Leaders of two new school systems in suburban Memphis this week told a town council near Chattanooga that their towns’ 2014 secession from Shelby County Schools didn’t hurt the urban district left behind.
But that’s not true.
In one glaring example, Shelby County Schools was saddled with a $1 billion-plus liability for employee retirement benefits as part of the 2013 merger of city and county schools. As the six school systems split off, the Memphis district was left mostly holding the bag — an obligation so big that Superintendent Dorsey Hopson has referred to it as a “huge gorilla around our neck.”
The full picture is important because elected officials and residents of Signal Mountain are considering exiting Hamilton County Schools and creating their own school system, just as the suburban towns did from Shelby County Schools several years prior.
And both are taking advantage of the same 2013 Tennessee law, which doesn’t specify how to distribute the “legacy costs” — such as retiree benefits and building debt — that the departing towns helped to create.
Superintendents from Arlington and Germantown spoke Monday to the town council for Signal Mountain, an affluent community near Chattanooga with some of the highest performing schools in Hamilton County. A committee there has been exploring the feasibility of a Signal Mountain pullout since February and also visited Shelby County on a fact-finding mission in June.
During this week’s meeting, Arlington Superintendent Tammy Mason was asked point blank if the 2014 split negatively affected the Memphis district left behind.
“No, there is not data to support this,” Mason said, according to a tweet by a reporter for Chattanooga’s Times Free Press.
But leaders for Shelby County Schools, who have not participated in this year’s talks between Signal Mountain and the Memphis suburbs, took issue Thursday with Mason’s statement.
“If they don’t find any data that supports damage to the students in Shelby County Schools, then they’re not looking hard enough,” said Chris Caldwell, a school board member in Memphis. “We got left with quite a lot of liability that belonged to legacy Shelby County Schools that are now the municipal districts.”
Mason did not immediately respond Thursday when asked to expand on her comment.
Tennessee is one of six states that don’t have some sort of provision for what to do with such costs when a town breaks away from a larger school district, according to EdBuild, a nonprofit research group focusing on education funding and equity. The group published a study earlier this year highlighting examples of wealthier suburbs splintering off their city school systems, contributing to segregation along socioeconomic and racial lines and exacerbating inequities in public education. The study cited Shelby County’s split as one of the nation’s most egregious.
Urban districts in both Hamilton and Shelby counties serve a significant number of poor, black and Hispanic students.
In Memphis, Shelby County Schools has struggled to pay the cost of medical and life insurance benefits for retired teachers and other employees. Known as OPEB, which stands for “other post employment benefits,” the obligation was already more than $1 billion under Memphis City Schools before the historic merger. But the “gorilla” got about $300 million heavier when the municipalities left their portion behind in creating new school districts in Arlington, Bartlett, Collierville, Germantown, Lakeland and Millington. And those towns’ $25 million payment for school buildings barely offsets the cost of retiree benefits to Shelby County Schools.
With the exodus of nearly 31,000 students to the new suburban districts, per-pupil funding to Shelby County Schools decreased while its OPEB liability increased — now sopping up about $570 out of $8,800 spent annually on each student. That’s about 7 percent of the per-pupil allotment from the district’s general fund.
“Every dollar we have to pay for (OPEB), we can’t put in the classroom,” district finance chief Lin Johnson told Chalkbeat this week.
Caldwell likened the arrangement to a company filing for bankruptcy and emerging as a debt-free entity.
“It allows (the municipal districts) to not to have to service OPEB liability to the extent they would have. And that money can go into programs and schools, where the reverse is now true for Shelby County,” he said.