Business of education

Memphis leaders say diversifying school business contracts will help in the classroom, too

PHOTO: Laura Faith Kebede
Winston Gipson confers with his wife and daughter, who help run Gipson Mechanical Contractors, a family-owned business in Memphis for 35 years.

Winston Gipson used to do up to $10 million of work annually for Memphis City Schools. The construction and mechanical contracts were so steady, he recalls, that his minority-owned family business employed up to 200 people at its peak in the early 2000s.

Looking back, Gipson says being able to build schools was key to breaking through in the private sector.

“When we got contracts in the private sector, it’s because we did the projects in the public sector,” said Gipson, who started Gipson Mechanical Contractors with his wife in 1983. “That allowed us to go to the private sector and say ‘Look what we’ve done.’”

But that work has become increasingly scarce over the years for him and many other minorities and women. The program designed to address contract disparities in Memphis City Schools was cut during its 2013 merger with Shelby County Schools.

A recent study found that a third of qualified local companies are owned by white women and people of color, but such businesses were awarded just 15 percent of the contracts for Shelby County Schools in the last five years.

It was even worse for black-owned construction companies, like Gipson’s, which make up more than a third of the local industry but were awarded less than 1 percent of contracts.

The disparity is being spotlighted as the city prepares to mark the 50th anniversary of the death of civil rights leader Martin Luther King Jr., who was assassinated in Memphis while trying to fight for the rights of minority workers in 1968.

On Jan. 25, Chalkbeat will co-host a panel discussion on how Shelby County Schools, as one of the city’s largest employers, can be an economic driver for women- and black-owned businesses. Called “Show Me The Money: The Education Edition,” the evening event will be held at Freedom Preparatory Academy’s new Whitehaven campus in conjunction with MLK50 Justice Through Journalism and High Ground News.

Community leaders say school-related business contracts are a matter of equity, but also an education strategy. Since poverty is a crucial factor in why many Memphis students fall behind in school, the lack of job opportunities for their parents must be part of the discussion, they say.

The district already is taking steps to improve its record on minority contracting, starting with setting new goals and resurrecting the city district’s hiring program.

Big district, big opportunity

Shelby County Schools is Tennessee’s largest district. With an annual budget of more than $1 billion, it awards $314 million in business contracts.   

An otherwise dismal 1994 study of local government contract spending highlighted Memphis City Schools’ program to increase participation of historically marginalized businesses as one of the county’s most diverse, though some areas were cited as needing improvement. The same study criticized the former county school system, which lacked such a program, for its dearth of contracts with Minority and Women Business Enterprises (MWBEs).

But when the two districts merged in 2013, the program in Memphis City Schools disappeared.

“We had to cut, cut, cut,” said school board member Teresa Jones. “We were trying to stay alive as a district. We did not focus as we should have.”

Jones, a former school board chairwoman, said it’s time to revisit the things that were working before the merger. “We have to get back,” she said, “to make sure there’s equity, opportunity, access, and an atmosphere that promotes business with Shelby County Schools.”

District and community leaders say the consolidated district has lost its ability to develop relationships with qualified minority-owned businesses.

“There was an infrastructure where African-Americans felt comfortable enough approaching the school system” for work, said Melvin Jones, CEO of Memphis Business Contracting Consortium, a black business advocacy group formed in 2015. “There was trust. During the merger, they dropped the infrastructure.”

Brenda Allen

Without the outreach, “we’re seeing the same vendors,” said Brenda Allen, hired last summer as procurement director for Shelby County Schools after working in Maryland’s Prince George County Public Schools, where she oversaw a diversity contracting program.

“We’re not marketing the district like we should,” she told school board members in November.  

Shelby County Schools is not alone in disproportionately hiring white and male-owned companies for public business. Just 3 percent of all revenue generated in Memphis goes to firms owned by non-white people, even though people of color make up 72 percent of the city’s population, according to a 2016 report by the Mid-South Minority Business Council Continuum.

Not coincidentally, district and community leaders say, Memphis has the highest rate of young adults who aren’t working or in college, and the highest poverty rate among the nation’s major metropolitan areas. About 60 percent of students in Shelby County Schools live in poverty and all but three of the district’s schools qualify for federal funding for schools serving high-poverty neighborhoods.

Jozelle Luster Booker, the CEO of the MMBC Continuum, developed an equity contracting program for the city utility company following the 1994 study that was so critical of the city. The program funneled half a billion dollars to minority-owned businesses — an example of how government policies can promote equitable contracting, and grow businesses too.

“When that happens, you could basically change the socioeconomic conditions of that community, which impacts learning,” Booker said. “They’re ready to learn when they come to school.”

Shelby County Schools plans to hire a consulting firm to help develop a procurement outreach program and set diversity goals for its contractors and subcontractors. The program will launch in July, and Allen plans to hire three people to oversee it.

PHOTO: Brad Vest/The Commercial Appeal
Bricklayers from TopCat Masonry Contractors LLC work on an apartment complex in downtown Memphis in 2014.

The district also is part of a city-led group that provides a common certification process for businesses seeking contracts with city and county governments, the airport, the transit authority, and Memphis Light Gas & Water. The city’s office of business diversity and compliance also has a list of qualified minority businesses, offers free business development courses, and accepts referrals from other government entities to reduce redundancy.

“As you spend public dollars, you always want those dollars to be spent in your neighborhoods because that money comes back into your economy,” Allen said. “When people have jobs, you should see crime go down. You should see more people wanting to do business in the community if you have a good program.”

Leveling the playing field

In order for it to work, there has to be consistent reports, measures and, most of all,  accountability, according to Janice Banks, CEO of Small Planet Works, who helped the district with its disparity study.

Gipson agrees.

A wall of his second-floor Memphis office is lined with photos of some of his most significant projects during his 35 years of business, including a multimillion-dollar mechanical contract with AutoZone when the Memphis-based car part company moved its headquarters downtown in the early 2000s.

The work was made possible, he said, because of public sector jobs like constructing nine schools under Memphis City Schools. But that work evaporated after the merger. “It’s mostly been Caucasian companies that do the work (now),” he said. “It’d be one thing if you didn’t have anyone qualified to do it.”

Shelby County Schools will have to show commitment, he said, if it wants to level the playing field.

“You have the mechanism in place to make a difference,” he said. “Now do you make a difference with that mechanism or do you just walk around, beat your chest, and say we have a disparity study and let things run the way they’ve been running?”

“If you don’t make it happen, it will not happen,” he said.

Unintended consequences

When Denver stopped lunch-shaming, debt from unpaid meals skyrocketed

PHOTO: David Buffington | Getty Images

After the Denver schools chief made a high-profile announcement last August guaranteeing a full meal to students whether or not they had the money to pay, many advocates cheered the end of so-called “lunch-shaming” in the 92,000-student district.

Then came an unpleasant surprise: Debt from unpaid lunches soared, rising to $356,000 from $13,000 the year before.

Denver’s exploding meal debt — amounting to roughly 900 unpaid lunches every school day of the year — illustrates the balancing act districts nationwide face amid growing public support for policies prohibiting lunch-shaming. Such shaming often involves giving students who can’t pay small, alternative meals, putting stickers or stamps on them to remind their parents to pay, or even throwing out their meals.

In the last couple years, a growing number of districts nationwide have established policies to curb lunch-shaming. Some states, including New York, Iowa, and New Mexico, have passed statewide legislation with the same goals. The idea behind such measures is to free students from the burden of debt they have no power to pay and ensure they don’t go hungry at school. But with school districts obligated to pay for the meals, food service leaders are often left scrambling to cover mounting costs.

The school lunch debt is one reason Denver district officials quietly introduced snacks such as Doritos and Rice Krispies Treats in elementary school cafeteria lines late this past winter. The new additions, seen as unhealthy by some parents, helped generate around $41,000 in new revenue for the nutrition services department.

Diane Pratt-Heavner, director of media relations for the School Nutrition Association, said she hasn’t yet heard of another district with a debt increase the size of Denver’s following the introduction of a lunch-shaming prevention policy. But she said it’s an issue the group, which represents school food service employees, plans to watch closely.

“In many districts, allowing all kids to automatically get a free meal …. can turn into a real financial challenge for the program,” she said, noting that it can take away the incentive for parents to fill out the free and reduced-price meal application.

Nearly one-third of the district’s lunch debt last year came from families who were eligible for free or reduced-price meals, but signed up part-way into the school year, after their children had already received free school lunches. The federal government covers lunch costs for students eligible for free lunches and part of the cost for students who qualify for reduced-price lunches. For elementary school students in Colorado (and starting next year for middle-schoolers), the state covers the remaining cost of reduced-price lunches.

Another 68 percent of Denver families with unpaid meal debt don’t qualify for free or reduced-price meals. Still, district officials said it’s impossible to determine how many of those families would qualify for subsidized lunches if they applied, how many struggle financially but just miss the cut-off for eligibility, and how many can afford to pay for school lunches but choose not to.

Theresa Peña, regional coordinator for outreach and engagement in Denver’s nutrition services department, supports the district’s new lunch-shaming prevention policy, which ended the practice of giving students with lunch debt cheese sandwiches or graham crackers and milk.

Still, district officials didn’t expect the ballooning lunch debt, which at one point was projected to hit a half-million dollars, she said.

Peña said the district is stepping up efforts to get every family to fill out the free- and reduced-price meal application for next year — an extra challenge in the current political climate in which some immigrant families fear leaving a paper trail.

Last year, in addition to adding new revenue-generating snacks in elementary schools, the district tried to recoup the debt by making weekly robocalls to parents, working with principals to do outreach to families, and in some cases sending letters home with students.

“We made a pretty hard push,” Peña said. “It did make an impact, but not as great an impact as we had hoped.”

A national problem

Most districts nationwide accrue some debt for unpaid meals.

A 2016 survey by the School Nutrition Association found that three-quarters of school districts rack up unpaid meal debt, up slightly from 71 percent two years before.

In Denver, the amount of lunch debt ranges widely by school, with some accruing less than $50 and others accruing thousands. Omar D. Blair Charter School had the highest lunch debt among Denver schools last year at $11,500. Meanwhile, Florida Pitt Waller, Joe Shoemaker Elementary, Thomas Jefferson High School, and Cheltenham Elementary all reported lunch debts between $2,500 and $5,000.

At Shoemaker, where two-thirds of students are eligible for free or reduced-price meals, Kitchen Manager Chris Juarez said he believes much of the school’s $4,000 in lunch debt came from families who would have qualified for subsidized lunches but didn’t apply. Sometimes, he said, families don’t realize they have to re-submit their application each year; this fall, he plans to meet with returning families — in addition to new families — to emphasize that fact.

Other parents don’t realize they have to add to the form if a related child joins their household, he said. And language barriers may still be a problem, even though the form is available in many languages. In addition, some may worry that filling out the form means their immigration status can be tracked. A 2017 Denver school board resolution specified that the district does not collect or maintain any information on students’ immigration status.

Juarez suspects only a small percentage of Shoemaker families can afford to pay for their children’s lunches, but choose not to.

Shoemaker Principal Christine Fleming, said her top priority is making sure kids get to eat lunch, no matter what. She sees non-payment as a “parent issue,” and said, “I don’t want 5-, 6-, 7- year olds to carry that burden.”

Fleming said she’s always reserved some money in a special “principal’s account” to cover the cost of unpaid lunches, including in 2017–18, when she set aside a few hundred dollars.

Previously, that practice was common across the district, Peña said, but once the lunch-shaming policy took effect, “a lot of them said, ‘Zero out my principal account. I’m not going to do that anymore.’”

In 2016–17, when the district’s lunch debt was just $13,000, an online fundraising campaign and a contribution from a private donor covered the outstanding balance. But not this year.

A district grant of $100,000 paid off lunch debt from students who were eventually eligible for free or reduced-price lunch last school year but whose parents may not have signed up right away. Peña said the district has not finalized how the remaining $256,000 will be paid, and has until June 30 to make a decision.

Is it junk food?

Before this year, elementary schools in Denver sold some snacks — officially called a la carte items — in their cafeterias. These included turkey sticks, granola bars, popcorn, string cheese, and yogurt.

Peña said the district decided to add more a la carte items in February, a few months after district food service supervisors visited nearby districts, including Jeffco and Cherry Creek, and learned that “a la carte sales were a big deal” there.

The additions include more than a half-dozen kinds of chips, Rice Krispies Treats, gummy fruit snacks, and pistachios. All of the items — some of which are slightly reformulated versions of the same products sold on grocery store shelves — adhere to federal rules governing school snacks. Parents were not informed of the new snack offerings when they were introduced.

Susan Scovell, who has two children at Bradley International School in southeast Denver and works part-time as a personal chef, said of the new snacks, “It’s pretty much total junk food.”

She got wind of them when her second-grade daughter began mentioning that friends routinely bought Doritos and Cheetos at lunch time.

“It took me months to figure out this was going on,” she said. “Most parents really had no idea.”

Scovell said the new snacks stand in stark contrast to the district’s efforts to emphasize scratch cooking and other kinds of healthy eating initiatives, such as the week-long fruit- and vegetable-tasting event at Bradley this spring.

Peña, who said the district plans to communicate better about the snack options this coming year, said parents can prevent their children from buying certain snacks. To do so, they need to contact the school’s kitchen manager and request that a note be added to the student’s school meal account citing the restriction. She conceded that the process may not be obvious or easy for all parents, and said the department will look to address that.

Peña also said that principals or kitchen managers have the option to limit the sale of a la carte snacks at their schools. For example, they can choose not to sell certain items, or restrict the sale of a la carte items to the last 15 minutes of the lunch period or to certain days of the week.

Denver is hardly unique in offering a la carte snacks at elementary schools.

Other large Colorado districts, including Douglas County, Jeffco, and Cherry Creek, also offer such items to grade school students. All three districts allow parents to limit or block their children’s snack purchases.

Carol Muller, state director of Colorado Action for Healthy Kids, which promotes nutrition and exercise initiatives in schools, said one of the top concerns she hears from parents across Colorado is about a la carte snacks. At the same time, she understands the financial pressures school cafeterias are under.

“It’s a really tough issue for everyone involved, including us,” she said. “We certainly support food service staff. We don’t want to add a bigger burden to them, but on the other hand, as a parent, I don’t find all the snacks acceptable either.”

IPS referendum

Seeking property tax hikes, Indianapolis Public Schools considers selling headquarters

PHOTO: Dylan Peers McCoy

As Indianapolis Public Schools leaders prepare to ask voters for more money, they are considering a dramatic move: Selling the district’s downtown headquarters.

The administration is exploring the sale of its building at 120 E. Walnut St., which has housed the district’s central office since 1960, according to Superintendent Lewis Ferebee.

Although architecturally dated, the concrete building has location in its favor. It sits on a 1.7-acre lot, just blocks from the Central Library, the cultural trail, and new development.

A sale could prove lucrative for the cash-strapped Indianapolis Public Schools, which is facing a $45 million budget deficit next school year.

A decision to sell the property could also convince voters, who are being asked to approve property taxes hikes in November, that the district is doing all it can to raise money. Two referendums to generate additional revenue for schools are expected to be on the ballot.

“IPS has been very committed and aggressive to its efforts to right-sizing and being good stewards to taxpayers dollars,” Ferebee said. “Hopefully, that [will] provide much confidence to taxpayers that when they are making investments into IPS, they are strong investments.”

Before going to taxpayers for more money, the district has “exhausted most options for generating revenue,” Ferebee added.

The administration is selling property to shrink the physical footprint of a district where enrollment has declined for decades. The number of students peaked at nearly 109,000 late-1960s. This past academic year, enrollment was 31,000.

During Ferebee’s tenure, officials say Indianapolis Public Schools has shrunk its central office spending. But the district continues to face longstanding criticism over the expense of its administrative staff at a time when school budgets are tight.

Ferebee’s administration has been selling underused buildings since late 2015, including the former Coca-Cola bottling plant on Mass. Ave., and at least three former school campuses. Selling those buildings has both cut maintenance costs and generated revenue. By the end of this year, officials expect to have sold 10 properties and raised nearly $21 million.

But the district is also embroiled in a more complicated real estate deal. After closing Broad Ripple High School, the district wants to sell the property. But state law requires that charter schools get first dibs on the building, and two charter high schools recently floated a joint proposal to purchase the building.

The prospect of selling the central office raises a significant challenge: If the building were sold, the district would either need to make a deal for office space at the site or find a new location for its employees who work there. Ferebee said the district is open to moving these staffers, so long as the new location is centrally located, and therefore accessible to families from all around the district.

It will likely be months before the district decides whether or not to sell the property. The process will begin in late July or early August when the district invites developers to submit proposals for the property, but not a financial bid, according to Abbe Hohmann, a commercial real estate consultant who has been helping the district sell property since 2014.

Once the district sees developers’ ideas, leaders will make a decision about whether or not to sell the building. If it decides to move forward, it would proceed with a more formal process of a request for bids, and could make a decision on a bid in early 2019, Hohmann said.

Hohmann did not provide an estimate of how much the central office building could fetch. But when it comes to other sales, the district has “far exceeded our expectations,” she said. “We’ve had a great response from the development community.”