Chalkbeat explains

Memphis suburbs are receiving federal money for more poor students than they have. Here’s why.

PHOTO: Brandon Dill/Special to The Commercial Appeal
In a 2015 photo, a student says goodbye to her friend as the pair board buses for home at the end of a school day at Bartlett Ninth Grade Academy.

Last school year, the small Lakeland district outside Memphis received about $64,000 in Title I funds to help educate poor students. Next year, it’s expecting nearly $427,000.

The Collierville district, 20 miles away, got about $635,000 last year. Next year? It’s expecting more than $3.1 million, a 490 percent jump.

And Germantown will do best of all. That district expects its Title I funds to increase nearly 850 percent to $2.2 million.

But poverty hasn’t risen precipitously in those places, which split off from Shelby County Schools in 2014 to form smaller districts and which have far fewer poor families. A quirk in the rules for allocating those federal funds will give all but Millington a big budget boost next year.

Combined, the five municipalities will receive an extra $7.1 million.

Meanwhile, in what could be described as a cruel irony, Shelby County Schools is set to receive $5 million less in Title I funds than it did last year — in part because of the secession of those six districts.

The changes have flabbergasted local educators.

“Something’s wrong with that equation,” said Deborah Atkins, who lives in Bartlett and teaches in Shelby County Schools. “I know we have (poor) students in the municipalities, but it’s not equitable.”

Those slated to benefit from the extra cash aren’t sure what it all means, either.

“I was surprised,” said Tammy Mason, superintendent of Arlington Community Schools, another one of the municipalities. Arlington is set to receive an extra $897,000. “We don’t have a plan yet.”

The funding shifts are another significant consequence of the tumultuous merger and subsequent de-merger of Memphis’s urban and suburban school districts. They also reveal how the labyrinthine method of allocating Title I money can perpetuate significant inequities.

Chalkbeat asked local, state and federal officials to explain the changes. Here’s what they told us.

Why is Shelby County Schools losing Title I money?

Last year, Shelby County Schools received $65 million in Title I funds. Next year, that number is expected to drop by 8 percent, or $5 million. There are three key reasons why, according to the U.S. Department of Education.

PHOTO: Katie Kull
The Foote Homes housing project, which is scheduled to be razed and redeveloped, has been home to thousands of Memphis families since it was built in the 1940s to serve as low-income housing for African-American families.

One: Shelby County Schools has a smaller share of the nation’s poor.

Title I funding is allocated based on each district and state’s portion of the total number of poor students in the U.S. That means that when poverty in one school district increases faster than in others, it shifts money away from those other districts even if their poverty levels haven’t changed.

And the share of those students living within the boundaries of Shelby County Schools has dropped, from 0.51 percent to 0.42 percent.

Two: The district is now smaller in the eyes of the federal government.

This year was the “first to reflect to creation of the new municipal school districts, which meant that the boundaries for Shelby used in the Census estimates were smaller than those used in the prior year,” according to the U.S. Title I program office.

Three: The new federal education law allows the state to withhold more Title I money from districts.

That money, taken from all Tennessee districts, will be redistributed by the state for school improvement efforts. Since most of the state’s lowest-performing schools are in Memphis, the district can expect to get a good chunk of that back.

Why are those five breakaway districts gaining $7 million?

This year will be the first year the U.S. Department of Education recognizes the six municipal districts in its funding calculations — nearly three years after the smaller districts formed.

That’s because the federal government only updates its list of school districts and boundaries every two years, and calculations about poverty lag another year behind that.

In the meantime, Title I funding for Shelby County Schools and the six municipalities was given to the Tennessee Department of Education as a bulk sum. The state then divided it among the seven school districts based on the percentage of poor students enrolled in food or income assistance programs and a few other criteria.

Now that the federal government recognizes the six municipal districts, a new process has kicked in to establish Title I funding levels.

In the first year of that process, each municipality inherits the student poverty level of the district it broke off from — in this case, Shelby County Schools. This is true even if poverty rates between the districts are drastically different.

State education officials called that policy “counterintuitive” and urged federal officials to reconsider. But the state ultimately accepted the extra funds when federal officials informed them that the money would go to other states if they declined.

Note: Shelby County Schools includes some unicorporated areas outside Memphis city limits
Source: Tennessee Department of Education (2015-16) and American Community Survey (2015)

Over the next three years, the Title I funds sent to the municipalities will gradually decrease to match their own poverty rates.

Source: Tennessee Department of Education

Why is one district losing a bit of Title I funding?

Not all of the municipalities are gaining money out of this policy. Millington’s student poverty rate is significantly closer to Shelby County Schools’ rate, so inheriting the larger district’s numbers didn’t change much.

In fact, the district is slated to lose nearly $128,000 this year. Officials say they have planned for that, and will take about $30,000 from Millington’s reserve fund to help make up the difference.

“We believe we’ll be able to carry on with the things we want to do,” superintendent David Roper said.

money matters

Why Gov. Hickenlooper wants to give some Colorado charter schools $5.5 million

Students at The New America School in Thornton during an English class. (Photo by Nic Garcia)

If Mike Epke, principal of the New America School in Thornton, had a larger budget, he would like to spend it on technical training and intervention programs for his students.

He would buy more grade-level and age appropriate books for the empty shelves in his school’s library, and provide his teachers with a modest raise. If he could really make the dollars stretch, he’d hire additional teacher aides to help students learning with disabilities.

“These are students who have not had all the opportunities other students have had,” the charter school principal said, describing his 400 high school students who are mostly Hispanic and come from low-income homes.

A $5.5 million budget request from Gov. John Hickenlooper, a Democrat, could help Epke make some of those dreams a reality.

The seven-figure ask is part of Hickenlooper’s proposed budget that he sent to lawmakers earlier this month. The money would go to state-approved charter schools in an effort to close a funding gap lawmakers tried to eliminate in a landmark funding bill passed in the waning days of the 2017 state legislative session.

Funding charter schools, which receive tax dollars but operate independently of the traditional school district system, is a contentious issue in many states. Charter schools in Colorado have enjoyed bipartisan support, but the 2017 debate over how to fund them hit on thorny issues, especially the state’s constitutional guarantee of local control of schools.

The legislation that ultimately passed, which had broad bipartisan support but faced fierce opposition from some Democrats, requires school districts by 2020 to equitably share voter-approved local tax increases — known as mill levy overrides — with the charter schools they approved.

The bill also created a system for lawmakers to send more money to charter schools, like New America in Thornton, that are governed by the state, rather than a local school district.

Unlike district-approved charter schools, which were always eligible to receive a portion of local tax increases, state-approved charter schools haven’t had access to that revenue.

Terry Croy Lewis, executive director of the Charter School Institute, or CSI, the state organization that approves charter schools, said it is critical lawmakers complete the work they started in 2017 by boosting funding to her schools.

“It’s a significant amount of money,” she said. “To not have that equity for our schools, it’s extremely concerning.”

CSI authorizes 41 different charters schools that enrolled nearly 17,000 students last school year. That’s comparable to both the Brighton and Thompson school districts, according to state data.

Hickenlooper’s request would be a small step toward closing the $18 million gap between state-approved charter schools and what district-run charter schools are projected to receive starting in 2020, CSI officials said.

“Gov. Hickenlooper believes that working to make school funding as fair as possible is important,” Jacque Montgomery, Hickenlooper’s spokeswoman, said in a statement. “This is the next step in making sure that is true for more children.”

If lawmakers approve Hickenlooper’s request, the New Legacy charter school in Aurora would receive about $580 more per student in the 2018-19 school year.

Jennifer Douglas, the school’s principal, said she would put that money toward teacher salaries and training — especially in the school’s early education center.

“As a small school, serving students with complex needs, it is challenging and we need to tap into every dollar we can,” she said.

The three-year old school in Aurora serves both teen mothers and their toddlers. Before the school opened, Douglas sent in her charter application to both the Aurora school board and CSI. Both approved her charter application, but because at the time her school would receive greater access to federal dollars through CSI, Douglas asked to be governed by the state.

Douglas said that her preferred solution to close the funding gap would be to see local tax increases follow students, regardless of school type or governance model. Until that day, she said, lawmakers must “ensure that schools have the resources they need to take care of the students in our state and give them the education they deserve.”

For Hickenlooper’s request to become a reality, it must first be approved by the legislature’s budget committee and then by both chambers. In a hyper-partisan election year, nothing is a guarantee, but it appears Hickenlooper’s proposal won’t face the same fight that the 2017 charter school funding bill encountered.

State Rep. Jovan Melton, an Aurora Democrat who helped lead the charge against the charter school funding bill, said he was likely going to support Hickenlooper’s proposal.

“You almost have to do it to be in alignment with the law,” Melton said. “I don’t think with a good conscious I could vote against it. I’m probably going to hold my nose and vote yes.”

Payment dispute

Fired testing company seeks $25.3 million for work on TNReady’s bumpy rollout

PHOTO: TN.gov

Tennessee officials won’t talk about the state’s ongoing dispute with the testing company it fired last year, but the company’s president is.

Henry Scherich

Henry Scherich says Tennessee owes Measurement Inc. $25.3 million for services associated with TNReady, the state’s new standardized test for its public schools. That’s nearly a quarter of the company’s five-year, $108 million contract with the state, which Tennessee officials canceled after technical problems roiled the test’s 2016 rollout.

So far, the state has paid the Durham, North Carolina-based company about $545,000 for its services, representing about 2 percent of the total bill, according to a claim recently obtained by Chalkbeat.

Measurement Inc. filed the claim with the state in February in an effort to get the rest of the money that it says it’s owed. Since then, lawyers for both sides have been in discussions, and the company filed a lawsuit in June with the Tennessee Claims Commission. The commission has directed the State Department of Education to respond to the complaint by Nov. 30.

“We’re moving forward,” Scherich told Chalkbeat when asked about the status of the talks. “… We’re simply asking to be paid for the services we provided.”

Education Commissioner Candice McQueen declined last week to discuss the dispute, which she called “an ongoing pending lawsuit.” A spokesman for the attorney general’s office also declined to comment on Monday.

Scherich said he and other company officials have not been called to Nashville for hearings or depositions.

“Our lawyers and the state’s lawyers are still skirmishing each other,” he said. “…They argue about lots of things. It’s kind of like we’re establishing the ground rules for how this process is going to proceed.”

PHOTO: Grace Tatter
Education Commissioner Candice McQueen announced the firing of Measurement Inc. and the suspensions of most testing in April 2016.

Tennessee’s dramatic testing failure started on Feb. 8, 2016, when students logged on during the first morning of testing and were unable to load TNReady off the new online platform developed by Measurement Inc. The fallout culminated several months later when McQueen fired the company and canceled testing altogether for grades 3-8. In between were months of delays after McQueen instructed districts to revert to paper-and-pencil materials that would be provided by Measurement Inc. under the terms of their contract. Many of those materials never arrived.

The company’s claim suggests that the state was hasty in its decision to cancel online testing and therefore shares blame for a year of incomplete testing.

The Tennessee Department of Education “unilaterally and unjustifiably ordered the cancellation of all statewide electronic testing that occurred on February 8, 2016, following a transitory slowdown of network services that morning,” the claim says.

(In an exclusive interview with Chalkbeat the day before his company was fired, Scherich said Measurement Inc.’s online platform did not have enough servers for the 48,000 students who logged on that first day — a problem that he said could have been fixed eventually.)

The claim also charges that McQueen’s subsequent order to substitute paper test materials was “unnecessary and irresponsible” and impossible to meet because of the logistical challenge of printing and distributing them statewide in a matter of weeks.

In her letter terminating the state’s contracts with Measurement Inc., McQueen describes daily problems with the company’s online platform in the months leading up to the botched launch. “This was not just a testing day hiccup; the online platform failed to function on day one of testing,” she wrote.

McQueen said those experiences contributed to her department’s conclusion that Measurement Inc. was unable to provide a reliable, consistent online platform and left her with no option but to order paper and pencil tests. She also cited the company’s failure to meet its own paper test delivery deadlines for her ultimate decision to terminate the contracts and suspend testing.

The last sentence of the four-page termination letter says the state would “work with (Measurement Inc.) to determine reconciliation for appropriate compensation due, if any, for services and deliverables that have been completed as of the termination date after liquidated damages have been assessed.”

In addition to its invoices for work under the contract, Scherich said his company is owed another $400,000 for delivering test-related materials to the state after its contract was ended.

“We didn’t want to be a company that stood in the way of the programs of the state of Tennessee, so we provided all the information they requested,” Scherich said. “We were told we would be paid, we provided the information, and then we’ve not been paid.”

Founded in 1980, Measurement Inc. had been doing testing-related work for Tennessee for more than a decade before being awarded the 2014 TNReady contract, its biggest job ever. The company had a fast deadline — only a year — to create the state’s test for grades 3-11 math and English language arts after a vote months earlier by the legislature prompted Tennessee to pull out of PARCC, a consortium of other states with a shared Common Core-aligned assessment.

Scherich said the loss of the TNReady contract was “a major hit” for his company, but that Measurement Inc. has paid every employee and subcontractor who worked on the project. “We have had to go into debt to keep ourselves viable while we wait for this situation with Tennessee to be resolved,” he said, adding that the company continues to do work in about 20 other states.

To pursue its claim, Measurement Inc. has hired the Tennessee law firm of Lewis, Thomason, King, Krieg & Waldrop, which has offices in Nashville and Knoxville.

“I’m sure we’ll work out something amicable with the state over time,” he said. “I’m an optimistic person. But I think our lawyers and their lawyers will have to have a lot of negotiations.”

Below are Measurement Inc.’s claim against the state, and the state’s letter terminating its contracts with the company.

Editor’s note: This story has been updated with details about the claim’s status.