
Residents of areas not opting out of the county system would be funding just the one system, Shelby County’s.
Rhodes, the AutoZone CEO, talked about the potential of finding savings in some areas that could be redirected to increase resources in other areas. In the corporate world, he said those kinds of moves are considered “investments” expected to generate either greater future savings or improved performance.
But much work remains to identify those areas. Cates, the chairman and mutual-fund manager, lives by the maxim that past performance does not necessarily predict future results.
“It’s way too early to have an opinion on (a tax increase),” Cates said. “We’re still all questions, and no answers yet to then take answers and decide there’s got to be a tax increase or not.”
The committee’s timeline calls for concrete answers to arrive by early spring.
– Zack McMillin: (901) 300-9225
As a member of Shelby County’s schools merger team, Shelby County Mayor Mark Luttrell came straight to the point at a Jan. 9 meeting of the Transition Planning Commission’s finance committee.
If county taxes for education must go up — primarily to make up for the $68 million Memphis will no longer be obligated to contribute to schools after administration of Memphis City Schools is transferred to the county by 2013-14 — the task will fall to him to make the political pitch.
So he challenged the committee to deliver strong, justifiable numbers.
“However this budget goes, if we ask for a huge tax increase or if we don’t, I’m going to be the one out there on point because I’ve got to go to the County Commission for it,” Luttrell said.
Crowded into the conference room at Shelby County Code Enforcement were members of the committee presided over by chairman Staley Cates, the philanthropist who has earned a reputation as one of the best mutual-fund managers in the country.
In addition to the chief financial officers for MCS (Pam Anstey) and suburban Shelby County Schools (Anita Hays), there were Bill Rhodes, CEO of AutoZone; Christine Richards, FedEx’s executive vice president general counsel and secretary; David Pickler, former SCS board chairman who is owner of Pickler Wealth Management; and, Marlin Mosby, whose Public Financial Management firm has for many years served as financial adviser for Shelby County, Germantown, Collierville, Bartlett and Memphis.
Given the the financial brain power and expertise collected on the committee, no one was conceding the idea that higher taxes for education are inevitable.
“I would challenge the notion there is going to be an increase,” Richards said. “There are a ton of efficiencies that can be gained.”
Also in that room were representatives from Boston Consulting Group, the international firm assisting the TPC and being funded by some of the county’s biggest employers and influential foundations. Two of the key BCG consultants, Reggie Gilyard and Lane McBride, contributed chapters to the Harvard University Press book, “Stretching the School Dollar: How Schools and Districts Can Save Money While Serving Students Best.” Gilyard told the committee that BCG would deliver numbers from both systems that provide “apples to apples” comparisons. That will require an in-depth analysis.
A superficial gauge of how large a unified county school district could be means simply adding the MCS operating budget ($884.7 million this year) and to the SCS operating budget ($387.3 million in 2011-12) to get $1.27 billion.
But assume the Memphis taxpayers’ legal obligation to fund Memphis schools goes away, and $68 million of current revenues disappears.
Though that may just be 5.3 percent of those budgets, it is actually 15.8 percent of the $429.7 million in local funding (Memphis and Shelby combined). Spreading that $68 million across the entire county, Anstey said, would require a 45-cent rise in county property taxes.
How the budget would be affected by potential losses of suburban students — funding is tied to enrollment numbers on a per-pupil basis — is among many items outside of the committee’s control.
And as those who work in the school systems well know, there is no guarantee that the Shelby County Commission would be willing to raise funding.
Since its 2008 budget, the county has kept funding for MCS and SCS operating budgets static — a combined $361,288,000 in local funding to public schools. That has happened even as total county revenues and tax income has increased.
In other words, education funding as a share of the county budget has been falling.
“And every year, the cost of doing business continues to increase,” Anstey told the committee.
Most of those increased costs are related to salary.
County Commissioner Mike Ritz believes the commission’s Memphis majority makes it likely a tax increase would be supported to cover the $68 million City of Memphis contribution that eventually will go away. During negotiations in 2009 to create a single-source funding model for MCS and SCS, Ritz said a deal was on the table to make that swap official anyway — increase county taxes and decrease city taxes.
But SCS did not support the deal, and those who eventually pushed MCS to surrender its charter said failure of single-source funding was a key driver.
Ending double taxation of Memphians for education was a key issue in the referendum to transfer MCS administration to the county.
“We were ready to go with that recommendation,” Ritz said early this month. “Now it’s going to get done anyway — in 2014 we will probably pick up the additional funding.”
As Luttrell well knows, higher county property taxes tied to schools could come as a shock to a county that has not asked taxpayers for any additional education funding since 2008.
It also appears referendums are imminent in suburban cities interested in raising their city taxes to pay for breakaway municipal districts.
But even if municipalities form their own districts, residents would still pay the full county education tax, even if they resided in an area that had broken away from the county school district. In essence, the double-taxation dynamic would flop, so that suburban municipalities could be funding two systems.
Residents of areas not opting out of the county system would be funding just the one system, Shelby County’s.
Rhodes, the AutoZone CEO, talked about the potential of finding savings in some areas that could be redirected to increase resources in other areas. In the corporate world, he said those kinds of moves are considered “investments” expected to generate either greater future savings or improved performance.
But much work remains to identify those areas. Cates, the chairman and mutual-fund manager, lives by the maxim that past performance does not necessarily predict future results.
“It’s way too early to have an opinion on (a tax increase),” Cates said. “We’re still all questions, and no answers yet to then take answers and decide there’s got to be a tax increase or not.”
The committee’s timeline calls for concrete answers to arrive by early spring.
– Zack McMillin: (901) 300-9225
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