Summary of Findings

March 1, 2011

Steve ReddingCharlie Santo

Regional Economic DevelopmentCenter

University of Memphis

• Study completed in May 2008

• Both MCS and SCS commissioned REDC to examine fiscal impacts of SCS converting to Special School District

• Did not consider impacts of consolidating or merging two districts

Multiple Scenarios Considered

• Two District Boundary Alternatives

• Two Local Property Tax Alternatives

Boundary Alternative 1: Constrained MCS Boundaries

Boundary Alternative 2: Expanded MCS Boundaries

Local Property Tax Alternatives

Property Tax Alternative 1 [Countywide Levy]

• Similar to the status quo

• Shelby County government would continue to serve as the primary local funding source for each 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 (e.g., if Memphis City Schools has 70 percent of the county’s students, it would receive 70 percent of the revenue generated by the county property tax for education).

• The new Shelby County special school district would be able to levy an additional property tax within its boundaries as a supplemental revenue source.

Local Property Tax Alternatives

Property Tax Alternative 2 [District Levy]

• Shelby County government would discontinue using property taxes to fund the special school district and Memphis City Schools

• With the creation of a special school district each district would levy its own property taxes as a primary local funding source.

Enrollment:

Baseline (2008-2009)Boundary Alternative 1 [Constrained MCS]

Memphis City Schools

Shelby County Special School District

Current Enrollment (2008) 111,502 47,510

Enrollment in Annexed / Pending Annexed AreasCountrwood East and West 1,580 (1,580) Berryhill 814 (814) Southwind Windyke 436 (436) South Cordova 687 (687) Bridgewater 1,094 (1,094) sub-total 4,611 (4,611)

Total Projected Enrollment 116,113 42,899

Property Tax Revenue: Baseline (2008-2009)

Alternative 1 Boundaries, Property Tax Alternative 1

TotalEnrollment 159,012 116,113 73% 42,899 27%

Assessed Value (real property) 15,592,328,065$ 9,843,672,470$ 5,748,655,595$

Where the Local Property Tax Revenue Comes From:

Main funding from countywide property tax (@2.02) 314,965,027$ 229,263,043$ 85,701,984$

Supplemental MCS funding from city property tax (@0.86) 84,655,583$ NA

Supplemental SSD funding from new district property tax (@rate TBD) NA TBD*

Total Property Tax Funding 313,918,626$ 85,701,984$

County Property Tax Base (Assessed Value)/Student 98,058$ 98,058$ 98,058$

County Property Tax Revenue/Student 1,981$ 1,981$ 1,981$

Supplemental Local Property Tax Base/Student 84,777$ 134,004$ Supplemental Local Property Revenue/Student 729$ TBD*

*To be determined by Special School District

Memphis City SchoolsShelby County Special

School District

Property Tax Revenue: Baseline (2008-2009)Boundary Alternative 1, Property Tax Alternative 1 [Constrained MCS], [Countywide Levy]

TotalEnrollment 159,012 116,113 73% 42,899 27%Assessed Value (real property) 15,592,328,065$ 9,843,672,470$ 63% 5,748,655,595$ 37%

These exising property tax revenue sources would go away:

Main funding from countywide property tax (@2.02) 314,965,027$ 229,263,043$ 85,701,984$

Supplemental MCS funding from city property tax (@0.86) 84,655,583$ NA

Total Property Tax Funding 313,918,626$ 85,701,984$

Existing property tax revenue sources would be replaced w/ new district taxes

Tax rate required to replace former funding from countywide property tax 2.3290$ 1.4908$

Tax rate required to replace former supplemental MCS funding from city property tax 0.8600$ NA

Total new tax rate required to replace former property tax revenue 3.1890$ 1.4908$

District Property Tax Base (Assessed Value)/Student 84,777$ 134,004$

Memphis City SchoolsShelby County Special

School District

Property Tax Revenue: Baseline (2008-2009)Boundary Alternative 1, Property Tax Alternative 2[Constrained MCS], [District Levy]

116,11373%

MCS$9.8 B63%

42,89927%

SC SSD$5.8 B37%

100 75 50 25 0 25 50 75 100

Percent of Countywide Total

MCS

SC SSDProperty Tax Base

Enrollment

MCS SC SSD

Available Tax Base Per Student

$84,777 $134,004

Property Tax Revenue: Baseline (2008-2009)Boundary Alternative 1 [Constrained MCS], Property Tax Alternative 2 [District Levy]

TotalEnrollment 159,012 116,113 73% 42,899 27%Assessed Value (real property) 15,592,328,065$ 9,843,672,470$ 63% 5,748,655,595$ 37%

These exising property tax revenue sources would go away:

Main funding from countywide property tax (@2.02) 314,965,027$ 229,263,043$ 85,701,984$

Supplemental MCS funding from city property tax (@0.86) 84,655,583$ NA

Total Property Tax Funding 313,918,626$ 85,701,984$

Existing property tax revenue sources would be replaced w/ new district taxes

Tax rate required to replace former funding from countywide property tax 2.3290$ 1.4908$

Tax rate required to replace former supplemental MCS funding from city property tax 0.8600$ NA

Total new tax rate required to replace former property tax revenue 3.1890$ 1.4908$

District Property Tax Base (Assessed Value)/Student 84,777$ 134,004$

Memphis City SchoolsShelby County Special

School District

Property Tax Revenue: Baseline (2008-2009)Boundary Alternative 1, Property Tax Alternative 2[Constrained MCS], [District Levy]

MCS Resident2.02 portion of county property tax

to support education2.33

0.86 portion of city property tax to provide supplemental revenue to MCS

0.86

2.88 total 3.19 total

SC SSD Resident2.02 portion of county property tax

to support education1.49

Propety Tax Rates that Go Away

New District Rate Required as

Replacement

Tax Rate Implications:

Baseline (2008-2009)Boundary Alternative 1, Property Tax Alternative 2[Constrained MCS], [District Levy]

Property Tax Revenue:

Baseline (2008-2009)Boundary Alternative 2, Property Tax Alternative 1[Expanded MCS], [Countywide Levy]

• Countywide tax revenue per student would be remain equal for Memphis City Schools and the Shelby County special school district

Property Tax Base

Enrollment

MCS SC SSD

Available Tax Base Per Student

$ 86,263 $ 147,388

Property Tax Revenue: Baseline (2008-2009)Boundary Alternative 2 [Expanded MCS], Property Tax Alternative 2 [District Levy]

128,33681%

MCS$11.1 B

71%

30,67619%

SC SSD$4.5 B29%

100 75 50 25 0 25 50 75 100

Percent of Countywide Total

MCS

SC SSD

MCS Resident2.02 portion of county property tax

to support education

0.86 portion of city property tax to provide supplemental revenue to MCS

2.88 total 3.06 total

SC SSD Resident2.02 portion of county property tax

to support education1.36

Propety Tax Rates that Go Away

New District Rate Required as

Replacement

Tax Rate Implications:

Baseline (2008-2009)Boundary Alternative 2, Property Tax Alternative 2[Expanded MCS], [District Levy]

Property Tax Base

Enrollment

MCS SC SSD

Available Tax Base Per Student

$ 111,922 $ 119,746

Property Tax Revenue: 2020Boundary Alternative 1 [Constrained MCS], Property Tax Alternative 2 [District Levy]

102,62464%

MCS$11.5 B

62%

57,92136%

SC SSD$6.9 B38%

100 75 50 25 0 25 50 75 100

Percent of Countywide Total

MCS

SC SSD

Property Tax Base

Enrollment

MCS SC SSD

Available Tax Base Per Student

$ 109,256 $ 130,939

Property Tax Revenue: 2020Boundary Alternative 2 [Expanded MCS], Property Tax Alternative 2 [District Levy]

119,90575%

MCS$13.1B

71%

40,64025%

SC SSD$5.3B29%

100 75 50 25 0 25 50 75 100

Percent of Countywide Total

MCS

SC SSD

Property Tax Alternative 1 [Countywide Levy]: • The creation of a special school district would not necessarily create any new imbalance in

tax revenue per student between the two districts. Since property taxes collected countywide would continue to be distributed proportionately to the two districts, the countywide tax revenue per student would be remain equal for Memphis City Schools and the Shelby County special school district.

Property Tax Alternative 2 [District Levy]:• Would create an imbalance in the two districts due to the ratio of available tax base to school

enrollment that would exist in each. The district property tax base per student would be lower for Memphis City Schools than for the special school district. In the long term, this imbalance could subside if MCS experiences the declining enrollment that has been projected.