Facts on district revenue and per-pupil spending

In past articles, we’ve shown you how much money we get and where it all goes.

Our community deserves an honest dialogue – without ideology and special interest talking points – about school funding that includes a fair assessment of needs, expenses, and revenue.

So let’s talk for a moment about where money comes from and under what circumstances we get more of it.

Where does revenue come from?

About a third of our operating budget comes from the State of Tennessee. They give us a certain amount of money per student and according to what kind of student. When more students enroll, our revenue from the state goes up, to the tune of about $3,200 per student.

The other two-thirds comes from the Metro Government, paid from county taxes and allocated by the Mayor’s Office and the Metro Council. The amount of money we get from the Metro Government is fixed. It is not tied to a per-student formula the way state money is.

This year our enrollment is up by nearly 1,800 students. About a third of our revenue (from the state) reflected that increase. The other two-thirds of our revenue (from the Metro Government) remained flat.

[NOTE: We received a $26 million increase in our operating budget from the 2012-13 school year to the 2013-14 school year. Of this $26 million, $12 million came from our own fund balance, $10 million came from the state and $4 million came from Metro Government.]

How does that money move around the district?

It’s a phrase people use a lot: per-pupil spending. Metro Schools spends around $9,100 per pupil in grades K-12. When a student moves from one school to another, the money theoretically follows him.

If the student leaves his neighborhood school and moves into a magnet school, he is moving from one district-operated school to another. The money attached to him stays in the same pot of district money and our per-pupil spending amount stays the same.

When a student leaves his neighborhood school – or a magnet school – for a charter school, the $9,100 moves to the charter management organization that runs the charter.

When a student leaves a district school for a private school, the money does not follow him to the private school. The district loses the state revenue associated with that student, but the private school does not get it. The funding from Metro Government is unchanged. The private school gets private money in the form of tuition.

The expenses of the neighborhood school don’t increase with every additional student and don’t decline with every student departure. The school is spending the same amount to keep its lights on and its hallways clean. The school still has teachers to pay and technology to buy and maintain.

Innovative practices that are designed to quickly improve achievement could face tough times, like extended learning time, model classrooms and certain kinds of school-level professional development.

What’s the solution?

Our strategic plan calls for more equitable use of resources, placing money where it’s needed most for fair service of students. We are already moving toward a model that puts more money directly in the hands of principals, allowing them to spend money in ways that will most directly benefit the unique needs of their students. That will help everyone decide best allocation of existing resources and ensure that money is spent in the most effective ways.

But what about revenue?

The answer will come from a community discussion of school finances. We must have an honest and open dialogue about revenue and expenses. The Board of Education began that conversation this fall, well in advance of the usual budget cycle.

This issue has wide-reaching effects, beyond just budgeting and buying textbooks. It can affect a school’s character and existence.

Let’s look at it at the individual school level. When a school is constantly threatened with drastic budget cuts or even closure, it has a more difficult time attracting students, which leads to further budget reductions.

It is a cycle that puts even more of a burden on teachers and principals to properly educate the students they already have.

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6 thoughts on “Facts on district revenue and per-pupil spending

  1. I applaud the call for an open dialog.

    Can you share what percentage of a school’s budget is for fixed costs (i.e. keeping the lights on and the hallways clean) and what percentage is for variable costs (which I assume teacher salaries are the largest slice).

    Also, what percentage of that money stays at the central office? One of the things that happens when a kid moves from a neighborhood school to a charter is that the central office loses their cut, whereas when a student moves from a neighborhood school to a magnet the central office keeps their cut.

  2. “The amount of money we get from the Metro Government is fixed.”

    This is simply not true. The sales tax option revenue stream increases funding for MNPS in years where consumption is higher. Such as last year and this year. Sales tax collections are running ahead of pace.

    Property tax collections have also increased, such as last year when the rate was increased. They also increase when assessed values increase. Revenue also increases when more properties are added to the property tax roles and those taxes start coming in (with Nashville’s building boom, this HAS been happening).

    In addition, that extra revenue flows into an already very large fund balance. The district also makes money off of some of their charter schools in the form of rent. And the Board can and has authorized fund balance expenditures mid-year.

    I want an honest dialogue to, but I think we should agree on some basic facts and put all the information on the table.

    • It is true, though. It is a fixed amount into our operating budget not tied to the number of students we serve, as state funding is.

      As you accurately say, any extra revenue we get in the form of increased sales or property tax collections goes into the fund balance, which is not part of our operating budget. It is money we cannot spend without permission, as explained here: https://onpubliceducation.com/2013/12/19/facts-on-fund-balance-why-we-must-spend-on-technology/

      (NOTE: That article was published before Mayor Dean authorized $6 million in technology capital funding for Metro Schools, as outlined here: https://onpubliceducation.com/2014/01/17/mayor-announces-6-million-capital-plan-for-student-technology/)

      • I guess we’ll disagree about ability to use fund balance. Fixed amount at the beginning of the year, yes, but amendments to the general purpose operating budget can and have been made mid fiscal year.

        The fund balance is the general purpose fund balance, so it is related to the general purpose fund. There are other fund balances for the food service fund, grants fund, etc.

        If say, 5000 kids showed up one year in MNPS in December, extra state BEP money would come in, and the Board could authorize the use of fund balance reserves to amend the general purpose operating budget (increased expenditure) to pay for more teachers, instructional coaches, etc.

        My larger point is about this idea of MNPS hands being completely tied with respect to local revenues, mid year, if more students come in (or exit). Doesn’t seem quite right, they have viable options.

        And again, laying everything out on the table for an honest dialogue – what happens to “fixed” local revenue when the district experiences a large outflow of students during a year, or more realistically, at certain schools? What happens to the overcapacity in the system where there is a large student outflow? Expenditures normally remain the same as planned, with less students. Why?

        BEP state funding would go down, but local “fixed” funding would be the same – and so the district can choose to spend the same amount of money on less pupils or spend less, and put any savings difference into the fund balance.

  3. I see your point here, Hunter, but the fact is that enrollment is climbing. We’re at more than 83,000 students right now, with more registering all year.

    We have already made a mid-year amendment for this fiscal year. You can see that here: http://www.mnps.org/AssetFactory.aspx?did=90666

    And spending fund balance does require Council approval. The Board can authorize it, but it’s not approved until the Council says ‘OK’. Look at what happened recently with the $14 million request for technology, retirement incentives and other expenses. Part of the request was granted and others were not. Thankfully, the Mayor authorized $6 million in capital spending to cover part of what was left.

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