Transition Plan for the Merger of Memphis City Schools and Shelby County Schools

Submitted by the Transition Planning Commission August 3, 2012

The Transition Plan was developed by the members of the Transition Planning Commission:

Joyce Avery Jim Boyd Kenya Bradshaw Staley Cates Dr. Reginald Green Tommy Hart Richard Holden Rickey Jeans Dr. Fred Johnson Martavius Jones Daniel Kiel Mayor Mark H. Luttrell, Jr. Mayor Keith McDonald Louis Padgett, III David Pickler Dr. Barbara U. Prescott Christine P. Richards Barbara Roseborough Dr. John Smarrelli, Jr. Larry Spiller Katie Stanton

The Transition Plan was finalized by the Transition Planning Commission on August 3, 2012, after reviewing and incorporating feedback from the Shelby County Board of Education, Commissioner of Education, and public during the review period in June and July, 2012. This document is the final version of the Transition Plan, submitted to the SCBE and Commissioner for approval. 1

TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................................................................... 4 INTRODUCTION ...............................................................................................................................................................18 LEGAL CONTEXT FOR THE SCHOOLS MERGER AND TPC................................................................................................................... 19 CHARGE OF THE TPC ............................................................................................................................................................... 19 GUIDING PRINCIPLES ............................................................................................................................................................... 20 THE GOAL OF THE TRANSITION PLAN .......................................................................................................................................... 20 SUMMARY OF THE PROCESS ...........................................................................................................................................21 EDUCATION PLAN: EDUCATIONAL SERVICES ...................................................................................................................28 INTRODUCTION....................................................................................................................................................................... 29 CONTEXT ............................................................................................................................................................................... 30 PRIORITY 1: EVERY CHILD READY FOR SCHOOL ............................................................................................................................... 33 PRIORITY 2: EVERY STUDENT READY FOR SUCCESS IN COLLEGE AND CAREER ........................................................................................ 36 PRIORITY 3: RIGOROUS IMPLEMENTATION OF STANDARDS .............................................................................................................. 39 PRIORITY 4: QUALITY AND ACCESSIBLE EDUCATIONAL CHOICES ......................................................................................................... 41 PRIORITY 5: ENGAGED PARENTS AND FAMILIES ............................................................................................................................. 44 PRIORITY 6: SUPPORTIVE COMMUNITY MEMBERS AND PARTNERS ..................................................................................................... 46 PRIORITY 7: TAILORED INTERVENTIONS AND SUPPORT .................................................................................................................... 48 PRIORITY 8: EFFECTIVE TEACHERS............................................................................................................................................... 53 PRIORITY 9: EFFECTIVE INSTRUCTIONAL LEADERS (PRINCIPALS AND ASSISTANT PRINCIPALS) .................................................................... 76 PRIORITY 10: CULTURE AND CLIMATE OF HIGH EXPECTATIONS ......................................................................................................... 82 EDUCATION PLAN: ADMINISTRATIVE ORGANIZATION ....................................................................................................84 CONTEXT ............................................................................................................................................................................... 85 SUMMARY OF CURRENT STATE ................................................................................................................................................... 85 FINDINGS FROM BENCHMARKS AND RESEARCH .............................................................................................................................. 87 ASPIRATIONS.......................................................................................................................................................................... 89 RECOMMENDATIONS ............................................................................................................................................................... 90 OPERATIONS PLAN ........................................................................................................................................................100 INTRODUCTION..................................................................................................................................................................... 101 CUSTODIAL .......................................................................................................................................................................... 102 UTILITIES ............................................................................................................................................................................. 105 MAINTENANCE ..................................................................................................................................................................... 107 CAPACITY UTILIZATION ........................................................................................................................................................... 109 TRANSPORTATION ................................................................................................................................................................. 115 PURCHASING........................................................................................................................................................................ 119 IT ...................................................................................................................................................................................... 124 SAFETY & SECURITY............................................................................................................................................................... 131 NUTRITION .......................................................................................................................................................................... 134 SHARED SERVICES ................................................................................................................................................................. 137 PERSONNEL MODEL ......................................................................................................................................................140 SUMMARY ........................................................................................................................................................................... 141 CENTRAL OFFICE STAFFING ...................................................................................................................................................... 142 SCHOOL STAFFING................................................................................................................................................................. 145 COMPENSATION ................................................................................................................................................................... 149 BENEFITS ............................................................................................................................................................................. 150 FINANCIAL MODEL ........................................................................................................................................................157 INTRODUCTION..................................................................................................................................................................... 158

CONTEXT ............................................................................................................................................................................. 158 SUMMARY OF CURRENT STATE ................................................................................................................................................ 159 METHODOLOGY FOR PROJECTIONS ........................................................................................................................................... 162 COST MANAGEMENT OF ENROLLMENT SHIFTS............................................................................................................................ 169 RECOMMENDATIONS ............................................................................................................................................................. 170 SUMMARY OF PROJECTED FUTURE STATE .................................................................................................................................. 172 RECOMMENDATIONS ............................................................................................................................................................. 177 CONTINGENCY PLAN .............................................................................................................................................................. 178 OTHER RELEVANT CONSIDERATIONS ......................................................................................................................................... 179 LEGAL ASSURANCES ......................................................................................................................................................182 INTRODUCTION..................................................................................................................................................................... 183 TCA 49-2-1201(1): ADMINISTRATION ORGANIZATION OF THE PROPOSED CONSOLIDATED SYSTEM................................................ 183 TCA 49-2-1201(2): METHOD TO ENSURE NO DIMINUTION IN THE LEVEL OF THE EDUCATIONAL SERVICE IN THE SCHOOLS IN ANY OF THE SYSTEMS INVOLVED .............................................................................................................................................................. 183 TCA 49-2-1201(3): APPROPRIATE MEANS FOR THE TRANSFER OF ASSETS AND LIABILITIES OF MUNICIPAL AND SPECIAL SCHOOL DISTRICT SYSTEMS ............................................................................................................................................................................ 183 TCA 49-2-1201(4): PLANS FOR DISPOSITION OF EXISTING BONDED INDEBTEDNESS THAT SHALL NOT IMPAIR THE RIGHTS OF ANY BONDHOLDER ..................................................................................................................................................................... 184 TCA 49-2-1201(5): PLANS FOR PRESERVING THE EXISTING PENSION RIGHTS OF ALL TEACHERS AND NONTEACHING PERSONNEL IN THE RESPECTIVE SYSTEMS ............................................................................................................................................................ 185 TCA 49-2-1201(6): PLANS FOR PRESERVING THE EXISTING TENURE RIGHTS, SICK LEAVE RIGHTS, AND SALARY SCHEDULE RIGHTS OF ALL TEACHERS AND NONTEACHING PERSONNEL IN THE RESPECTIVE SYSTEMS ......................................................................................... 186 TCA 49-2-1201(7): APPROPRIATE PLANS FOR CONTRIBUTIONS BY MUNICIPALITIES OR SPECIAL SCHOOL DISTRICTS TO THE COUNTY FOR THE OPERATION OF A UNIFIED SYSTEM OF SCHOOLS DURING THE PERIOD OF TRANSITION FOLLOWING UNIFICATION, WHICH PERIOD SHALL NOT EXCEED 3 YEARS ............................................................................................................................................................................. 186 TCA 49-2-1201(8): APPROPRIATE PLANS FOR REAPPORTIONMENT AFTER EACH FEDERAL DECENNIAL CENSUS OF DISTRICTS FOR ELECTION OF MEMBERS OF THE SCHOOL BOARD ........................................................................................................................................... 186 TCA 49-2-1201(9): ANY OTHER MATTERS DEEMED BY THE PLANNING COMMISSION TO BE PERTINENT........................................... 186 MIGRATION PLAN .........................................................................................................................................................188 OVERVIEW........................................................................................................................................................................... 189 DAY ONE MILESTONES........................................................................................................................................................... 189 TRANSITION MANAGEMENT .................................................................................................................................................... 191 ACTIVITIES AND MILESTONES FOR KEY INITIATIVES ........................................................................................................................ 193 APPENDIX......................................................................................................................................................................203

EXECUTIVE SUMMARY

Introduction The merger of Memphis City Schools (MCS) and Shelby County Schools (SCS) presents a historic opportunity for our community to unite behind the children of Shelby County. For the first time in the regions history, a single public school district will allow the community to bring together all of its resources to ensure every student in Shelby County receives an excellent education. At times, this community has been divided by emotions, politics, and even by this merger. The purpose of this Transition Plan, and the hope for the merged district, is to build a world-class school district that will help us move forward together. This merger will not be easy, and planning for it is only the first step. The Shelby County Board of Education (SCBE) and district staff must be focused, disciplined, and courageous in their decisionmaking and leadership. In order for the merger to be successful, the Transition Planning Commission (TPC) strongly recommends the SCBE identify and name a Superintendent for the 2013-14 school year as soon as possible, but no later than the fall of 2012. Additionally, the government leaders of the State of Tennessee (hereinafter referred to as "the State") and local governments owe it to the children to do everything in their power to help this merger succeed. Most importantly, everyone in Shelby County is responsible for thisparents, community members, and community organizations must serve as guardians of and advocates for this Transition Plan. The vision laid out in this plan is a district in which the academic success and well-being of the students come first. It is a district where students and educators are held to high expectations. It is a district where parents are engaged and the community is invested, realizing everyone is in this together. The district is focused on both strong community schools and on students and families having good choices. The district thoughtfully balances stability with needed change. It is a district with strong leaderswho can make tough decisions when needed in order to make a world-class system fiscally sustainable. It is a district that embraces this once-in-a-lifetime opportunity.

The Transition Planning Commission The Transition Planning Commission was created by state law. The Norris-Todd Act and court orders entered by U.S. District Judge Samuel H. Mays, Jr. state that a planning commission should develop the transition plan to consider and provide for each of the matters set forth in TCA 49-2-1201(i) and TCA 49-2-1204. Following these orders, the TPC was appointed in August and September 2011 and is comprised of 18 appointed commissioners and three ex-officio members. Early in its process, the TPC adopted ten guiding principles to guide its work and to aid in the recommendation process: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. The academic success and well-being of our students come first Educators and staff are our most important resource We have high expectations We are all in this together We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all We believe parent engagement is essential We must save where we can to fund what we need We value strong leadership This is our once-in-a-lifetime opportunity 5

These principles were supported by the SCBE, and strongly informed the work of the TPC in the development of its recommendations. The Transition Plan is designed to serve as a guide for the SCBE and merged SCS leadership to use in leading the transition. The Plan provides guidance on all the core componentsacademics, student support, district organization, finances, personnel, and operations---for the merged SCS. It is intended to supportnot substitute forthe leadership of the SCBE and district staff during the transition process. Throughout its work, the TPC engaged the community in a two-way dialogueboth informing the community about the facts of the merger, and asking the community to provide input, guidance, and context to inform the development of the Transition Plan. Events were held throughout Memphis and other Shelby County municipalities for parents, community members, students, teachers, and principals. The TPC also provided regular updates to the SCBE and the Tennessee Department of Education. Through events, speaking engagements, town halls, and media, the TPC was able to reach more than 13,000 people. This community input directly informed the transition planning process. The TPC carefully considered community feedback prior to the formation of its recommendations, and included community members in many of its recommendation-development workshops.

The Education Plan: How students, teachers, and schools are set up to succeed The Education Plan chapter of the Transition Plan provides recommendations for ensuring that every student experiences a world-class education. This includes recommendations related to educational programs and services, a set of strategies for ensuring all students have high-quality teachers and principals, and an administrative structure that enables schools to innovate and succeed. To start its work, the TPC studied the current state of student demographics, needs, and academic performance. Across both districts, there are about 150,000 students of which 70% qualify for free or reduced lunch and 12% receive special education services. Seven percent of students have limited English proficiency, and 2% of students are estimated to be homeless. In 2010-11, 34% of 3rd graders scored proficient or better on the state Reading exam, and 27% of 7th graders scored proficient or better in math. Using the state value-added growth measure, however, the districts score in line with state expectations, with students making more progress than expected in math. Across both districts, the 2010-11 graduation rate was 78%. All 11th grade students in Tennessee take the ACT, and in 2011 10% of students met the ACT's college readiness benchmark, and 25% scored a 21 or better. The ultimate goal of the Education Plan for merged SCS is that every student graduates ready for success in college and career. The following diagram illustrates 10 priorities and the vision for the educational services of the merged district:

Educational Priorities

The Education Plan chapter provides detailed recommendations in all 10 areas, while this Executive Summary describes a few highlights. Educational programs and services In order for every child to be successful in school, every child must be ready for school. Currently, less than 50% of students across MCS and SCS meet a "Kindergarten readiness" benchmark at the start of Kindergarten. Both MCS and SCS operate district-run Pre-Kindergarten programs for 4-year-olds (PreK 4), funded by mostly by the state. About 4,300 students participate in this program, and these students consistently out-perform their peers on Kindergarten-readiness assessments. The Transition Plan recommends that the merged district expand the Pre-K 4 program to add 2,500 spots over 5 years. This will effectively ensure universal access for Pre-K 4, given that some parents and families will continue to prefer to send their children to private centers or Head Start. The recommendation is to add 500 spots25 classroomseach year of the 5-year expansion. The cost of this recommendation has been factored into the district's budget and is detailed in the Financial Model chapter. Kindergarten Readiness is only the first step toward success. The ultimate goal for all students is to graduate ready for success in college and career. In order to achieve this goal, the district and community must unite behind an aligned set of milestones and track progress toward these targets. Both districts currently have strategic plans, however they could benefit from a more concise and impactful set of goals that are clear and understandable to the community. Other districts and communities around the country have benefited greatly from developing an aligned set of milestones, and from including the entire community in the development and monitoring of the goals. After careful review of the data, the TPC recommends the following milestones:

8 Key Milestones:
Outcome 1. Kindergarten readiness 2. 3rd Grade reading proficiency 3. 7th Grade math proficiency 4. 9th Grade on track 5. ACT college ready / ACT minimum score of 21 6. Graduation rate 7. Post-secondary enrollment 8. Post-secondary completion college college 2010-11 actual 47% 34% 27% Unknown 10% / 24% 78% 40% (MCS data only) 16% (MCS data only) 2016-17 target TBD%* 60% 50% TBD%* 25% / 60% 90% 60% TBD%*

*Items marked TBD are areas in which the TPC did not have current state data, therefore the TPC was not able to identify an appropriate target. In the Education Plan chapter, the TPC recommends the district gather the baseline data for these items, and set ambitious goals. It is important to note that these goals should be owned by the community as a whole, not just the school district. The school district is not the only entity with a role in supporting students; parents and a wide range of community organizations also have critical roles. This approach acknowledges that the path to educational success is bigger than the strategy of any particular district administration. It is a vision that needs to be owned and sustained by all of Shelby County. In addition to ensuring a core of courses and programs is available at every school, the Transition Plan also embraces choice and recognizes that students and families may have unique needs and interests that cannot be met at every community school. To support and challenge these students, the Plan recommends a district-wide school transfer policy on a space-available basis. The district will continue to support the Optional Programs that exist in current MCS, as well as unique offerings such as the International Baccalaureate (IB) programs that exist in both school districts. Furthermore, to ensure that students are challenged no matter which school they attend, the district will double the number of students who participate in Advanced Placement courses and Dual Enrollment programs over the next five years. National research has found that students who participate in advanced courses regardless of their performance in them are more likely to be successful in college and career. Every child in Shelby County deserves the chance to be challenged in order to reach his or her potential. The district will need to provide tailored interventions for students who need extra help meeting high academic standards. In order to help students, teachers and schools must first identify where there is a need. For this reason, the 8 key milestones mentioned above are critical check-points in students' school careers. The district will offer targeted support to help students at these milestones. Schools will also carefully track and provide interventions to address attendance and student behavior, given the impact that these factors can have on students' likelihood to graduate. In addition, the TPC recommends an increase in the number of school counselors, given their important role in providing targeted interventions. Finally, for students in struggling schools that have been placed in the Innovation Zone, the school day will be extended by an hour to provide more instructional support. The TPC's recommendations address many of the most critical aspects of the districts' educational and support services. However, the TPC recognizes that important detailed work remains in order to align on the merged district's approach in areas including alternative education, gifted programs, athletics and other extra-curricular programs. The TPC recommends that staff work during the implementation year (2012-13) to develop a shared approach to these programs. Appendix C contains a compendium of input from district staff, which can serve as a starting point for understanding the similarities and 8

differences in the districts' current programs. The Migration Plan chapter includes more detail on a process for developing a shared approach. Teachers and school leaders Research shows that teacher effectiveness is the single most important school-controllable variable for student achievement. Establishing a clear and shared understanding of the characteristics of effective teaching, measuring for these characteristics, and then using that information to make better decisions is one of the most important things a school district can do. A well-designed and well-implemented teacher evaluation is central to a districts effort to improve student achievement. Only when evaluation is a meaningful representation of teacher performance can it be used to identify teachers professional development needs, help teachers advance their craft, make better decisions about who teaches, and compensate teachers more effectively. For many years, school districts across the United States have rated almost all teachers above average and have provided little feedback on how to improve. MCS and SCS share this history, but are already making significant strides in improving upon it. Each district has begun full-scale implementation of a developmentally-focused teacher evaluation system in the past year. In MCS, this work has been supported by a $90 million, seven-year Teacher Effectiveness Initiative (TEI) grant from the Bill and Melinda Gates Foundation. In part based on the early work of TEI in MCS, the state adopted a more robust teacher evaluation model as part of its Race to the Top application. The state model currently is used in SCS. Over the coming months, the districts will partner to adopt single teacher and principal evaluation models to use from the merger date forward. These evaluations will be research-based, include multiple measures, and be implemented by evaluators who are trained and reliable. In order to ensure the evaluation model enables teachers and principals to improve their practice, the district will develop an integrated professional development plan based on the needs identified in evaluations, student achievement data, and best practice research. The professional development will be job-embedded, focused on student learning, and linked to specific development opportunities identified by the teachers' evaluation. Additionally, the district will regularly protect time to allow teachers to meet in Professional Learning Communities to review student data and develop instructional plans. Decisions about who teaches are among the most important decisions a school district makes. These decisions include who is selected to fill vacancies, how teachers are dismissed, what happens to teachers whose positions are eliminated, and which teachers are allowed to transfer between schools. Currently, many of these decisions are made based on the seniority and tenure of the teacher. However, MCS and SCS data show no relationship between years of experience and teacher effectiveness. National research shows teachers' improvement leveling off after the first four or five years. Meanwhile, research shows that approximately a quarter of a teachers effectiveness is determined by his or her fit with his or her school. Mutual consentthe decision of the principal and teacher to work togetheris more important than a teacher's years of experience. Given this, the TPC recommends that decisions about who teaches be based on mutual consent and teacher effectiveness. The current average salary of MCS and SCS teachers is the highest in Tennessee. Teachers are currently paid on the basis of a step (years of experience) and lane (degree attainment) system. Approximately 30% of total teacher compensation in the district is based on years of experience and degree attainment. Yet national research shows gains to teacher experience leveling off after four to five years. Local data shows no relationship between years of experience and student value-added data after the first two years in MCS and at all in SCS. 9

The TPC recommends the district redesign teacher compensation to better attract and retain effective teachers, including attracting teachers to and retaining teachers in hard-to-staff positions. Additionally, teachers with sustained, demonstrated effectiveness should be eligible for salary increases and career advancement opportunities. To enable this differential compensation, the TPC recommends freezing the additional compensation paid for advanced degrees. Together, these recommendations will ensure more students have effective teachers leading their classrooms and effective principals leading their schools. Administrative organization No particular organizational design can guarantee a school districts success. Districts of many different sizes and structures have demonstrated strong academic outcomes, while low-performing districts also come in a range of shapes and sizes. The most important question about administrative structure is not whether a structure is right, but rather whether it supports the district in achieving its strategic goals. Structure above all should be an enabler, not an inhibitor, of critical drivers of student achievement including strong district leadership, strong school-level leadership, and effective teaching. The recommended structure for the administrative organization of the merged SCS is the Multiple Achievement Paths (MAP) model. This model builds upon best and promising practices from the current districts and elsewhere, and it is tailored to the unique needs and context of Shelby County. This context includes 26 charter schools currently operating in the districts, and the formation this year of the state's Achievement School District (ASD), which aims to turn around the state's lowest performing schools. The goal of this structure is to give each school, regardless of its status or location, the support and autonomy that will enable it to deliver on the districts educational priorities. The MAP model calls for the district to hold all school operators to common high performance standards. Multiple Achievement Paths Model

This model enables the district to focus foremost on students having the opportunity for an excellent education, regardless of what type of school they attend. This means a system where the district 10

partners with charter and ASD schools, and holds all schools to common high performance standards. In this model, most community and optional schools are managed in regions. Innovation, charter, and ASD schools are supported through the Office of Innovation. These officesthe regional offices and the Office of Innovationcollaborate, share best practices, and encourage innovation throughout the district. The structure is meant to enable the most highly effective educational practices to be implemented in the most appropriate contexts. To support this, the district will support broader school-level autonomy, allowing school leaders to make more decisions. The central office of the merged SCS will need to support this model. More than any specific organizational chart, the central office must fulfill the following six roles: 1. Take all necessary action to ensure that an increasing number of students have access to effective schools and teachers. 2. Support high-quality instruction in district-operated schools. The district must maintain a central focus on quality instruction, both by ensuring that schools are staffed with effective teachers and leaders and by providing support to teachers, principals, and staff to help them develop their skills over time. 3. Work in close partnership with charter schools and the ASD. This partnership requires that the district, the ASD, and charter schools exchange services, share best practices, develop fair funding arrangements and policies, and coordinate communications with families and the community. 4. Measure performance. Ensure that common metrics are used to measure the performance of district-operated, charter, and ASD schools. Metrics should include both status and growth measures to account for schools' different starting points. 5. Provide high-quality operational and support services to district-operated andfor a feenondistrict-operated schools. For the sake of efficiency, scale, and preserving principal time to focus on instructional leadership, the central office is in the best position to provide these operational services to schools. 6. Ensure compliance, fiscal responsibility, and equity. The central office has a responsibility to ensure compliance with laws, regulations, and policies, to ensure that funds are spent wisely, and to ensure all students and families are treated fairly. Three features of the central office bear further mention here: the regional offices, the Office of Innovation, and the Office of Planning and Performance Management. The regional office design is focused on two critical roles. The primary role of the regional office is to foster and develop greater instructional leadership among principals. The second critical role of the regional office is to support parent, family, and community engagement. The purpose of the Office of Innovation is to ensure that the district is able to provide more highquality school options for more children, through traditional and non-traditional Achievement Pathsincluding charter schools, Innovation Zone schools, and ASD schools. To that end, the Office of Innovation should ensure that all types of schools, including community schools, have the access to innovative approaches that are effective. The purpose of the Office of Planning and Performance Management is to have a consolidated, district-wide view into performance, enrollment and student needs across the district and across a variety of school types. This office supports the district, Superintendent, and SCBE in strategically managing the creation of new schools, school closings, and the transition of schools from one "path" to another. Together these three offices ensure that all schools are supported in a way that encourages innovation and equips schools to be successful.

11

The Plan also includes recommendations about student assignment policies and attendance zones. The TPC recommends, with a few exceptions, that the district preserve current student attendance zones for a minimum of two years post-merger, in order to preserve stability for students and families. The TPC also recommends that the district expand its student transfer policies to allow transfers district-wide, on a space-available basis. The TPC does not recommend any forced busing for desegregation purposes.

The Operations Plan: How to ensure students and schools have the resources they need The Operations Plan chapter of the Transition Plan provides recommendations to ensure that every student experiences a school that has the resources it needs to provide a world-class education. This chapter describes how the district can maximize efficiency while also improving the quality of operational services. The Plan focuses on operational support functions in six areas: transportation, facilities (including capacity utilization, custodial services, maintenance and utilities), purchasing, information technology (IT), safety and security, and nutrition. Using facilities efficiently is one of the most important ways for the district to ensure students have access to the resources they need. Under-utilized schools have to spread the fixed costs of running a school (e.g., utilities, maintenance) over fewer students and thus have a smaller proportion of perpupil funds to spend on additional teachers and support staff. A secondary equity impact occurs because the remaining schools in under-utilized regions also contribute to this shortfall. To ensure under-utilized schools have a minimal level of program and supports, other schools in the region often have to staff at higher student-teacher ratios to help balance the overall budget. By closing underutilized schools, all students benefit from greater access to resources and a richer learning environment. A capacity utilization analysis shows that there is an under-utilization of capacity in Western Memphis and over-utilization of capacity in Eastern Memphis. This trend is driven by an overall decline in enrollment in the district, and more significantly, a population shift from Western Memphis to Eastern Memphis. The analysis shows there are 89 schools with under 80% utilization, of which 70 are in Memphis and 19 are in Shelby County. However, low utilization is not the only factor that should be considered in determining whether to close a school. The TPC also considered these schools' academic performance, facilities condition, enrollment trends, and the regional capacity to transfer students to other nearby schools. This analysis indicated an opportunity to close at least 20 schools, for a savings of about $19 million annually. In both transportation and custodial services, one district currently outsources the service, and the other currently provides the service in-house. In both transportation and custodial services, the district that outsources the service is more cost-effective than the district that provides the service in-house (with the exception of special education transportation). The recommendation in both areas is to migrate to an outsourced service provider with experience in K-12 school districts and a reputation for quality, through a competitive bid process. The TPC does not have an inherent preference for outsourcing, but recommends outsourcing these services because there is no evidence the district can achieve the same level of cost savings in-house (with the exception of special education transportation). The TPC also recommends that the bid process for vendors encourages providers to preferentially hire current district employees for new roles. Combined, these recommendations will save the district more than $35 million annually. In utilities and purchasing, the TPC recommends more cost-effective and quality-enhancing service provision. The recommendation to pursue a Board-approved demand management policy to reduce school level energy usage is expected to save about $5 million annually. Strategic sourcing of high 12

spend purchasesthrough consolidation to fewer vendors and more centralized buying and enhanced visibility into spend at the central office and school levelwill save the district about $8 million. The TPC also considered critical operational investmentsthe most significant of which is a single Human Resources, Payroll and Finance system for Day 1 of merged district. This expected $12-15 million investment is necessary for ensuring the district can accurately pay staff, assign staff to schools, and understand the financials in the merged district. Other IT recommendations will allow the district to move towards a less resource-intensive central help desk and provide for greater support for school-based instructional technology. The recommended nutrition service and safety and security models are largely cost neutral. Adopting the MCS central kitchen model for the merged district will allow for reinvesting of money saved through purchasing scale into healthier food for students and enable greater flexibility to serve the variety of new school models expected in the merged district. For safety and security, the TPC recommends maintaining a blended model with both law enforcement and security guards present in the merged district.

The Personnel Model: The personnel requirements of the merged district MCS and SCS employ almost 18,000 full-time staff, including school-based staff, operations staff and central office staff. The ultimate success of the district depends on its people and their effectiveness in creating a world-class educational system. Personnel costs are also the districts' largest expensetotal compensation exceeds $1 billion per year. The Personnel Model chapter includes an estimate of the personnel who will be required in the merged district to support this plan's aspirations. The personnel model reflects several inputs: The baseline from the number and roles of personnel in MCS and SCS today Recommendations from the TPC Education Plan and Operations Plan Changes required to ensure the districts staff school-based roles equitably Efficiencies, such as elimination of duplication through combining the two central offices The TPC recommends that the size of the new central office be smaller than the aggregate size of the two central offices today. This recommendation is based on duplication and scale. For example, both districts currently have many of the same positions and in the merged district there will only be a need for one. Further, there will be efficiency gains from having a larger district. Based on these two factors, the TPC recommends the district cut combined district spending on central office personnel by $14 million, or 26% of current general fund total spend. Still, central office effectiveness cannot be achieved solely through a one-time target in reduction in central office spending. It is dependent on a clear understanding of what success looks like for each function and a culture where it is expected that all staff improve every year. The TPC recommends that the district establish a personnel management system for its central office functions that utilizes multiple measuresincluding achievement of key metrics and customer satisfactionin order to evaluate each central office employee. While both MCS and SCS are subject to the same state laws governing student-teacher ratios, the two districts have different approaches. For example, MCS has 1.9 more students per general education class than SCS. While this difference might seem insignificant, moving to the SCS effective staffing ratio would cost the district $23M annually. The TPC recommends that the district adopt a costneutral approach to student-teacher ratios, which means a slight reduction in former MCS class sizes and a slight increase in former SCS class sizes, on average. 13

The district also must determine compensation for each of the different classes of employees. For many classes of employees, the two districts pay similarly (e.g. teachers), but in other cases the districts have significantly different compensation for the same position (e.g. principals). The NorrisTodd Act requires that within three years of the merger date the district establish new salary schedules that are no lower than the highest component of the prior salary schedule. The cost of implementing this recommendation for all employees, including associated increases in FICA and retirement, is approximately $18 million per year. The TPC recommends this begin in the third year after the merger. Beyond compensation, the districts also must develop a consistent benefits plan. Although the districts use the same health insurance administrator and have broadly similar policies, there are differences in plan design and the effective share of health care costs. By adopting the SCS effective district share and other cost management improvements, the district will save $17 million annually on health insurance benefits.

The Financial Model: The finances of the merged district The Financial Model chapter details the forecasted revenues and expenditures of the merged district over its first three years. The model incorporates all of the recommendations in other sections of the Plan with financial implications, in addition to other assumptions about revenues and costs. The financial projections are very sensitive to enrollment, so the financial plan also details the projected overall enrollment in merged SCS, and the enrollment mix among district-operated schools, charter schools, and the ASD. The financial projections are top-down targets, not intended to replace the bottom-up process for developing the district's budget. Overall Shelby County public school enrollment is projected to decline 3% from FY2012 to FY2016, resulting in approximately 147,400 students enrolled in Shelby County public schools by FY2016. The enrollment mix is expected to shift to non-district operators (including charter schools and the ASD), from 4% of total public school enrollment in FY2012 to 19% in FY2016, resulting in approximately 118,700 students enrolled in district-operated schools by FY2016. The following exhibit details the major categories impacting the FY2014 budget, which has a $57M remaining fiscal gap:

14

FY2014 Fiscal View

Independent of the merger, the district is projected to face a deficit of $71M in FY2014. This assumes that that the district aggressively manages costs, proportional to enrollment decline and shifts. The merger increased the deficit by $72M with the TPC recommending an additional $14M in investments in educational priorities, leaving the merged district with a starting gap of $157M in FY2014. The TPC has identified $100M in net efficiencies to close a significant portion of the gap, leaving a $57M deficit that must be addressed in order to balance the budget in FY2014. This gap is projected to widen by $15M in FY2015 and an additional $37M in FY2016. The steep jump in FY2016 is mostly driven by the timing of the Norris-Todd salary preservation requirement (estimated at $18M incurred in FY2016). In order to close the $57M fiscal gap in FY2014 remaining after all TPC recommended investments and efficiencies have been incorporated, the TPC recommends that the district pursue the following four actions in parallel: 1. The SCBE will vigorously pursue additional City and local sources of funds and in-kind support not in the district's control. The most significant of these funds is the City of Memphis repayment of the FY2009 maintenance of effort net payment of $55M. 2. The SCBE will seek additional funding from the State, such as implementation of alreadypassed reforms to the State BEP funding formula ("BEP 2.0") and transitional funding for consolidation (similar to what is suggested in TCA 49-2-1262). 3. The SCBE will set a $15M target for additional district efficiencies that do not increase studentteacher ratios or otherwise impact the classroom. The specific plan for achieving these efficiencies will be developed by a district-led cross-functional working committee supported by the Transition Management Office.

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4. The SCBE will request increased local funding from the County through a reallocation of funds from within the County budget and/or through implementing a tax increase As a mechanism to provide ongoing guidance on improving operations in the merged district, the TPC recommends the creation of an Operational Effectiveness Council by December of 2013.

Migration Plan: What must happen next As the planning phase of the merger comes to a close, the focus turns to implementation. The Migration Plan chapter focuses on the implementation activities that need to occur in the implementation year defined as the year between the Transition Plan approval and July 1, 2013. The migration plan identifies what must happen in order for the Transition Plan to be implemented with fidelity and the merger to be successful. This includes a timely approval of the Transition Plan by the SCBE and the State of Tennessee, so the district can begin to take action on the recommendations. Additionally, the district needs a clear transition governance model, clear goals and milestones to guide the transition process, and a community that holds the district accountable for implementing the Plan. District leadership The easiest path to a clear transition governance model would include having a Superintendent for school year 2013-14 named by the early fall of 2012. Transition management The district should aim to meet the following aspirations for the transition: Students, families and staff are ready for the first day of school in the fall of 2013 The 2012-13 school year is successful in the midst of planning for the merger Merger planning decisions are well-informed and decision-making processes are effective The district retains and attracts the best talent The new district develops its own distinct culture A management structure is in place during the pre-merger implementation year so that tough decisions for the merged district can be made The district hits its financial targets The selection of staff for the central office is fast, fair and disciplined

The district will need a Transition Office to lead and manage the merger process, as the districts continue to operate two separate school districts during the 2012-13 school year. One role of this office is coordination ensuring accountability to the Transition Plan, tracking progress and managing timelines, and raising issues that cut across multiple initiatives. In this role, the Transition Office will advise the merged SCS Superintendent on key decisions. Importantly, the Transition Office will also plan events and other means of helping the district develop a shared culture, facilitate clear and effective internal and external communications, and track adherence to the legal requirements of the merger. The Transition Office will be a group of current staff from both districts, selected by the merged SCS Superintendent. These individuals will serve dual roles during the implementation year, continuing to serve in their current management roles while spending part of their time in the Transition Office. 16

One of the most important functions of this office will be coordinating all of the initiatives that require significant progress during the implementation year. Most importantly, the district must ensure school staff is trained and ready to start the 2013-14 school year and finalize educational programs and student services offerings. The transition office will also need to manage the development of the 201314 budget, development of board and personnel policies, and IT system migration. Additionally, in order to protect investments in the classroom, the district must implement the TPC's operations recommendations: securing contracts with custodial and transportation vendors, and closing undercapacity and under-performing schools. The following high-level timeline summarizes some of the key milestones for the implementation year: Implementation year timeline:

Legal Assurances The Legal Assurances chapter describes in detail how the Transition Plan meets the nine legal requirements of the planning commission as outlined in TCA 49-2-1201.

Conclusion After more than eight months of research, discussions, and planning, the Transition Planning Commission is confident that the talent and resources in this community will enable the merged SCS to achieve the vision in this Plan. The merger presents a unique opportunity to build from the existing strengths and emerging successes of both systems, of which there are many. The merger also prompts this community to step back and ask, "Why not here?", and adopt best practices in education from around the world. Both districts employ talented leaders, who are true experts in their fields. This merger enables these leaders to join forces to build a district that improves upon both districts today. Finally, this merger presents an opportunity for community, business, philanthropic, faith, and government leaders to unite to guarantee the success of this system, for the benefit of all of Shelby County's children. 17

INTRODUCTION

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Legal Context for the Schools Merger and TPC On December 20, 2010, the Memphis City Schools Board of Education voted to surrender the school systems charter. The Board proposed that a referendum be held for residents of the city of Memphis to approve the Boards proposal. In March 2011, Memphis residents voted to transfer the administration of MCS to the Shelby County Board of Education (SCBE). The Transition Planning Commission (TPC) was created by state law. The legislation (TCA 49-2-1201 and ultimately TCA 49-2-502) lays out the Transition Planning Commission's makeup and mission to create a plan to guide the merger of the two school systems. The solution was subsequently supported by the Norris-Todd Act and court orders entered by U.S. District Judge Samuel H. Mays, Jr. 1 The Transition Planning Commission was appointed in August and September 2011 and is comprised of 18 appointed commissioners and three ex-officio members: Appointed by Chair of MCS Board of Education: Kenya Bradshaw, Reginald Green, Fred Johnson, Daniel Kiel, Barbara Prescott Appointed by Chair of SCS Board of Education: Tommy Hart, Richard Holden, Rickey Jeans, Mayor Keith McDonald, Katie Stanton Appointed by County Mayor: Jim Boyd, Louis Padgett, Christine Richards, Barbara Roseborough, John Smarrelli Appointed by the Governor: Staley Cates Appointed by the Lieutenant Governor: Larry Spiller Appointed by the House Speaker: Joyce Avery Ex officio: Mayor Mark Luttrell, Martavius Jones, David Pickler

Charge of the TPC The TPC has been charged with creating a plan to guide the merger of the Memphis City Schools with the Shelby County Schools that includes the following components based on TCA 49-2-1201 (i) and 49-2-502(b): 1. Administrative organization of the proposed consolidated system 2. Method to ensure no diminution in the level of the educational service in the schools in any of the systems involved 3. Appropriate means for the transfer of assets and liabilities of municipal and special school district systems 4. Plans for disposition of existing bonded indebtedness that shall not impair the rights of any bondholder 5. Plans for preserving the existing pension rights of all teachers and nonteaching personnel in the respective systems 6. Plans for preserving the existing tenure rights, sick leave rights and salary schedule rights of all teachers and nonteaching personnel in the respective systems 7. Appropriate plans for contributions by municipalities or special school districts to the county for the operation of a unified system of schools during the period of transition following unification, which period shall not exceed three years 8. Appropriate plans for reapportionment after each federal decennial census of districts for election of members of the school board 9. Any other matters deemed by the planning commission to be pertinent

See Board of Ed. of Shelby Co., Tenn. v. Memphis City Board of Ed., U.S.D.C. No. 11-2110. 19

The TPC formed eight subcommittees to facilitate the planning process and, ultimately, to write the transition plan.

Guiding Principles The TPC adopted ten principles to guide its work and aid in the recommendation process: The academic success and well-being of our students come first Educators and staff are our most important resource We have high expectations We are all in this together We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all We believe parent engagement is essential We must save where we can to fund what we need We value strong leadership This is our once-in-a-lifetime opportunity

The Goal of the Transition Plan In order to fulfill the legal requirements outlined by statute and court order, the TPC adopted a vision for the goal of the transition plan. This is particularly important for TCA 49-2-1201(9), which requires the Plan to include: Any other matters deemed by the planning commission to be pertinent." The TPCs goal is to create a plan for a world-class school system that: Provides an excellent education for all students in Shelby County Is led by an administrative structure that will serve the breadth of students and schools in the merged district Has a human capital model that will attract and retain strong leadership, teaching and nonteaching talent to Shelby County Identifies areas of efficiencies and opportunities to fuel greater academic investments and ensure the fiscal viability of the merged district Promotes collaboration within merged SCS and between the district and other stakeholders in our community Actively invites input from the community and uses that input to shape policies and decisions The Transition plan is designed to provide strategic guidance for the Shelby County Board of Education and merged SCS leadership to use to guide the full transition. The Plan provides guidance on all the core componentsacademics, organization, finances, and operations for merged SCS. It is not meant to replace the work of SCBE or the leadership of the superintendent during the full transition process.

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SUMMARY OF THE PROCESS

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Overview of the Transition Planning Process The 18 appointed and 3 ex-officio commissioners led the transition planning process. This group drew heavily on the expertise of the current staffs of Shelby County Schools and Memphis City Schools, input of community members, and best practices from other school districts across the country. The Transition Planning Commission also hired The Boston Consulting Group (BCG), a leading management consulting firm, to support the TPC in creating the Transition Plan. To organize its efforts, the TPC created eight subcommittees to manage the planning process and, ultimately, to write the transition plan. Each committee was chaired by one or two TPC members and included other TPC members, representatives from district staffs, and The Boston Consulting Group. Over the course of the transition planning process, the TPC engaged approximately 150 staff members across all departments and levels of seniority from both districts. The committees and their primary charges are: Executive: Responsible for steering the overall direction and timing of the planning process as well as addressing issues that do not fall into the ambit of a specific committee. This committee did not include district staff. Administrative Structure and Governance: Responsible for providing recommendations with regard to the high-level administrative structure for the resulting district. Assessment: Responsible for compiling a baseline across student demographics, needs, performance, and distribution to inform TPC recommendations. Communications and Community Engagement: Responsible for creating and executing a comprehensive communication and engagement plan for key stakeholders. Educational Services: Responsible for recommending the highest priorities in support of student achievement; responsible for recommending specific programs, strategies, and actions to support excellence in high-priority areas. Finance: Responsible for validating the overall financial viability of the Transition Plan and providing a consolidated view of current and FY 2014 financials. HR/Personnel: Responsible for developing a high-level staffing plan that addresses the legal requirements in the Norris-Todd Act and estimating staffing levels for merged SCS. Logistics: Responsible for providing recommendations on the go-forward models and efficiencies/investment needs for operational functions. Committees met weekly or bi-weekly and made reports to the broader TPC regularly. Broadly, each committee was responsible for analyzing the current state of operations, understanding best practices, making recommendations for the go-forward model for merged SCS, and estimating any financial impact. Recommendations were first approved at the committee-level before they were presented and ultimately voted upon by the full TPC. The TPC began meeting in October 2011, culminating with the approval of a draft of the entire plan by the TPC on June 14, 2012. The Plan was presented to the Tennessee State Board of Education Commissioner for review and endorsement and the SCBE for approval. The district staff, led by a Transition Management Office, will be responsible for implementing the Plan in the year leading up to the school merger in the fall of 2013. See more detail in the Migration Plan chapter (page 188).

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Summary of Communications Committee Process and Outputs The Communications and Community Engagement Committee's efforts were based on a collaboration of the TPC, staff members from both MCS and SCS, and external partners including BCG, Red Deluxe, and Yacoubian Research. The goal of the Communications Committee was to engage the Shelby County community in gathering input into the planning process and presenting the finished plan. The committee targeted its engagement at five key stakeholder groups: Education Community (e.g. SCBE, district leaders, principals, teachers) Key Leaders and Influencers (e.g. Elected officials, business and non-profit leaders) Community Groups (e.g. Non-profit, business, faith-based) Broader Community (e.g. parents, students) Press To engage the above groups, the Communications Committee organized efforts into three phases: Phase 1: Listen and Learn: Focused on in-bound communication and engaging the community through 14 community-wide listening sessions and over 35 speaking engagements. This was the focus of the TPC in January and February 2012. Phase 2: Engage and Gain Buy-in: Focused on two-way dialogue between the TPC and the community. The primary method of engaging the community in this phase was through targeted town halls for key stakeholder groups including instructional staff, non-instructional staff, and parent leadership in schools. This was the focus of the TPC in March and April 2012. Phase 3: Inform (Completed by August 2012): Focuses on outbound communications to broadcast key components of the final plan as they are recommended by the TPC. Primary methods of engagement in this phase include the internet (through the TPC website and social media), district email distribution lists, print (e.g. Op-Ed articles in newspapers), meetings with editorial boards at local newspapers, and television/radio. This has been the focus of the TPC from May 2012 onward. Through the committee efforts, the TPC has reached 13,650 voices through TPC events (e.g. listening tours), speaking engagements and town halls. In addition, the TPC has cooperated extensively with the print and television media, thereby greatly increasing the total number of residents reached. Community Voices Reached by the TPC
Form of engagement Voices reached

14 listening sessions 7 town halls 43 speaking engagements Opinion poll: email surveys Opinion poll: phone surveys Unique visits to Our Voices website Comments on OpEd articles Total

2,900 1,170 1,910 2,200 1,200 4,235 25 13,650

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The input gathered directly informed the transition planning process. The committee provided targeted input to other committees prior to the formation of recommendations and provided summary feedback to the broader TPC that reflected the information gathered during each phase of the Communications Committee's work. The TPC also shared its findings with the Shelby County Board of Education. Phase 1: Listen and Learn Listening sessions were held county-wide and reached nearly 2,900 voices. TPC members also completed more than 37 speaking engagements, reaching over 1,700 voices. More important than the number of attendees, the speaking engagements reached a very broad set of stakeholder groups which included school and parent organizations, students, teachers, the business community, the faith-based community, and universities. Map of Listening Sessions Completed 14 sessions, reaching nearly 2,900 voices

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List of Speaking Engagements

Each listening session was led by two or three TPC members (though additional members and district staff were often in attendance). The purpose of the sessions was to briefly introduce the charge of the TPC and then to solicit questions and comments from attendees regarding their aspirations, hopes, and concerns for merged SCS. All comments were recorded and presented to the broader TPC in both summary and detailed form as an input into the overall planning process. Examples of summarized comments from the listening sessions and speaking engagements include the following: Aspirations and Hopes Many comments, such as the following, focused on enhancing Educational Services for merged SCS: Make every school in every community a great school Offer services that meet needs of all students, including special education and ESL Invest in early childhood Strengthen core subjects including math and science Keep and expand optional schools and programs for gifted students Offer enrichment programs outside of traditional focus areas Keep music, art, and vocational programs Other comments focused on expanding community involvement: Promote parent involvement Increase teacher morale and seek advice from staff as new programs and policies are implemented Involve the business community and community groups as part of the planning process Finally, comments focused on enhancing the personnel, operational and fiscal capabilities for merged SCS: Recruit and retain proficient teachers, caring staff, and top leaders Manage the costs of the merger Ensure students are safe from violence and bullying in their schools Provide world class nutritional services for our students Adequately maintain the upkeep of district facilities 25

Concerns Concerns focused on Educational Services: Academic quality and rigor will decrease as a result of the merger Special needs programs may be reduced in merged SCS Academic resources will not be equitably distributed across schools in merged SCS Additional concerns focused on the Administration Structure of the district: Local control to serve local needs will be lost Concern over lack of stability for students Concern over the efficacy of large districts Finally, the community expressed concerns focused on HR, Operations, and Finance: Concern over lack of stability for teachers and staff Financial resources will not be used responsibly The TPC also held a special listening session to engage the students of both MCS and SCS. The session was held at Colonial Middle School on February 20, 2012. The feedback from this session reflected many of the same themes as the broader comments summarized above, but additional themes included: Establishing high academic standards for all students Increasing the individual attention that students receive from teachers Integrating technology into the classroom more frequently Offering broader diversity of programmatic options Prioritizing school safety and nutrition from an operational perspective Engaging students throughout the planning process

Phase 2: Engage and Gain Buy-In Each town hall session in Phase 2 was led by at least two TPC members (though other members and district staff were often in attendance). The purpose of the sessions was to present specific TPC recommendations from the Educational Services and Administrative Structure and Governance committees and get targeted feedback from the identified group. Comments from the meeting often extended past these topic areas and all comments were recorded and presented to the broader TPC in both summary and detailed form as an input into the overall planning process. Examples of summarized comments from the town halls include: Instructional Staff Town Halls Support for specific priorities identified by the Education Services Committee (e.g. Pre-K, high expectations, parental involvement, increased technology, targeted interventions) Questions about the different school types identified in the Administrative Structure Committee (e.g. Charter Schools, Achievement School District) Questions about staffing policy and human resources recommendation (e.g. teacher staffing policies, comments about specific positions) Concerns and questions about the teacher evaluation program Desire for strong professional development for all staff positions Non-Instructional Staff Town Halls Questions and comments about many of the recommendations addressed in the Logistic Committee recommendations (e.g. transportation, nutrition services, custodial) Support for the continuation of employee unions Questions about the preservation of salaries and benefits 26

Questions about staffing policy and employee transfers in merged SCS

Parent Leadership Town Halls Strong support for increased parental engagement as part of transition planning process and during the normal operation of the merged district Support for specific priorities identified by the Education Services Committee (e.g. tailored interventions, importance of effective teachers and leaders Pre-K) Desire for high expectations for students and increased transparency around academic standards Questions about student transfers in the merged district Desire for tailored interventions to support student needs Special-education Town Hall Strong support for interdisciplinary nature of gifted program and pull-out services that allow for more tailored instruction Concern over gifted class sizes being too large; suggestion for more cross-training of gifted and special education teachers to expand reach and effectiveness Desire for teachers to receive more help with paperwork so they can focus on teaching Desire to see earlier identification and support with interventions Desire to see more parent engagement with IEPs

Phase 3: Inform This phase focuses on outbound communications to broadcast key components of the final plan as they are recommended by the TPC. The TPC created a website (http://www.ourvoiceourschools.org) as a means to provide background information on the TPC and the transition planning process, to broadcast a calendar of upcoming events, and to report out recommendations and other news. The website also provided community members with the opportunity to ask the TPC questions and make additional comments on the planning process. Comments and questions submitted through the website were communicated to TPC members in long-form to inform the on-going recommendation process. The TPC reached more than 650 additional community voices during this phase. The TPC held eight events in June and July of 2012, including four regional town halls, a community-wide presentation, a faith-based leaders meeting, a breakfast for community leaders, and a presentation to PeopleFirst. Over the course of the planning process, the members of the TPC generated a number of Frequently Asked Questions (FAQs) received from community members. These questions were answered and compiled in a document that was distributed at TPC events and displayed on the TPC website. The list was updated as new questions were compiled and answered. Questions addressed in the FAQ document include but are not limited to: Within the merged system, will my child be able to remain in his/her current school? As a teacher, will I get to stay in my school? Will my salary and benefits change? Will the new teacher evaluation initiatives carry over in the Transition Plan? Will busing (for desegregation purposes) be part of the Transition Plan? What is the TPC's position on the potential for separate municipal districts? Does research support large districts?

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EDUCATION PLAN: Educational Services

The Education Plan for the district includes two sections: first, the educational services that the district will provide, and second, the administrative structure that will deliver these services. This chapter starts with the educational services recommendations.

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Introduction This chapter provides recommendations for educational services in merged SCS across 10 priority areas. These recommendations and priorities were identified as critical to making Shelby County Schools a world-class school system. Across the 10 priority areas, there are a total of 78 recommendations, most with sub-recommendations. Within this list, the most transformative recommendations representing the greatest departure from the current state include: Expanding Pre-Kindergarten to provide an additional 2,500 slots across the county to ensure universal voluntary access for all four-year-olds (recommendations 1a1c) Introducing measures of success along eight key benchmarks for college readiness, and setting goals and tracking progress in these areas: 8 Key Milestones:
Outcome 1. Kindergarten readiness 2. 3rd Grade reading proficiency 3. 7th Grade math proficiency 4. 9th Grade on track 5. ACT college ready / ACT minimum score of 21 6. Graduation rate 7. Post-secondary enrollment 8. Post-secondary completion college college 2010-11 actual 47% 34% 27% Unknown 10% / 24% 78% 40% (MCS data only) 16% (MCS data only) 2016-17 target TBD%* 60% 50% TBD%* 25% / 60% 90% 60% TBD%*

*Items marked TBD are areas in which the TPC did not have current state data, and so the TPC was not able to identify an appropriate target. In the Education Plan chapter, the TPC recommends the district gather the baseline data for these items, and set ambitious goals. Doubling the number of students participating in Advanced Placement courses and dual enrollment programs Expanding access and ensuring equity through a consistent, district-wide school transfer policy on a space-available basis Supporting the creation of a community collaborative that includes community organizations, government leaders, the faith community, and the business community. The goal of this collaborative will be to focus the community on the eight benchmarks listed above and to align resources to support the well-being and academic success of all Shelby County's children Reducing the number of suspensions and expulsions district-wide by focusing student behavior investments on preventative, positive behavior education and programming Using evaluations for teachers and principals that clearly define effective teaching and effective instructional leadership and that utilize multiple measures, both qualitative and quantitative, to assess performance Creating integrated plans for professional development for teachers and instructional leaders that are linked to needs identified by individual evaluations Making all hiring by mutual consent whereby principals can offer a teaching position to the best-fit applicant from any pool of teachers at any point during the year Dismissing teachers and instructional leaders who cannot or will not improve Redesigning teacher and instructional leader compensation to attract and retain teachers for high priority schools and hard to staff subjects, as well as to reward sustained effectiveness Creating reciprocal accountability at all levels of the district by making sure that each level of the organization holds the others accountable for high performance 29

Forming a Student Congress to identify and elevate student priorities with district staff

What follows is a more detailed description of the current state, best practice research, measures of success, and specific recommendations within each of the 10 priority areas.

Context The Education Plan for merged SCS includes the priorities and recommendations necessary for SCS to be a world-class educational system, where every student graduates ready for success in college and career. To develop the priority areas, the TPC relied on an assessment of the current state including student demographics, student needs, and student academic performance. Data from this report is included in "Summary of current state" section of each priority area. Additionally, the complete Assessment Report is included in Appendix A. In developing recommendations, the TPC considered its guiding principles. In each priority area, the Plan describes the guiding principles that are most relevant to the recommendations in that area. The TPC also considered additional aspirations that establish the overarching framework and philosophy for the educational services of merged SCS. These aspirations include: Quality Equity Efficiency Accessibility County-wide collaboration Data-driven decision-making Decision-making as close to the student as possible To focus its work, the TPC identified 10 educational priorities, depicted on the next exhibit: 1. Every child ready for school 2. Every student ready for success in college and career 3. Rigorous implementation of standards 4. Quality and accessible educational choices 5. Engaged parents and families 6. Supportive community members and partners 7. Tailored interventions and support 8. Effective teachers 9. Effective instructional leaders 10. Culture and climate of high expectations

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Educational Priorities

In each priority area, the TPC recommends measures of success for merged SCS to use in evaluating its success across these 10 areas. In some cases, the TPC had enough information to suggest specific numerical targets for the measure of success. In other areas the TPC did not have current state data, and so left the target as TBDwith the proposal that the district leadership should set specific numerical targets in partnership with the community. All measures of success will be tracked and reported regularly to the community. The majority of the recommendations are cost-neutral. In the places where there is a financial cost, that cost has been detailed in this chapter, as well as in the Financial Model chapter of the Plan. The Committee developed these priorities and recommendations with the understanding that Shelby County Schools will not be structured like a traditional school district in 201314. With the growth of the Achievement School District (ASD), the Innovation Zone, and charter schools, the district will be a mix of school operators and types. The TPC recognizes that the district does not, and should not, have the authority to mandate some of the recommendations below in charter schools and the ASD. However, to ensure equity and to enhance the quality of education offered by all schools, the TPC recommends that the ASD and charter schools consider these recommended strategies and measures of success, and that the district uses these in the charter school application process. The TPC strongly recommends collaboration among all school operators to ensure that all students are successful. This includes district-operated schools (both in regions and in the Office of Innovation), charter schools, and the ASD. The TPC also recognizes that the district is only one contributor to student success. Parents, community members, and community partners are critical as well. Several times in these recommendations the TPC charges a community collaborative with owning the tracking and implementation of several recommendations. A community collaborative is in the process of formation, and will include leaders of community organizations, government, public institutions, the faith community, and business leaders. The TPC recognizes that the items specifically identified in these recommendations do not represent the full scope of work for a school district and that, for many of these items, greater specificity will be required during implementation to accomplish the Plans goals. As part of the work of the Educational Services Committee, the staffs of the existing districts have developed detailed documentation of the 31

current state and initial recommendations for merged SCS. This work has contributed significantly to the TPCs recommendations below. In addition, the TPC recommends: 1. Utilizing the recommendations presented by the staffs on specific educational topics (reproduced in Appendix C) as a starting point for making more detailed decisions through the implementation process in a way that is consistent with the educational priorities and recommendations outlined within this Plan.

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Priority 1: Every child ready for school The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity Summary of current state MCS and SCS operated a combined 219 Pre-Kindergarten classrooms for 4-year-olds in the 201112 school year, serving about 4,380 students (out of 4,975 who applied). District-sponsored pre-K programs are full-day instructional models (7.5 hours) delivered by certified, college-educated preschool teachers who are supported by a full-time assistant. In addition to the district-run program, Shelby County Head Start and private care centers provide Pre-K 4 programs to approximately 4,000 students. MCS reports the Kindergarten readiness scores for students disaggregated by where students attended Pre-K 4, as reported by parents. This research has consistently shown that students who participate in district-run programs are better prepared for Kindergarten than other programs. However, students who participate in any formal Pre-K 4 program (including Head Start and private centers) are better prepared for Kindergarten than those who do not participate in any program at all. MCS Academic Achievement, by Pre-School Experience, 2010

Findings from benchmarks and other districts Many national studies have shown the long-term benefits of Pre-K education. The following three studies are commonly cited: 2
2

Galinsky, Ellen. The Economic Benefits of High-Quality Early Childhood Programs: What Makes the Difference? Committee for Economic Development, February 2006.

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Summary of Academic Research on Pre-Kindergarten

High/Scope Preschool project Long-term Outcomes Tested as special education Arrested by age 19 High school completion College enrollment Public benefit for each $1 invested Part-day center-based preschool for 2 years + weekly home visits 15% v. 34% 31% v. 50% 71% v. 54% 33% v. 28% $7.16 Chicago Child-Parent Centers Part-day school-based preschool for 2 years + parent outreach 23% v. 38% 17% v. 25% 66% v. 54% 24% v. 18% $6.87

Abecedarian Project Full-day program from 6 weeks age 5 12% v. 48% n/a 70% v. 67% 36% v. 12% $2.69

Measures of success 100% of four-year-olds have access to a high-quality preschool experience (including but not limited to district-run Pre-K) TBD% of Kindergarteners meet the Kindergarten readiness indicators Recommendations 2. Shelby County as a community ensures universal access to Pre-Kindergarten for all four-yearolds in Shelby County, provided by a mix of district-run classrooms, Head Start, and private care centers a. The district leads the way in ensuring universal access, by adding 2,500 spaces (125 classrooms) to its Pre-K program over the next five years. This represents enough slots so that all children (including students with special needs and students from all economic backgrounds) not currently participating in a formal Pre-K 4 program have the opportunity to participate. b. In this expansion, the district aims to expand Pre-K 4 classrooms in partnership with organizations that can provide wrap-around support services c. The long-term run-rate cost of this initiative to the district is $15Mwhich the TPC recommends phasing in over five years. This would add 500 spots (or 25 classrooms) per year, adding an incremental $3M to the budget each year, starting in FY14. See the summary of all investments in the Financial Model chapter (page 172162). 3. In addition to expanding access to Pre-Kindergarten for four-year-olds, the TPC recommends that the community of Pre-K 4 providersincluding the district, Head Start, and private care centersfocus on quality achieved through: a. Use of a single research-based Kindergarten readiness indicator to ensure accountability across all programs, and to establish a baseline from which to set district-wide goals for improvement 34

b. Partnership among the district, Head Start, and private care centers to ensure all Pre-K 4 programs in Shelby County are high quality, using appropriate research-based interventions and preparing students for success in Kindergarten c. Considering the expansion of effective teaching work in grades K12 to district-run Pre-K 4, supporting the recruitment, staffing, evaluation, and professional development of Pre-K 4 teachers d. Ensuring the district has interventions that address the needs of students who come to Kindergarten without the benefit of Pre-K 4 educational services 4. The TPC also recognizes the critical importance of child development during the ages 04. The TPC recommends that the district support community partners, governmental organizations, health care providers, and service providers (e.g. public libraries, Books from Birth, Urban Child Institute, Tennessee's Early Intervention Services, Support and Training for Exceptional Parents) that provide services and resources to families with children in this age range. Specifically: a. Serve as an information source about 04 year-old programs and services to parents and families b. Collaborate with the Tennessee Early Childhood Training Alliance to co-develop course trainings and professional development for certificated personnel c. Build a data system that enables integration of data from both the Tennessee Department of Education and the Tennessee Department of Human Services so that data and information relevant to students early development is captured and used to provide better support and interventions d. Continue to assess students health at the point they enter the school district for the first time 5. Because of the critical importance of partnership among the district, community organizations, government, public institutions, the faith community, and business leaders in this effort, the TPC recommends that a collaborative of these organizations serves as the communitys advocate for Shelby Countys early childhood initiative. More detail on this collaborative can be found in the Priority 6: Supportive Community Members and Partners section of this chapter (recommendation 26).

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Priority 2: Every student ready for success in college and career The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity Summary of current state Across the state, 44% of 9th graders enroll in college after high school graduation, and 19% eventually earn a college degree.3 Tennessees measure of college readiness, the ACT College Readiness Benchmark, shows that only 15% of all TN high school students are meeting college readiness standards in English, Mathematics, Reading, and Science. 4 In the 201011 school year, 10% of MCS and SCS 11th grade students met the ACT College Readiness Benchmark (5% in MCS and 20% in SCS). Only MCS tracks college attainment, and according to data from the National Student Clearinghouse, 40% of MCS 2010 graduates enrolled in college immediately following graduation, including four-year and two-year programs. As of 2010, 16% of MCS 2004 graduates had earned a college degree14% from a four-year program and 2% from a two-year program. 5 Findings from benchmarks and other districts In other districts and community support organizations, setting achievement targets from early school years through high school and beyond is a common first step for increasing academic success: Montgomery County, Maryland has established 7 Keys to College Readiness which include scoring Advanced in reading on the Maryland School Assessment in 3rd through 8th grade, completing Algebra I by 8th grade with a C or higher, and scoring 1650 on the SAT or 24 on the ACT Strive Together, a community organization that advocates for children from cradle to career, has set their success metrics as: Kindergarten readiness, 4th grade reading proficiency, 8th grade math proficiency, high school graduation, and ACT score Additionally, college matriculation and completion have become the targets towards which many school organizations are building their vision and curriculum: Achieve, a national education reform organization, recommends a set of strategies for improving college and career readiness which include requiring students to take a college- and career-ready curriculum to earn a high school diploma and building college- and career-ready measures into high school assessment system YES College Prep in Houston, Texas requires students to take a college prep course in which each student applies to at least three four-year colleges during the first semester; and staffs counselors at a 1:30 ratio to enable greater support for college exploration, research, and applications Measures of success Success in college and career is not something that happens by accident, but rather can be predicted by the degree to which students reach certain milestones. Accordingly, the TPC recommends setting goals around eight key indicators:

Tennessee State Profile. Achieve, Inc. 2011 ACT National and State Scores. www.act.org. 3 2010 student tracker report for Memphis City Schools. National Student Clearinghouse.
3 4

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Aligned Set of Milestones

The districts first step is to set specific numerical targets in the measures of success that have TBD currently listed as the target. This will require gathering baseline data, evaluating other districts around the country, and setting a goal in partnership with the community that is ambitious and feasible. Additionally, the TPC recommends that the district set specific recommendations for reducing the achievement gap in each of these areas. Recommendations 6. The TPC recommends empowering a community collaborative (see more detail in recommendation 26) to own the tracking of measures of success outlined above and that: a. District leaders partner with this community collaborative to build broad stakeholder ownership of these goals b. The district and community collaborative partner in the annual review and communication of progress regarding these goals 7. Additionally, the district should build specific support structures to ensure that students are fully prepared for college and career success, including: a. Providing the counselor-to-student ratio to enable counselors to spend more time on college preparation, planning, applications, and financial aid. This recommendation increases the number of counselors in MCS by approximately 25%, with an estimated cost of about $4M. See the summary of all investments in the Financial Model chapter (page 172). b. Investing in opportunities for students to participate in ACT and SAT preparation courses and to take the test(s) multiple times. The cost for this initiative is estimated at $650,000 which includes funding for test-preparation courses at the school site and district coverage of testing fees for students wishing to retest. See the summary of all investments in the Financial Model chapter (page 172). c. Ensuring counseling services align with national standards for academics, social/emotional development, and career domains 37

8. Career and Technical Education (CTE) should be made more relevant to today's job demands. The TPC recommends that the district: a. Prioritize current and projected job clusters and courses that build knowledge and skills in the most in-demand, well-paid jobs in the local community b. Increase the number of courses that qualify students for professional certification before they graduate from high school c. Create a business advisory board, including local chambers of commerce, to advise the district in course development, no later than the end of 2013 d. Forge partnerships that provide more opportunities for student apprenticeships 9. As STEM (science, technology, engineering, and math) skills continue to become more important for success in college and careers, the TPC recommends that the district build a STEM thread through the curriculum: a. Pursuing a rigorous set of math and science course offerings throughout the K12 continuum b. Ensuring all schools build STEM experiences, activities, and an integrated crossdepartmental approach c. Investing in professional development for teachers in STEM areas, raising awareness of the need for students to be proficient in reading and math in order to be successful in challenging STEM courses at the high school and college level 10. In order to know whether the districts efforts are leading to success for students, the TPC recommends that the district expand its longitudinal data to capture data on student postsecondary enrollment, remedial coursework in college, college graduation (within four and six years), technical certification, and workforce participation, as these pieces of information are available 11. Because the fine arts provide students with multiple avenues and opportunities for attaining success in college and career, the TPC recommends ensuring all children have access to a full complement of sequential fine arts instruction across arts disciplines and throughout their academic career by: a. Ensuring arts offering and instructional time is prioritized and protected b. Supporting collaboration with professional artists, arts agencies, and organizations to expand arts exposure throughout the district c. Utilizing arts integration as a fundamental aspect of K12 curricular programming and professional development offerings 12. The TPC strongly values the importance of service learning and experiential learning. In order to ensure all students experience the benefits of these activities, the TPC recommends the district institute a service learning requirement as part of its graduation requirements

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Priority 3: Rigorous implementation of standards The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity Summary of current state In July 2010, the Tennessee State Board of Education adopted the Common Core State Standards (CCSS) in mathematics and English language arts. These standards are more rigorous than current standards and reflect the skills students need to succeed in college and the workplace. Despite national publicity, many parents and teachers still do not know about CCSSs adoption in 46 states. In a 2011 national poll, 60% of voters and 13% of teachers knew nothing about the CCSS, and of those aware, 33% of voters and 15% of teachers had an unfavorable opinion of the standards. Tennessee has adopted a phased transition plan: 201112: Grades K2, math and English language arts 201213: Grades 38, partial math 201314: Grades 312, math and English language arts 201415: New, online accountability assessments, four times per year for grades 38 Findings from benchmarks and other districts A 2011 survey of states that had adopted CCSS identified that most states: Agree that CCSS are more rigorous than previous standards and will improve students English language arts and math skills Have transition plans in place for aligning curriculum, assessment, and teacher policies with the standards Expect full implementation by 201415 Identify a lack of resources to implement the CCSS as a major challenge Anticipate technology challenges in implementing online assessments Measures of success By the start of the 201415 school year: 100% of teachers and principals surveyed agree that they are prepared to successfully teach CCSS, and are supported by an aligned set of curriculum, technology, and benchmark assessments 100% of students and parents are aware of CCSS and how they are different from historical expectations Recommendations 13. In order to ensure successful implementation of CCSS, professional development is critical. To ensure teachers and instructional staff have the professional development they need, the TPC recommends that the district take a two-pronged approach: a. Make CCSS a top priority within the district's professional development plan to support teachers and instructional staff in developing the knowledge and skills to successfully teach the new standards by utilizing a train-the-trainer model. This model costs an estimated $500,000 over the first two years of CCSS implementation, to be paid as stipends for summer teacher training. See the summary of all investments in the Financial Model chapter (page 172). 39

b. Charge principals with the responsibility for CCSS professional development for the teachers in their buildings, and ensure teachers are using strategies that are effective and culturally relevant for the students in their schools 14. The districts instructional plan should include a comprehensive assessment strategy to assess the needs of each student, including: a. Developing consistent district-wide benchmark assessments (23 times/year) that are aligned with CCSS to track progress throughout the year b. Ensuring that the district has the technology capacity required to support the state assessments move online in 201415 15. The district will explore and review extended school day and extended school year as an option to support students 16. The district will develop a community communications strategy, coordinated among the district, the community collaborative, and parent organizations (e.g. PTA, PTSA, PTO), for educating and investing parents in the benefit of higher standards and what higher standards mean for their children. See more in Priority 5: Engaged Parents and Families (page 44).

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Priority 4: Quality and accessible educational choices The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity Summary of current state Both districts provide opportunities for students to choose to attend a school other than their zoned school when the student has a particular educational interest: 6 In SCS, students are granted special permission for academic transfers, and two high schools operate selective International Baccalaureate programs In MCS, there are 44 special programs to which students can apply: - Two fully optional schools (with no attendance zones) - 29 School-within-a-School optional programs that operate within the same building as a neighborhood school - 13 neighborhood schools that offer optional, themed programs, but prioritize students from their attendance zone before opening to transfers In SCS, 5% of students take advantage of the academic transfer opportunity, and in MCS, 13% of students participate in optional programs (this includes 9% of all students who are zoned to an optional program and qualify and 4% of students who apply by transfer into an optional program). MCS currently has an 80/20 enrollment policy for oversubscribed optional programs, which means that if a program is oversubscribed, 20% of the seats are filled through a random lottery, and 80% of seats are first-come, first-serve. Both districts also provide a variety of opportunities within high schools: 7 45% of high school students are enrolled in an honors classes 9% of high school students are enrolled in one or more Advanced Placement (AP) class 2% of high school students participate in dual enrollment Less than 1% of high school students are enrolled in an International Baccalaureate (IB) course Findings from benchmarks and other districts A study conducted in Texas involving 200,000 college students found that participation in AP courses was highly predictive of college success when controlling for SAT/ACT scores, income level, ethnicity, and gender. 8 51% of students who took four or more AP courses graduated from college within four years, whereas only 30% of students who took one AP class graduated within four years Students who took an AP class and took the AP exam, regardless of their score, performed better in college than those who completed the course but did not participate in the exam Measures of success 100% of students have access to a high-quality school, recognizing that all schools may not be high-quality at the start of the merger, but ensuring all students have access to transfer into a higher-quality school than their zoned school if they prefer
Data provided by district staff or drawn from presentation by Office of Optional Schools and Advanced Academics (MCS), March 2012. 7 Data from 201011 school year 8 Hargrove, L., D. Godin, B. Dodd. College Outcomes Comparisons by AP and Non-AP High School Experiences. College Board, research report 2008-03.
6

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Unique options (e.g. advanced academics, STEM, world language programs, arts offerings) are equitably distributed across the district, and the process for enrolling in those options is clear and fair

Recommendations 17. The TPC recommends that the district create, in partnership with teachers, principals, parents, students, and community partners, a common definition of high-quality school referenced in the measures of success above 18. The TPC recognizes and values the importance of community schools and believes that the ultimate goal should be for each school in the district to offer a variety of rigorous, collegepreparatory courses. However, many schools do not currently meet this bar. In order to achieve this goal, the TPC recommends that the district: a. Establish a rigorous set of core courses to be offered across all schools at a given grade level (including math, reading, science, social sciences, art, music, physical education) b. Double the number of students participating in AP courses over the next five years, double the number of students participating in dual enrollment courses at the campuses of institutions of higher education over the next five years, and increase IB and/or dual credit offerings in high school. Ensure every student in the district is aware of and has the opportunity to participate in any course in the district, using virtual or distance learning where needed. The cost associated with the dramatic increase in AP participation is estimated at $750,000 in the first year, and an additional $750,000 each year for the following four years. This estimate includes the cost of additional teachers given smaller class sizes and teacher training. The cost of the expansion of dual enrollment courses will be supported by the partnering institutions of higher education and grant funding (e.g. Hope Scholarship), at no incremental cost to the district. See the summary of all investments in the Financial Model chapter (page 172). c. Build capabilities for virtual learning throughout the district to expand access to advanced and unique courses for all students d. Create a centralized listing of all course offerings, by school, so that all students will be informed about all courses offered in the district 19. In addition to high-quality community schools, the TPC recognizes and values the importance of choice for students and families who desire something unique or different than what their neighborhood school offers. To that end, the TPC recommends that the district: a. Provide unique offerings throughout the district that are available and accessible to all students who want to pursue particular interests in the arts, world languages, debate, and vocational areas. Grow these programs over time based on demand and quality b. Maintain and continue to improve schools with a particular emphasisincluding Optional Programs, IB programs, and other specialized programs c. Build STEM programs and experiences throughout the K12 curriculum, as well as building platform/hub STEM schools 20. In order to manage the variety of school types and choice options, the district and all charter schools in Shelby County need a clear and fair application, enrollment, and transfer process for the 201314 school year. The TPC recommends that the district: a. Create a centralized application, enrollment, and transfer system, with a randomized lottery to ensure fairness when demand exceeds capacity. The lottery, while not a replacement for the ultimate goal of growing the number of high-quality school options for all students, creates equal opportunities for all students who are interested in a program or school and replaces the current first-come, first-served policy. See more detail in the Education Plan: Administrative Organization chapter (recommendation 102)

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b. Consider both academic performance and the equitable availability of high quality educational options in any future decisions to create, expand, and/or close schools or programs 21. The TPC recognizes the importance of preserving other programs within the district where TPC has not made specific recommendations about the future state. In the areas of athletics, fine arts education, world languages, extended learning opportunities (including driver's education and JROTC), and other educational choices currently offered by the district, the TPC recommends that the district: a. Resolve differences in the way the two districts approach their programs in a way that maintains critical services and is cost-neutral b. Follow the timeline and process detailed in the Migration Plan chapter of the Transition Plan (begins on page 188) c. Builds off of the recommendations made by staff, included in Appendix C

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Priority 5: Engaged parents and families The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We believe parent engagement is essential Summary of current state MCS and SCS both have structures in place to support parent and family 9 engagement, but each differs in its approach. All schools at MCS have a parent organization, including a mixture of Parent Teacher Associations (PTAs), Parent Teacher Student Associations (PTSAs), Parent Teacher Organizations (PTOs), and other formal parent organizations. Each school also has a site-based decision-making council made up of parents, community members, and teachers, who focus on advising the principal on the expenditure of the Title I budget. Additionally, MCS offers several regional and district-wide programs for parent engagement, and has the central office Parent and Community Engagement (PACE) team dedicated to this effort. These programs include regional and district-wide parent assemblies which bring together one parent representative from each school. In SCS, all schools have a PTA as a matter of policy. Leaders of each PTA meet with the Superintendent twice per year. At a town hall for MCS and SCS parents, parents shared the following views with the TPC: Parent engagement is critical, and even more avenues for dialogue with teachers and administration beyond the PTA are needed Effective school leaders, based on individual skill and school support structure, are essential Parents are looking for good academic and support resources, such as tailored achievement and behavioral interventions Findings from benchmarks and other districts Parent engagement has been broadly shown to have a positive impact on student achievement and school improvement. Studies from the National Network of Partnership Schools have found that: Parent engagement is positively correlated with grades, test scores, attendance, and behavior Parent engagement has the greatest positive impact for low-income students Involvement of parents is one of five key factors in turning around a struggling school The National Parent Teacher Association has identified six best-practice standards to help schools, districts, and parents form successful parent engagement policies and structures: Welcome all families into the school community Communicate effectively Collaborate for student success Advocate and speak out for all children Share decision making Collaborate with the community Measures of success 100% of schools have a formal parent organization (e.g. PTA, PTSA, PTO)

The TPC intends the term parents and families to apply broadly to include parents, grandparents, legal guardians, and other family members

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TBD% of parents surveyed each year indicate that they are welcomed at their childs school and know how to navigate the schools resources and decision-making processes (specific survey questions to be determined)

Recommendations 22. The TPC believes that the district and all school leaders and teachers should: a. Approach parent engagement proactively by welcoming parents into the school system and encouraging early and frequent communication between parents and teachers, principals and district leaders. b. Build a culture that reinforces school leaders and parents as partners, not adversaries, and also ensures that the district focuses on addressing underlying issues raised by parents, as opposed to focusing on managing parent complaints. 23. In order to achieve this aspiration, parent engagement is best focused at the school level. The TPC recommends that principals, in partnership with the district: a. Ensure each school has a formal parent organization (e.g. PTA, PTSA, PTO) that is visible to all parents of children attending the school, has a voice in school decisions, has an elected representative on the district-wide parent assembly, and collaborates with parent organizations at other schools. b. Utilize the school-based parent organization in Title I schools to inform decisions related to site-based Title I spending, and include teachers and community members in the decisionmaking process. c. Are held accountable for their effectiveness in communicating with and engaging parents, and are evaluated on the effectiveness of parental engagement at their school. 24. The districts senior leadership and central office also have an important role to play in parent engagement by: a. Engaging parents authentically in decision making through a district-wide parent assembly which draws one member from each school and meets with the Superintendent at least twice per year to offer input on district policies and practices. This engagement is also achieved through the Parent and Community Liaison position staffed in each region. See the Education Plan: Administrative Organization, chapter (recommendation 92) for more detail. b. Developing meaningful professional development for principals and teachers on strategies and approaches for improving parent engagement. c. Ensuring district communication processes and IT systems (e.g. district website, calendar, and parent portal) communicate needed information to parents in a clear, accessible, and timely fashion. 25. The TPC recommends that the districts community engagement office partner with colleges, universities, other adult education providers, and community organizations to develop opportunities for parent education concerning how parents may best support their childs academic success.

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Priority 6: Supportive community members and partners The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations This is our once-in-a-lifetime opportunity Summary of current state The TPC engaged more than 50 leaders from the community in its efforts to understand the current state of community engagement with the school district. While community leaders expressed that there is currently a large amount of community engagement, their general consensus was that such engagement is fragmented. In interviews with community organization leaders, several opportunities were identified for the school district and community organizations to improve their ability to partner in support of children. The community leaders expressed the following: It would be powerful for the community and school district to set goals together There is potential for community organizations to better serve more students if those organizations have a clearer point of contact in the district who can ease coordination and direct communication Organizations see an opportunity to expand offerings that currently impact a relatively small number of students, and there is room to grow school-site partnerships more broadly throughout district Because community organizations are uniquely positioned to offer services in certain areas, the school district does not have to do everything. Having maximum impact, though, requires coordination and frequent communication with the district regarding - Extended learning time (e.g. after school tutoring) - Communication with parents - Early childhood support - Wrap-around services (e.g. health care) Findings from benchmarks and other districts Current partnerships within the district, as well as strong community partnerships outside the district, inform best practices for community engagement and collaboration: The city of Cincinnati partners with Strive Together, an organization focused on supporting children from birth to career, to bring together leaders from education, business, nonprofit, community, civic, and philanthropic sectors in a coalition to mobilize resources for childrens individual needs. Knoxville Great Schools Partnership serves as a think tank, catalyst, incubator, and start-up funder with the mission of making Knox County Schools globally competitive. The board is a cross-cut of education and business leaders, and the executive director meets regularly with the superintendent. Measures of success Greater Shelby County has an aligned and rigorous set of goals and commitments for PreKindergarten through post-secondary education, which enjoy broad and deep support from a range of stakeholder organizations TBD% of principals surveyed are aware of and regularly partner with community organizations to connect students and families with services and programs TBD% of community partners surveyed feel welcomed in the district and encouraged to provide support that is aligned with the communitys collective goals for education TBD% of Shelby County citizens polled believe that public schools are (a) improving and (b) well-supported by the community 46

District and community collaborative partner to develop a report card to assess these measures of success and shares results annually

Recommendations The TPC views the merger of MCS and SCS as an opportunity for all people in Shelby County to be invested in the success of all students in Shelby County. Broad-based community support is critical to the success of the school district. 26. The TPC recommends that the district empower a broad-based community collaborative to support the academic success and well-being of Shelby County's children by: a. Partnering with the district and institutions of higher education to develop an aligned set of college readiness and college success goals and to identify strategies that the district and other organizations in the community may use to meet these goals b. Developing a broad constituency, exemplified by membership that includes education, community, faith, business, philanthropic, and government leaders c. Supporting advocacy and public awareness related to the Countys educational goals, including reporting annually on the return on investment of the communitys investment in education d. In the near term, advocating for the implementation of the Transition Plan 27. In addition to the community collaborative, the TPC recognizes the importance of a single entity to match businesses and other donors with needs within the school system. Currently each district has its own foundationthe Memphis City Schools Foundation and the Shelby County Schools Education Foundation. The TPC recommends the existence of a single independent foundation wholly focused on supporting merged SCSs educational goals and partnering with other foundations that contribute to education in Shelby County 28. Additionally, the district is responsible for creating a culture among district staff and school leaders that values partnership with community organizations, partners, and volunteers. The TPC recommends the district: a. Maintain and expand formalized processes for sharing data with community partners who provide support and services to students, such as MCSs current data sharing memorandum of understanding b. Form partnerships and have regular dialogue with the seven municipal governments and county government in Shelby County (addressing topics including violence prevention and early childhood education) c. Ensure that the district has a strong community engagement leader among the senior district team who is the clear point of entry for community organization service providers and educational and cultural organizations, and who works in partnership with the Parent and Community Liaisons in each regional office. See Education Plan: Administrative Organization chapter (recommendations 91 and 92) d. Build communication processes to ensure principals and teachers are completely aware of services and programs for children and families that are provided by community organizations

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Priority 7: Tailored interventions and support The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity Summary of current state The TPC focused research on five priority areas to focus for intervention recommendations: Academics Attendance Behavior Graduation Special education Academics MCS and SCS combined are behind the state average on all currently measured key academic indicators. In the 2010-11 school year: The districts' combined proficiency rate on the 3rd Grade Reading TCAP was 34%, compared to the state average of 44% (25% in MCS, 58% in SCS) The districts' combined proficiency rate on 7th Grade Math TCAP was 27%, compared to the state average of 36% (20% in MCS, 42% in SCS) The districts' combined percentage of students who met the ACT college readiness benchmark was 10%, compared to the state average of 15% (5% in MCS, 20% in SCS) Attendance In the 2010-11 school year, average attendance in MCS and SCS combined was 91.6%, compared to the state average of 93.3%. SCS attendance rate was 94.3%, and MCS attendance rate was 90.4%. Behavior 201011 school year data showed significant differences between behavior consequences in the two districts: Disciplinary Incidents, 2010-11
Per 1,000 Students District In-school Suspension incidents 197 431 Out-of-school Suspension incidents 411 100 Expulsion Incidents 41 1

Memphis City Schools Shelby County Schools

In addition to distinct behavior policies and procedures, the universal presence of in-school suspension aides in SCS schools may partially account for the discrepancies. Graduation The 2010-11 combined district graduation rate was approximately 78%, compared to the state average of 86%. The MCS rate was 73%, and the SCS rate was 89%. This data uses the current state definition 48

for graduation rate as reported to the federal government. It is important to note that Tennessee is transitioning to a longitudinal cohort definition for graduation rate in the next few years. Special Education In the two districts combined, according to 2011-12 40th day enrollment, 12% of students have special needs, excluding gifted students. In MCS, 13% of students have special needs, and in SCS 11% of students have special needs. Along key academic indicators, special needs students perform below regular education peers. Special Education Academic Achievement
Academic milestone 3rd Grade Reading Proficiency 7th Grade Math Proficiency Average ACT score SPED 23% 10% 13.6 Non-SPED 36% 29% 18.0

Findings from benchmarks and other districts Academics Results of a 2009 study in Montgomery County, Maryland showed that setting and reaching for high targets on K12 academic milestones made a significant difference in long-term academic achievement: 47% of high school graduates received bachelor's degrees within six years of graduation (versus 31% of the general population) and those who passed Algebra I in the 8th grade were more than twice as likely (75%) to receive a bachelor's degree than those who did not (34%).10 Attendance New York City has historically experienced a significant problem with chronic student absenteeism: 20% of all city students were absent 20 or more days in 200910. Three out of four students who were chronically absent in the 6th grade never graduated from high school. To combat this problem, the New York City Department of Education launched a campaign, Every Student. Every Day. in which community organizations worked with schools to support attendance. The district also provided mentors for students who were chronically absent. First year results showed a 24% and 16% reduction in chronic absenteeism among elementary and middle school students respectively. 11 Behavior Positive Behavioral Interventions and Supports (PBIS) is an example of a research-based program with the aim of improving student behavior and academic performance through consistent, clear enforcement of policies and behavior instruction and coaching. PBIS has been implemented to some extent in both SCS and MCS. In one SCS example, at Southwind High School, the number of discipline reports decreased from 8,287 in 200910 to 3,145 for 201011. Graduation The On Track for Success report suggests that best practice in improving graduation rates lies in focusing interventions on the ABCs: 12
Montgomery schools track graduates rate of college degrees http://www.washingtonpost.com/wpdyn/content/article/2010/05/17/AR2010051703621.html 11 Mayors Interagency Task Force on Truancy, Chronic Absenteeism, and School Engagement 12 Bruce, Bridgeland, Hornig Fox, Balfanz. On Track for Success: The Use of Early Warning Indicator and Intervention Systems to Build a Grad Nation. Civic Enterprises & The Everyone Graduates Center at Johns Hopkins University. November 2011.
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Attendance: Missing 20 days or being absent 10% or more of school days Behavior: Two or more mild or serious behavior infractions Course performance: Inability to read at grade level in 3rd grade, failure in English or Math in 6th9th grade, GPA of less than 2.0, two or more failures in 9th grade, and failure to earn on-time promotion to 10th grade

Special Education The 2011 report Something Has Got to Change: Rethinking Special Education, suggests the following strategies for improving academic performance of students in special education, while managing costs: Consider behaviorists (highly trained professionals who diagnose and address root causes) instead of additional teachers and paraprofessionals Set goals and track progress for academic achievement of students in special education Track case loads by school, instructor, and therapist to ensure strategic use of resources Recruit district management with skills in curriculum, data, counseling, and finance Focus management attention on increasing academic success while managing costs Measures of success Results across eight academic milestones described in the Every child ready for success in college and career section of this chapter TBD% attendance rate TBD% reduction in out-of-school suspensions and expulsions TBD% increase in academic achievement for students with disabilities across eight key academic milestones Recommendations Tailored interventions and supports serve the broader goal of all children graduating from high school prepared to be successful in college and career. Interventions should be implemented in a coordinated way across academic, behavior, and health services. Given the introduction of CCSS and a focus on high expectations for all students, it is important not to lower standards for students who are struggling, but to have tailored interventions that allow teachers and school leaders to help students bridge the gap between their current performance and their potential. Relationships between teachers and students are very important. It is critical that teachers and students have a positive relationship based on mutual understanding, and that teaching styles are aligned with learning styles. To succeed, the TPC recommends the district, school leaders, and teachers focus interventions in six key areas: 29. Academics: Both districts currently have benchmark assessments and tiered intervention strategies. Going forward, the TPC recommends that the district: a. Evaluate the impact of those strategies annually, and revise to ensure the highest-impact interventions are being used most frequently for each student b. For students who need additional support, develop a special support system and partner with community organizations to provide extended learning time and enrichment (extended school day and summer programming). In Innovation Zone schools, the school day will be extended by an hour to provide more instructional time, spent on focused interventions in core instructional areas in math and literacy. The district's Innovation Zone grant covers this cost, and has been written into the state-approved grant application that was developed jointly by MCS and SCS. c. Offer extra and focused support at and/or in advance of transition years (5th to 6th grade, 8th to 9th grade) to ensure students are not falling behind. 30. Attendance: The TPC recommends that the district: a. Focus on the reduction of absenteeism (unexcused absences of five days or more per year) 50

b. Ensure teachers and school leaders, with the support of clerical staff, actively monitor attendance and engage parents, community organizations, and social services to keep students in school c. Use all available levers (e.g. Temporary Assistance for Needy Families school attendance requirement) to invest students and families in the importance of attendance 31. Behavior: The TPC recommends that the district: a. Focus student behavior-related investments on preventative measures that emphasize clear expectations and progressive discipline. b. Engage students in programs that lead to behavior modification c. Support teachers and principals in this effort, by making preventative behavioral interventions a priority in the district's professional development agenda at all grade levels, beginning in elementary school. d. Ensure schools are staffed and supported with the school counselors, social workers, and psychologists who can identify root causes of student behavior and provide more focused support. In order to achieve this recommendation, the TPC recommends an increase in the number of counselors in current MCS schools to bring them in line to the SCS ratiosat a cost of about $4M per year. There is not a recommendation to increase the number of social workers and psychologists. The district will need to set these staffing ratios in a costneutral way. See the summary of all investments in the Financial Model chapter (page 172). See all other school staffing recommendations in the Personnel Model chapter (page 145). e. Empower principals and support them to be the decision-makers on suspensions and expulsions. Review the district student discipline policies and procedures to ensure that principals are empowered and supported in their decisions, while preserving students' due process rights f. Ensure that every elementary and middle school has the support of an in-school suspension aide to reduce the need for out-of-school suspensions and, thus, keep students in school. This does not have a cost impact, as the districts currently employ enough inschool suspension aides to accomplish this. g. Review disciplinary policies and procedures and ensure that the language in those policies fosters appropriate intervention strategies prior to and after suspensions and expulsions h. Maintain and deepen current safety programming and pupil services, and continue to seek government grants to fund proactive behavior programming, as included in recommendations 128 and 129 of the Safety and Security recommendations (page 133) 32. Graduation: The TPC recommends that the district: a. Use an early indicator dashboard so that teachers, principals, and district leaders can better support students who are likely to drop out of school b. Employ focused interventions for students who are likely to drop out, including mentoring, counseling, and extended instructional time 33. Special needs: The TPC recommends that the district: a. Ensure that all students working toward a regular diploma have teachers with content expertise, with inclusive placement as the preference b. Develop and implement a district-wide strategy to reduce the amount of time special education teachers spend on clerical workincluding adding Special Education clerical assistants. The cost of this recommendation is $2.5M. See the summary of all investments in the Financial Model chapter (page 172). See all other school staffing recommendations in the Personnel Model chapter (page 145). c. Develop a professional development program for school leaders and teachers to enhance their knowledge of both the law regarding special needs students and best practice strategies that can be used to address those needs 51

d. Provide services to teachers and school leaders to enhance their skills in the area of identification and placement of students who need special services 34. Health: The TPC recommends that the district: a. Ensure all students have access to a nurse, although not every school will be able to employ a full-time nurse. See all other school staffing recommendations in the Personnel Model chapter (page 145). b. Continue school-based clinics where they currently exist c. Maintain the licensed Mental Health Center, and expand access to the entire district 35. The TPC recognizes the importance of preserving other programs within the district where TPC has not made specific recommendations about the future state. For gifted programming, programs for English language learners, alternative education, extended learning opportunities, summer programming, and other educational choices currently offered by the district, the TPC recommends that the district: a. Resolve differences in the way the two districts approach their programs in a way that maintains critical services and is cost-neutral b. Follow the timeline and process detailed in the Migration Plan chapter of the Transition Plan (begins on page 188) c. Builds off of the recommendations made by staff, included in Appendix C

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Priority 8: Effective teachers Research shows that teacher effectiveness is the single most important controllable variable in student achievement. 13 Establishing a clear understanding of the characteristics of effective and ineffective teaching is thus among the most important tasks of the district. Districts establish this understanding through their observation rubric, often referred to as a framework for effective teaching and learning. Historically, the observation rubrics used by districts have been of poor quality, have been poorly implemented, or both. To improve this problem, districts have introduced more robust teaching and learning frameworks and have incorporated other measures into teacher evaluations, such as student value-added data and student perceptions. This development is critical. Only if evaluation is a meaningful representation of teacher performance can it be used to understand teachers professional development needs and deliver against those needs. Further, an accurate system is needed to make better decisions about who teaches and how they are compensated. For many years, districts have rated virtually all teachers above average. But with such an outcome, teachers cannot receive the professional development and coaching they need to improve, principals cannot dismiss those teachers who cannot or will not improve, and the Human Resources office cannot compensate teachers for sustained effectiveness. The effective teachers section covers each of these ways to promote effective teaching. These are listed as: Priority 8a) Teacher evaluation Priority 8b) Teacher support and professional development Priority 8c) Decisions about who teaches Priority 8d) Teacher compensation The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first Educators and staff are our most important resource We have high expectations We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all This is our once-in-a-lifetime opportunity This systemic approach to teacher effectiveness with evaluation at its core is currently being implemented in MCS through its Teacher Effectiveness Initiative (TEI). The Teacher Effectiveness Initiative is part of $90M, seven-year commitment from the Bill and Melinda Gates Foundation to MCS to fund a systemic approach to teacher effectiveness.

13

Linda Darling-Hammond, Teacher Quality and Student Achievement: A Review of State Policy Evidence, Education Policy Analysis Archives, 8 (1) (2000). 53

Priority 8a: Teacher Evaluation Summary of current state Both MCS and SCS are in their first years of implementing new teacher evaluations. Both districts use student achievement data in similar ways, as required by state law. However, MCS and SCS use different observation frameworks. Additionally, MCS incorporates two additional measuresstudent perceptions and teacher content knowledge. The chart below summarizes the evaluation models of MCS and SCS. MCS and SCS teacher evaluation models use student achievement data in similar ways but have different observations, other measures

In 201011, MCS piloted three potential rubrics with 500 teachers and 65 certified evaluators who chose the DC IMPACT rubric over the TAP rubric for its specificity. At the same time, the State also ran a pilot program and elected to use the TAP rubric, the same rubric SCS uses. Similarities between MCS & SCS observations Evaluators must be certified and are mostly principals and assistant principals There are approximately 1213 teachers per certified evaluator Professional teachers are observed 115120+ minutes and apprentice teachers for 150180+ minutes All documentation is electronic (although different systems are used) Evaluators meet with teachers to discuss the observation within seven days Flexibility to change evaluation models subject to state approval Differences between MCS & SCS observations MCS conducts more observations of shorter length (averaging 30 minutes) while SCS does fewer observations but all for a full lesson length SCS directly evaluates two domainsplanning and professionalismthat MCS observes indirectly MCSs rubric specifies behaviors that constitute each of the five levels, while SCSs rubric defines a 2 as a blend of 1 and 3, and a 4 as a blend of 3 and 5 SCS also has a professionalism conference at year end 54

As the next chart demonstrates, from a student outcomes perspective, 51% of MCS and 60% of SCS teachers score a Level 3 or better on TVAAS, though both districts have more of their teachers in Level 1 than any other category and both districts are below the state average TVAAS score. As the second chart demonstrates, from an observation perspective, SCS teachers receive evaluations 0.4 points higher than MCS and 0.3 points higher than the State on average. MCS & SCS have fewer teachers with TVAAS of Level 3 or higher than the State

Mid-year 2011-12 observation scores are higher in SCS than in MCS or the State

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Findings from benchmarks and other districts The Measures of Effective Teaching Project, sponsored by the Bill and Melinda Gates Foundation, is the largest ongoing research project in the area of teacher evaluation. MCS is one of the sites for the study, the findings of which include: Multiple measures are better than any single measure of teacher performance. As the report notes, The combination of classroom observations, student feedback, and student achievement carries three advantages over any measure by itself: (a) it increases the ability to predict if a teacher will have positive student outcomes in the future, (b) it improves reliability, and (c) it provides diagnostic feedback that a teacher can use to improve.

Multiple Measures Have Greater Reliability & Predictive Power than Any Single Measure

Multiple observations are better than single observations. As the report notes, Our findings suggest that a single observation cannot meet that standard [of high reliability]. Averaging scores over multiple lessons can reduce the influence of an atypical lesson. The MET study suggests 34 teacher observations as part of a single evaluation would be sufficiently reliable; Blunk 2007 suggests 45 observations as part of a single evaluation would be sufficiently reliable. Other research also finds that frequent feedback is a habit of high-performing schools. TNTP finds that at top-performing schools teachers are observed an average of eight times per year. 14 Dobbie & Fryer 2011 finds, in a study of New York City charter schools, that those schools that give formal or informal feedback 10 or more times per semester have higher math and English Language Arts (ELA) gains. Observers should be required to demonstrate accuracy before rating teachers. As the MET report notes, Teachers need to know that observers can apply an observation instrument accurately and fairlybefore performing their first observation. Good training is not enough. Observers should be expected to demonstrate their ability to generate accurate observations and should be recertified periodically. It is important to track system level reliability by double-scoring at least some teachers with impartial observers. As the MET report notes, At least a representative subset of teachers should be observed by impartial observers with no personal relationship to the teachers. This is the only way to monitor overall system reliability and know whether efforts to ensure reliability are paying off. Verify that teachers with higher observation scores also have higher student achievement gains. As the MET report notes, Even a great observation instrument can be implemented poorly. And any measure can become distorted in use. Rather than rely on this study or any 56

14 TNTP, Greenhouse Schools, 2012.

other as a guarantee of validity, school systems should use their own data to confirm that teachers with higher evaluation scores also have larger student achievement gains, at least on average. Measures of success, selected 15 A meaningful distribution of teacher evaluation scoresapproximately 20% evaluated 1s and 2s and less than 20% evaluated 5s Extent to which teachers agree: - I was evaluated fairly - I was evaluated rigorously - That the post-conference is a valuable opportunity to get constructive guidance and feedback I could use to improve instruction - The evaluation process has helped me become more effective with my students The teacher evaluation is used as the basis for professional development, decisions about who teaches, and compensation. Recommendations In the area of teacher evaluation: 36. In the area of observation, the TPC recommends: a. The district adopt a single framework for effective teachingobservation rubricfrom the merger date forward. This is imperative not only to ensure a common language among all district staff, but for basic fairness since professional development, compensation, and dismissal are linked to the evaluation. b. MCS and SCS work together to select an observation rubric by December 2012. This observation rubric must include a clear and differentiated definition of each level of teaching. Criteria for selecting the observation rubric include: i. Correlation between rubric and student growth data both local and national, with particular attention to local data (Guiding principle: The academic success and well-being of our students come first) ii. Cost of implementation (Guiding principle: We must save where we can to fund what we need) iii. Teacher and evaluator ownership (Guiding principles: Educators and staff are our most important resource; We are all in this together) c. The length and frequency of observations reflect research on best practices. The number and length of observations should be differentiated based on apprentice status and performance. On an informal basis, the district should seek to increase observations even further. d. The district regularly certify evaluators as reliable raters by: i. Holding monthly norming sessions to prevent rating drift away from standardized definitions ii. Holding principals accountable for quality of teacher observations in their own evaluations iii. Monitoring the effectiveness of various classes of evaluators (e.g. principals, PIT crew, administrators) and seek to increase the use of evaluators who have proven to accurately and reliably rate teacher performance. 37. In the area of stakeholder perceptions, the TPC recommends: a. The district administer the student perceptions Tripod instrument two times per year and share results with teachers and evaluators in a timely manner to allow mid-course refinements. The TPC based this recommendation on the demonstrated validity of the instrument in national and local research.
See Appendix B for full listing of measures of success.

15

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i.

ii.

Further, the TPC recommends that SCS pilot the Tripod survey with a fullscale rollout, but with no stakes for district in 201213; SCS should seek state funding, but if funding is not available, Tripod should be paid out of the TEI grant. Merged SCS will use at 5% from 201314 onward, vs. 0% in 2011-12.

38. In the area of teacher content knowledge, the TPC recommends that the district: a. Exclude teacher content knowledge from its evaluation model due to the lack of valid and reliable measures for teacher content knowledge b. Include teacher content knowledge as part of its professional development for teachers c. Continue to look for acceptable measures of teacher content knowledge to include in the evaluation model as part of its future work 39. In the area of TVAAS data, the TPC recommends that the district: a. Continue to use TVAAS data per state law b. Work with the state to enable teacher verification of TVAAS data (i.e. roster of student scores returned to each teacher with notice of which students are included in the teachers score) c. In the summer of 2012, jointly convene teacher working groups to improve the available menu for non-tested subjects 40. In the area of other student achievement metrics, the TPC recommends that: a. Teachers choose the other student achievement metric and principals approve such selection b. The district set the bar for performance, differentiated by school (e.g. state school AMOs) c. In the summer of 2012, the districts jointly convene teacher working groups to improve the available menu for non-tested subjects 41. Each year, the TPC recommends that the district seek opportunities to improve its teacher evaluation model, including through the components it uses and their respective weights.

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Priority 8b: Teacher support and professional development Summary of current state There are four types of professional development: Formal structured programs, such as new teacher induction or periodic trainings. Team-based, such as professional learning communities (PLCs). One-on-one attention, such as coaching, observation feedback, evaluation feedback, and mentoring. Independent study, such as videos of best practice, video review of own practice.
Formal MCS Induction program has all newly hired teachers participate in on-going new teacher network support series. Teachers participate in other formal districtsponsored professional development at the discretion of their principals or department heads. PLC Teams: Protected time for all teachers to meet weekly to review and develop common responses to student data SCS Induction: New teachers pyramid of support (three tiers of support including coaching, observations, PD classes, and videotaping over a two-year Induction period) Performance Improvement Team (PIT Crew) provides guidance to coaches, support teachers and administrators on the TEAM evaluation model PLC Teams: Protected time for all teachers to meet weekly to review and develop common responses to 4 critical PLC questions and student data Virtual teams/communities via PD 360 Learning Coach Monthly Team Meetings Online courses aligned with observation and differentiated based on observation data Video library of best practices aligned with evaluation available Daily and monthly newsletters with best practices All teachers are observed and receive feedback from their evaluator within seven days All teachers receiving a rating of 1 or 2 are assigned a Learning Coach (level 3, 4, or 5 teacher) and entered into online PD Learning Loop Administrators, PIT Crew & Master Teachers provide individualized evaluation support Formative Assessment Trainers provide individualized assessment support

Team-based

Independent

One-on-one attention

Online courses aligned with observation and differentiated based on observation data; requires assessment of 80% or higher at end of module. Video library of best practices aligned with evaluation available Reflective practice technology allows teachers to videotape their classrooms All teachers are observed and receive feedback from their evaluator within seven days All new hires receive a trained and certified mentor

Findings or benchmarks from other districts Professional development is an area where best-practice research is still relatively inconclusive. As EdWeek writes in a review of professional development for its Research Center: Hard data on which professional-development models lead to better teaching are difficult to come by. In essence, professional development relies on a two-part transfer of knowledge: It must inculcate in teachers new knowledge and skills such that they change their behavior, and those changes must subsequently result in improved student mastery of subject matter. Unsurprisingly, the complex nature of those transactions renders the field of professional development a challenging one to study. 16
16

EdWeek, Professional Development, 2004, updated 2011.

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Still, there is reason to believe that school districts will stand to benefit from professional development that matches the needs of their teachers. Given the state of knowledge about professional development, thoughtful construction and regular review of professional development offerings are especially central to this effort. Districts may choose to focus on a subset of these four types of professional development. For example: Denver Public Schools and Mastery Charter School network in Philadelphia, Pennsylvania focus on one-on-one attention and formal structured programs. DC Public Schools and AUSL in Chicago, Illinois focus on team-based and independent study. Each of these forms of professional development has strengths and weaknesses:
Formal structured programs Strengths Sets a floor by establishing common expectations and experiences Teacher ownership of problem-solving within the context of their school Greater amounts of individually relevant feedback; ability to evaluate whether teacher incorporates into practice Individual efficacy; ability to use technology to scale Weaknesses While may be tailored to aggregate needs and priorities, not tailored to individual needs and priorities Requires common planning time; requires at least some teachers to know how to use student data to guide instruction Labor intensive to scale

Team-based

One-on-one attention

Independent study

Relies on teacher to incorporate into practice

Research has shown that the type of professional development most commonly used by improving districts depends on whether the districts are transitioning from poor to fair or good to great. Those districts that are transitioning from poor to fair primarily use coaching and formal programs to deliver technical skills. However, districts transitioning from good to great use more peer collaboration, such as professional learning communities. To summarize, districts use professional development to Prescribe adequacy, unleash greatness.17 Measures of success, selected 18 A meaningful distribution of teacher evaluation scoresapproximately 20% evaluated 1s and 2s and less than 20% evaluated as 5s All teachers have common planning time to meet in PLCs at least once a week during the regular day Extent to which teachers agree that each of the following forms of professional development help them become effective in the classroom: - Formal structured programs - Team-based - One-on-one attention - Independent study

17 18

Mourshed, Chijoke, and Barber, How the Worlds Most Improved School Systems Keep Getting Better. Please see Appendix B for a full listing of the measures of success.

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Recommendations In the area of Teacher support and professional development: 42. The TPC recommends that the district develop an annual strategy for professional development based on an assessment of its needs. a. The strategy should consider each of the four types of professional development formal structured programs (e.g. induction), team-based (e.g. PLCs), one-on-one attention (including coaching and peer observation), and independent study. In constructing the strategy, the district should make use of needs identified by teacher evaluation and student achievement data, as well as research and emerging best practices, and should seek opportunities to give teachers professional development that is job-embedded, focused on student learning, and linked to specific development opportunities identified by the teachers evaluation. b. The strategy should also seek to provide an array of learning platforms for the delivery of professional development. Further, it should consider whether and how the approach to professional development should vary based on the overall performance of the school. Professional development that does not meet needs identified in the strategy should be discontinued. Such strategy should be revised annually based on student achievement and teacher efficacy data, as well as on educational priorities (e.g. implementation of Common Core). The revised strategy should then be reviewed with a committee of key stakeholders. 43. The TPC recommends that Professional Learning Communities (PLCs) be the districts primary approach to team-based professional development for teachers by: a. Educators working together to review and respond to student data, answering the following critical questions: - What do we want students to learn? - How will we know if they have learned? - What will we do if they dont learn? - What will we do if they already know it? b. Scheduling classes such that there is common planning time at least once a week within a teachers regularly scheduled workday. Such planning time focuses on analyzing and responding to student data to answer the critical questions, creating and scoring common formative assessments, making intervention decisions that answer the critical questions, etc. Such planning time is not to be spent dealing with calendar, consequences, or content issues. Strategies to close achievement gaps must be among the issues that teachers address when analyzing and responding to student data. c. Ensuring that the school has a culture and climate of high expectations that is conducive to the effective functioning of PLCs, where teachers feel comfortable collaborating and students are engaged in their learning. 44. It is important that students and schools have the resources they need. Given this, the TPC recommends that teachers have adequate materials and supplies in order to be effective

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Priority 8c: Decisions about who teaches Summary of current state Research shows that teacher effectiveness is the single most important school controllable variable in student achievement. 19 Decisions about who teaches are thus among the most important decisions a school district makes because such decisions affect student achievement. School districts and principals make four critical decisions about who teaches: Who they select to fill vacancies Who they dismiss What happens when there are surplus teachers (teachers whose positions have been eliminated, for example, due to declining enrollment) Which teachers are allowed voluntary transfer and when Selection includes the policies and procedures governing who is hired, when, and by whom. In MCS, 1587 vacanciesabout 20% of teaching positionswere filled for 201112. In SCS, 357 vacancies about 10% of teaching positionswere filled for 201112. Despite the different rates of total hiring, the rate of external hiring is similar in both districts. Internal hires often create a chain of vacancies, requiring more hires. Teacher retirements and resignations 20 occur at the same rate in both districts an average of approximately 8% over the last two years. Much greater internal hiring in MCS drives the difference in total hiring. Internal hiring includes surplus teachers finding new assignments and voluntary transfers. On average over the last two years, 4060% of MCS hires were internal but just 2535% of SCS hires were internal. MCS runs an increasingly strategic, data-based recruiting process in order to meet the complexities of staffing a large urban district with high poverty, mobility, and contract provisions that complicate staffing. MCS contracts with TNTP to manage teacher recruitment. TNTP is a non-profit dedicated to providing excellent teachers to the students who need them most. TNTP proactively constructs an applicant pool to match applicants to identified vacancies, for example building a pool of at least three teacher applicants for every one vacancy for most subjects and at least two teacher applicants for every one high need subject vacancy (e.g. math, science). TNTP recruits both locally and nationally. Approximately one-third of the MCS applicant pool is comprised of non-local applicants. TNTP rates applicants to make strategic referrals, to understand the timing of top applications, and to identify whether top applicants are accepting positions. As the next chart shows, top-rated applications peak in February to April, but hiring peaks in May to July when top-rated applicants dwindle. By purposefully pushing early hiring through staffing goals and the budget checkout process, MCS was able to increase the top-rated applicants at each stage of the processfrom 24% of those applying to 46% of filled positions.

Linda Darling-Hammond, Teacher Quality and Student Achievement: A Review of State Policy Evidence, Education Policy Analysis Archives, 8 (1) (2000). 20 MCS separates resignations and separations; both are included under the term resignation here. 62
19

Applicant quality peaks early, before hiring and vacancies peak

TNTP tracks and manages the time to fill positions at each stage of the processboth from the district side and the applicant side. This tracking allows TNTP to increase efficiency and identify opportunities to improve. It currently takes about three weeks to fill a vacancy from the time the vacancy is identified to the completion of onboarding. Finally, TNTP puts differentiated effort into staffing high priority schools, which are defined as the 62 schools that had failed to meet NCLB accountability targets. e. TNTP provides a variety of interviewing opportunities that meet the needs of each school to ensure high potential candidates have multiple opportunities to interface with leaders from high priority schools. Further, TNTP provides professional development to principals and hiring teams on effective hiring and teacher induction strategies. TNTP also collaborates with other human capital partners (e.g. Teach For America, Memphis Teacher Residency), placing 70% of partner candidates in high priority schools. According to the Tennessee Higher Education Commission Report, the students of new teachers who were trained by Teach For America in Memphis achieved TVAAS scores that were better than average, a statistically significant finding. In SCS, vacancies are pooled and filled first by direct placements of surplussed teachers. After this first round of hiring, voluntary transfers and external hiring take place to fill remaining vacancies. By procedure, SCS requires principals to interview all internal applicants in seniority order, but a principal may choose which candidate to hire. While SCS recruits from sources that match their hiring needs (e.g. the University of Tennessee-Knoxville for science and engineering), SCS does not set or manage to numerical targets for each type of position. SCS additionally does not track and manage the time at each step of the process to fill open positionseither from the district side or the applicant side. Finally, SCS does not currently put differentiated effort into staffing their highest need schools. Dismissal covers the policies and procedures governing who is dismissed, when, for what reasons, and by whom. By state law (TCA 49-5-511), teachers may be dismissed for incompetence, inefficiency, neglect of duty, unprofessional conduct, and insubordination. Inefficiency includes but is not limited to having evaluations demonstrating an overall performance effectiveness level that is below expectations or significantly below expectations as provided in the evaluation guidelines adopted 63

by the state board of education pursuant to TCA 49-1-302. In the event of dismissal, tenured teachers in both districts have the right to an appeal and a hearingby Memphis Education Association (MEA) contract in MCS and by procedure in SCS. Untenured teachers in either district have no recourse to appeal. The State establishes the qualifications for tenure. These qualifications were amended in 2011. Previously, all teachers who were re-elected for their third year received tenure. According to TCA 49-5-503, a teacher must now have a minimum of five years experience to get tenure. For the last two years, teachers must also have an overall performance effectiveness level on their evaluations that are above expectations or significantly above expectations. For those teachers receiving tenure after July 1, 2011, if after receiving tenure a teacher receives two consecutive years of below expectations or significantly below expectations, that teacher will return to probationary status, pursuant to TCA 49-5-511. In both districts, less than 1% of teachers have been dismissed for performance on average over the last three years despite TVAAS scores well below the state average. While 36% of Tennessee teachers are TVAAS 1s or 2s, 49% of MCS and 40% of SCS teachers are TVAAS 1s and 2s. MCS expects to bring an increased number of teachers for file review this year on the basis of the results of its TEM evaluation. SCS expects no change from its historical numbers. Surplus includes the policies and procedures governing the consequences for teachers whose positions have been eliminated. Positions may be eliminated, for example, due to declining enrollment, mobility, school closures, or programmatic changes. An increasing number of ASD and autonomous schools will increase the number of surplus teachers over the next several years. In recent years, MCS has had large surpluses: 296 teachers in 201011 and 621 teachers in 201112. Under the MEA Agreement, MCS teachers are currently surplussed in seniority order. The least senior teacher is surplussed from his or her school without consideration of effectiveness. Surplussed MCS teachers have an opportunity to transfer at the same time other teachers are applying for voluntary transfer. For 201112, approximately one-fourth of transfer vacancies were filled with surplussed teachers. Still, not all surplussed teachers find positions through the transfer process. To accommodate surplussed teachers, the district may freeze external hiring in May in order to ensure all surplussed teachers find positions. This external hiring freeze encourages principals to hide vacancies until all surplussed teachers find positions in order to have choice in hiring. Such a chain of events hurts the district in two ways: one, it denies a principal the opportunity to choose the applicant he or she believes will be the best fit, whether internal or external, transfer or surplus; two, freezing external hiring in May means the district cannot access external applicants during a time when the pool has the largest number of top quality applicants as well as a larger applicant-to-vacancy ratio, which would allow principals to be more selective. In the uncommon event that surplussed teachers do not find positions even after an external hiring freeze, they are currently entitled to bump teachers out of positions in seniority order (i.e. the least senior teacher is bumped in order to accommodate a teacher of greater seniority whose position has been eliminated). In 201011, MCS did not bump any teachers but in 201112, 25 MCS teachers were bumped. No teachers have been bumped in SCS in recent years. SCS has had much smaller surpluses: 32 in 201011 and 51 in 201112. By procedure, teachers are currently surplussed in seniority order without consideration of effectiveness. Surplussed SCS teachers are directly placed into vacancies by HR before the transfer window opens. This practice has the advantage of assuring early placement to all surplussed teachers. However, neither the teacher nor

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the principal chooses the match. Research has shown that approximately 25% of a teachers effectiveness depends on the quality of her match with her school. 21 In addition to the MEA agreement and SCS procedures, there is State statutory authority governing reductions in force of tenured and non-tenured teachers. TCA 49-5-511(b)(1)(4) governs the procedure employed when there is a need to reduce the number of teaching positions. The statute allows for the dismissal of teachers as may be necessary when there is a reduction in force due to a decrease in enrollment or . . . other good reason. But the statute also stipulates: A tenured teacher who has been dismissed because of abolition of a position shall be placed on a list for reemployment in the first vacancy the teacher is qualified by training and experience to fill. Teachers without tenure have no such recourse and are not legally entitled to be placed on a rehire list. Voluntary transfer includes the policies and procedures that allow teachers to move from one school to another. MCS had 208 voluntary transfers in 201011 and 363 in 201112. SCS had 83 in 201011 and 72 in 201112. In MCS, all tenured teachers are eligible for voluntary transfer once every three years or if there is a change in the principal. As an exception, teachers are eligible to transfer once every two years in high priority schools. Probationary teachers (those without tenure), however, are only eligible to transfer during their first year. Teachers eligible for and desiring a transfer may transfer per MEA agreement during three transfer periods that occur between the beginning of February and end of May. Principals must, by MEA contract, interview the four most senior applicants who apply for an open position that meets the criteria for the position before interviewing any external candidates. In high priority schools, however, principals may interview the internal and external candidates simultaneously. In SCS, all tenured teachers are eligible for voluntary transfer once every three years. There is one transfer period in April that takes place after surplus teachers are placed but before external hiring begins. Principals must interview all internal candidates who meet the qualifications of the position (i.e. license, highly qualified, have tenure, have been in current assignment at least three years) in seniority order, regardless of whether the principal thinks the teacher will be a good fit. Findings from benchmarks and other districts Selection In Missed Opportunities, researchers for TNTP find that in large urban districts, strategic recruitment brought hundreds of applicants but that 3158% of them withdrew; 5070% of withdrawers cited late hiring timelines as a major reason they found other jobs. Salary, on the other hand, was cited by just 14% of withdrawers, significantly less than those citing hiring timelines. Those who withdrew had, on average, higher GPAs and were 40% more likely to have a degree in their teaching field. More than half of those who withdrew held certifications in hard-to-staff subjects. Almost 80% of withdrawers accepted teaching positions in other districts, but close to half said they would have definitely or probably accepted an offer from the district if it had come first. The obstacles to earlier timelines include: Lack of clear hiring goals and accountability for achieving the goals Insufficient systems to track applicants and vacancies Teachers union transfer and surplus requirements, which give existing teachers preference in the hiring process. This preference creates complexity and encourages principals not to report vacancies if they think their choice will be limited. Jackson, C.K. (2010). Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence From Teachers. NBER Working Paper 15990.
21

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Vacancy notification requirements that allow late notice of intent to retire or resign Late or uncertain budget timetables

While not a substitute for removing obstacles to hiring earlier, some districts also extend large numbers of early contracts to high potential candidates for hard to staff positions. For example, Houston ISD plans to extend up to 350 early contracts this year for teachers in critical shortage areas, Teach For America candidates, and experienced hires. Either a principal or the district can issue an early contract, but early contracts are for the district and not for particular schools. In addition to improving the quality of hires by removing obstacles to hiring earlier, districts have an opportunity to improve the quality of hires through the intentionality with which they build their pool and select candidates from it. Teach For America (TFA), for example, rates candidates on seven dimensions, tracks the demonstrated gains of these candidates when they enter the classroom, and then uses this data to change the weights of criteria in the selection model. TFA also links teacher performance back to the place from which the teacher was sourced in order to determine most/least productive recruiting sources. The Tennessee Higher Education Commission (THEC) report does this as well. It links to the value-added data for new teachers to the new teacher training program from which they graduated. Dismissal A primary way that principals increase student achievement is through differentiated retention dismissing ineffective teachers, replacing them with more effective teachers, and developing and retaining effective teachers. In a 2009 study, Beteille, Kalogrides, and Loeb use value-added methods to examine the effectiveness of a school and the recruitment, retention, and development of its teachers. The researchers find that effective schools are better able to attract and hire higher-quality teachers. [They] also find that teachers who work in more effective schools improve more rapidly than do those in less effective ones. In a 2010 study, Balu, Horng, and Loeb find that these personnel management practices are particularly successful when applied strategically. Dismissing ineffective teachers gives principals an opportunity to hire more effective teachers, helping to increase student achievement and decrease achievement gaps. This research is consistent with the findings of the evaluation of Charlotte-Mecklenburgs strategic staffing initiative. Researchers there found that the strategic staffing initiative had the most impact where the new team constituted a larger portion of the staff or where turnover was highest and the principal was therefore able to replace more teachers. Teachers also report that dismissing ineffective teachers improves instructional culture at their schools. In Greenhouse Schools, researchers for TNTP report: The failure to remove ineffective teachers . . . appears to weaken instructional culture. In top-quartile schools, only 23% of teachers report one of my colleagues was wrongly retained, while 42% of teachers report this in bottomquartile schools. Houston ISD and DC Public Schools are two systems that are increasing the dismissal of low performing teachers that cannot or will not improve. Houston expects to dismiss approximately 3% of its teachers this year and expects that in steady state, teacher dismissals will amount to 67% each year, the range in which DC Public Schools is currently dismissing teachers. New York City Public Schools (NYCPS) has taken a different approach, focusing dismissals on teachers in their first three years before teachers are eligible for tenure. NYCPS principals now elect not to renew approximately 20% of teachers over their first three years. 22 Surplus and voluntary transfer

22

Interview with Betsy Arons, former Assistant Superintendent for HR in NYCPS.

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Research shows that teachers are most effective when they work at schools that are a good fit for them. Kirabo Jackson, a researcher at Northwestern, finds that 25% of a teachers effectiveness depends on the quality of match with her school. This means that teachers will not reach their full potential if they are hired in a way that ignores the quality of this match (e.g. by directly placing teachers). It also means that districts may significantly boost student achievement by facilitating strong matches between teachers and schools (e.g. by running a selection process that allows teachers to get to know the schools and principals with which they are interviewing). Mutual consent exists when principals and teachers choose to work together without limitation. Under mutual consent, principals and school interview committees are free to interview and hire the candidate they think is the best fit for their school. Mutual consent does not give any preference to the time of the year, and whether the candidate is internal or external, novice or experienced, or surplus or transfer. Under mutual consent, teachers are free to choose to work at any school that offers them a position. In order to put mutual consent in place, teachers can no longer be guaranteed jobs in the event their current position is eliminated. For example, this means that if a teacher loses his or her position because of declining enrollment, and no principal hires that teacher, he or she will be laid off. As a consequence of implementing mutual consent, teachers will not be placed in a teaching position without both the principal and teacher agreeing to the assignment. Teachers want to have a choice in where they teach, and principals and their staffs want to have a choice in who comes to teach at their schools. In research conducted by TNTP, 93% of all transferring Minneapolis Public Schools (MPS) teachers reported that it is important that the administrator wanted them to come to their school. Additionally, 100% of all MPS principals and 94% of non-transferring teachers agree that the ability to choose their colleagues is important for creating the best possible instructional team for their school. Teachers who were displaced from their schools and involuntarily placed into new schools without choice are four times more likely to plan on transferring again at the end of school. New York City (NYC) is the largest school district that has implemented full mutual consent hiring. While teachers are still surplussed by seniority, all hiring has been by mutual consent since 2005. NYC principals have no obligation to interview or hire any candidates except those they choose. Despite this, 80% of surplussed teachers in NYC found placement within six months. NYC teachers now support mutual consent. In a 2007 survey by TNTP, 87% of transfer teachers and 82% of excessed teachers agreed that it was important whether the principal of the school where they sought a new position wanted them to work there.23 As TNTP reports, nine out of ten transfer teachers and eight out of ten excessed teachers described their new mutual consent positions as satisfying. Mutual consent results in teachers finding positions that they plan to keep. Less than 10% of teachers who transferred in 2007 replied that they were thinking about making another transfer attempt the next year. The same is not true of teachers who are centrally assigned. A 2007 survey of Milwaukee Public School teachers by TNTP showed that 52 percent of all teachers who were centrally assigned to their positions planned to consider a transfer the following year; in comparison, only 22 percent of Milwaukee teachers who were hired through a school interview process planned to transfer again. Nor did the switch to mutual consent disadvantage high poverty schools62% of NYC teachers transferred to a school of the same or higher poverty level than the one in which they were currently teaching. Moreover, the number of teachers applying for voluntary transfer decreased more than 20% after the first year of mutual consent hiring in NYC, suggesting that teachers transfer less once they have found positions that are good fits. Teachers who taught at schools that were closed were also able to find new positions. As TNTP reports, Out of 198 teachers excessed from these [three closed NYC] schools, just 23 (less than 12%) failed to find positions. Of those who did not find positions, none held a hard-to-staff license, only
23

TNTP, Mutual Benefits: New York Citys Shift to Mutual Consent in Teacher Hiring.

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52% submitted an online application for positions, and only 35% attended any job fairs. This mirrors the experience of other surplussed teachers. Of the 20% of surplussed teachers who did not find new mutual consent positions within six months, nearly half did not even apply for a vacancy. The teachers who did not find placement were six times more likely to have an Unsatisfactory evaluation rating than other New York City teachers. But as TNTP reports, Data suggest that a teachers placement prospects were not negatively influenced in any significant way by characteristics such as seniority or having come from a school that was closed by the Department of Education. As TNTP concludes, Variations in job-search outcomes appear to have been driven primarily by teachers performance history and degree of engagement in the job search process. Measures of success, selected 24 Overall Number of schools with: - 0 Evaluation Level 4 or 5 teachers - 12 Evaluation Level 4 or 5 teachers - 35 Evaluation Level 4 or 5 teachers - 69 Evaluation Level 4 or 5 teachers - 10+ Evaluation Level 4 or 5 teachers Retention of teachers by performance level overall and by school Turnover in the first three years of employment by performance and by new teacher training program Teacher selection Ratio of vacancies to applicants by each position type overall and by school Acceptance and declination rate of offers to vacancies by position and type, overall and for high priority schools Percent of vacancies identified and filled by key dates in the hiring process Target of 60% of vacancies identified and filled by May 1 Target of 80% of vacancies identified and filled by June 1 Target of 90% of vacancies identified and filled by July 1 Target of 100% of vacancies identified and filled by first day of school Percent of principals that agree that teachers hired this year have the potential to be more effective than the teachers who resigned, retired, or transferred out of their schools in the last year Teachers and principals both agree to work together by true mutual consent: - Zero forced or direct placements - Zero limitations on whom a principal can hire (other than an HR compliance screen) a principal may hire internal or external candidates, transfer or surplus candidates at his or her discretion, at any time during the year. - Zero limitations on where a teacher can teacha teacher may choose to teach at any school at which a principal offers him or her a position. Teacher dismissal Percent of teachers that are dismissed for performance, by evaluation level Teacher responses to the following questions, by school: - One of my colleagues was wrongly retained - One of my colleagues was unfairly dismissed Number of teachers in district receiving persistent 1s (three or more consecutive years) on overall evaluation and on TVAAS Teacher surplus
24

Please see Appendix C for a full listing of the measures of success.

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There are zero direct or forced placements There are never external hiring freezes There is no bumping The percent of surplussed teachers eligible for rehire that agree that The district has given me adequate support in seeking a new position The percent of surplussed teachers eligible for rehire that find new mutual consent positions within six months

Voluntary transfer Number of voluntary transfers into and out of each school, overall and for high priority schools The percent of teachers who transfer to schools of lower, the same, or higher poverty level The percent of teachers who transfer to schools with lower, the same, or higher school-level TVAAS scores Recommendations In the area of teacher selection, the TPC recommends: 45. The district take the following actions to increase the quality of its applicant pool: a. All applicants go through the same selection process at the district level and have the same access to open positions, regardless of whether they are internal or external candidates. All vacancies continue to be posted electronically. b. The district track key indicators in the hiring process (e.g. number of vacancies by position, ratio of applicants to vacancies by position, source of candidate, time elapsed at each stage of hiring process, etc.) that allow strategic management in real-time and continuous improvement year over year c. The district work with principals and school selection committees to develop selection models appropriate to their schools d. The district put differential effort into identifying and attracting candidates that are good fits for teaching in high-priority schools e. The district utilize a closed loop selection model by rating each of its hires and comparing their applicant ratings to their evaluation scores. The district should act on this data by, for example, adjusting its selection model to match those qualities that appear to matter to teacher performance in the classroom. Additionally, the district should track the number and quality of graduates hired via each pathway and meeting semi-annually with organizations to provide feedback on their graduates. This feedback will also be shared with the state. Over time, this should increase the overall quality of new hires. 46. The district take the following actions to hire more teachers earlier in the year when applicant pool quality is higher: a. Incentivize early notification of retirement and resignation by allowing an exemption from end of year professional development for those who meet an early notification deadline b. For the most common teaching positions, project the number of people that will need to be hired based on historical vacancies. For some portion of this projected number, the district should be able to safely hire ahead of knowing the actual number of vacancies. For this portion, the district will offer early contracts to top applicants c. Fill all vacancies on a rolling basis d. Choose not to complete an HR compliance screen on a candidate unless the district expects to hire the candidate 47. The district take the following actions to ensure that all teachers and principals agree to work together (see also recommendation 52 which describes the legislative change required to fully implement this recommendation) 69

a. All hiring be conducted by mutual consent (see definition on page 68) b. No forced or direct placements of teachers c. No external hiring freezes or other limitations placed on whom a principal can choose to hire d. All of the above shall be in effect even if there are surplus teachers 48. The district hold principals accountable for their selection decisions. As part of their evaluation, principals are held responsible for hiring teachers who rate highly on the schools selection model or who have demonstrated effectiveness. In the area of dismissal, the TPC recommends: 49. A dismissal recommendation may be brought by policy, by the district, or by the teachers principal 50. The district set a dismissal policy that strives to balance fairness to teachers, who need an opportunity to improve if they are close to meeting expectations, with fairness to students, who need an opportunity to learn, and with fairness to principals, who need a way to dismiss teachers who are not meeting expectations that is not overly burdensome. By this dismissal policy: a. Teachers rated significantly below expectations will be dismissed, regardless of tenure. Tenured teachers will be eligible for an appeal and a hearing. b. If there is no surplus for their school, teachers rated below expectations will be provided intensive supports the next year. They will have that year to improve to meeting expectations or higher, or they will be dismissed. Per TCA tenure law, all teachers who do not at least meet expectations for two consecutive years and received tenure after July 1, 2011 will lose tenure and the right to an appeal and a hearing. Previously tenured teachers will have the right to an appeal and a hearing. If layoffs are needed at their school, teachers who are below expectations will be dismissed as needed according to surplus procedure. c. A dismissal decision may be appealed by the district or by the teachers principal, or by the teacher, if tenured. In the area of surplus, the TPC recommends: 51. The district no longer guarantee jobs to surplussed teachers. Instead, the TPC recommends that when there is a surplus of teachers at a school, within the license area and scheduling constraints: a. The district terminate any teachers rated significantly below expectations b. If teachers are still in surplus, the district terminate teachers rated below expectations c. If teachers are still in surplus, the district terminate non-tenured teachers who at least meet expectations. The district gives support to teachers in finding a new position within the district, but teachers are not guaranteed a job. Such support would include but not be limited to resume workshops, opportunities for interview practice, and making sure principals with open positions are aware of these candidates with records of sustained effectiveness. Further, teachers who exceed expectations or significantly exceed expectations are extended early contracts by the district where supported on a riskweighted basis. d. If teachers are still in surplus, the district place tenured teachers who at least meet expectations on a list for reemployment in the first vacancy for which the teacher is qualified by training and experience to fill pursuant to TCA 49-5-511. e. Within a given performance level, the district use the following criteria to terminate (those not at least meeting expectations or lay off (those at least meeting expectations): i. Score within a given performance level (e.g. 2.1 vs. 2.4) ii. Average of last three years of evaluation scores iii. Extracurricular participation and other additional roles 70

iv. Certification in a critical need area (e.g. special education, math, science, bilingual) v. Seniority 52. The district lobby the Tennessee legislature to amend TCA 49-5-511 which requires districts to place tenured teachers on a preferred re-employment list if they lose their jobs due to a reduction in force. The TCA should make no requirement regarding the continued employment of teachers, tenured or otherwise, who have lost their jobs due to reduction in force. In the area of voluntary transfer, the TPC recommends: 53. All teachers rated meet expectations or higher be eligible for voluntary transfer, subject to finding a mutual consent position 54. Teachers rated below meets expectations not be eligible for transfer 55. The district place no limitations on how frequently a teacher who at least meets expectations may transfer. The district should revisit this policy on an annual basis to ensure that it results in an equitable distribution of teachers, including: a. Analyzing teacher turnover by school to identify schools where teachers who at least meet expectations are those seeking to leave, with particular attention to high poverty and low performing schools (school-level TVAAS of 1 or 2) b. Conducting an exit interview of all teachers leaving their positions to determine the reasons they are leaving c. Analyzing exit interview data for schools with turnover of teachers who at least meet expectations d. Developing and implementing remedies that address the reasons teachers scoring meet expectations are exiting schools 56. Principals interview candidates at their discretion, with no obligation to interview internal or external candidates 57. All vacancies continue to be posted electronically and be accessible to both internal and external candidates.

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Priority 8d: Teacher compensation Summary of current state The current average salary of MCS and SCS teachers is the highest in Tennessee. Teachers are currently paid on the basis of a step (years of experience) and lane (degree attainment) system, with almost 30% of teachers at the maximum pay step in both districts. Approximately 30% of pay is currently non-base payapproximately 20% based on years of experience, approximately 7% based on degree, and approximately 3% based on stipends. Yet, national research shows gains to teacher experience leveling off after four to five years, and local data shows no relationship between years of experience and TVAAS levels after the first two years in MCS and ever in SCS. Additionally, both national research and local data show no correlation between TVAAS scores and degree. As part of their joint teacher effectiveness work, the districts have a study in progress on compensation. It is expected that an output of this work will be a better understanding of the views of teachers regarding compensation. The recommendations of the Transition Plan with respect to compensation are structural and grounded in research. The study under way should help further refine how best to structure compensation within the guidelines suggested in the Transition Plan. Almost 30% Of MCS & SCS Teachers Are at the Maximum Salary Step

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The TVAAS Scores of MCS and SCS Teachers Show No Relationship with Years of Experience

The TVAAS Scores of MCS and SCS Teachers Show No Relationship with Degree Attainment

Findings from benchmarks and other districts In United States K12 education, most teachers are currently paid on the basis of experience and degree attainment. Although studies show that neither criterion is directly linked to effectiveness, very few full-scale pay reforms have been implemented and analyzed to date. Accordingly, there is little information about the potential of any particular reform structure. It is thus critical that any new structures be flexible and evaluated on an ongoing basis. The ability to alter structures based on new learning and evidence will require flexible and responsive compensation structures. The single salary schedule currently in use does not take into consideration labor market realities 73

some teachers will have more financially attractive opportunities outside of teaching than others. For example, four years out of college, the gap in salary between teachers and non-teachers who have technical (math and science) training is $13,469 but only $6,811 for their non-technical peers. 25 This growing salary gap may make it more difficult to attract and retain teachers with technical skills and knowledge. Data from teacher exit surveys show that mathematics and science teachers who left the profession were almost twice as likely as other teachers to rate better salary or benefits as very important or extremely important as reasons for leaving. 26 Measures of success Turnover of teachers by overall evaluation level and by TVAAS level o Overall o In critical shortage fields o In high priority schools Extent to which exiting teachers agree that compensation was a reason for leaving the district, broken out by evaluation level (from exit survey) Extent to which applicant teachers agree that compensation was a reason for applying to teach in the district (from applicant survey) Recommendations In the area of teacher compensation, the TPC recommends: 58. Effective teachers be identified, recognized and honored both financially and through other means 59. Teacher compensation be redesigned to better attract and retain effective teachers, including attracting teachers to and retaining teachers in hard-to-staff positions, including high priority schools and critical shortage areas (e.g. math, science, world languages). Teachers with demonstrated and sustained effectiveness should be eligible for salary increases and career advancement. The teacher career framework should clearly articulate the associated performance requirements for such increases. 60. The district not base teacher compensation on degree attainment, which shows no correlation with student outcomes, either in local data or national research. The district should, likewise, not tie teacher compensation to professional development undertaken. 61. Teacher compensation reform be fiscally sustainable. No increases in total average compensation should be entered into without provision for the ongoing increase in expenditure. 62. The compensation reform process engage teachers, administrators, and other stakeholders. This engagement may be accomplished through focus groups and a targeted survey to establish a teacher value proposition that meets the aspirations of recommendations 1 and 2 of this section, and the financial constraints outlined in recommendation 4 of this section. 63. The district annually analyze the effects of teacher compensation and adjust go-forward compensation policies based on that analysis. In order to fund teacher compensation, the TPC recommends:

25 Goldhaber, D., Teacher Pay Reforms: The Political Implications of Recent Research. Center for Education Data and Research, (2010). 26 National Center for Education Statistics, Attrition of Public School Mathematics and Science Teachers. (2008).

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64. Teachers who have attained advanced degrees prior to the merger will continue to be paid for these advanced degrees in accordance with the pre-existing salary schedule and the requirement of Norris-Todd to not diminish the salary schedule of teachers. Teachers who have begun an advanced degree prior to August 2012 and finish the degree by August 2014 will be paid for these advanced degrees in accordance with the salary schedule. Teachers will not be paid for any other degrees attained after the merger date. 65. New teachers employed after the merger date will not receive additional compensation for degree attainment but will have the opportunity to receive additional compensation based on whether they teach in a high priority school, teach a hard to staff subject, or have demonstrated sustained effectiveness. 66. The district apply to use COLA funds for the purpose of differentiating compensation and in accordance with the flexibility the state plans to offer for this purpose. 67. Much of the financial responsibility for implementing the recommendations for effective teachers falls within the scope of the Bill and Melinda Gates Foundation Teacher Effectiveness Initiative grant to MCS. The TPC strongly supports the work of the TEI and its expansion to include Shelby County Schools. Further, the TPC recommends allocating $2.5M in 2014-15 and $2.6M in 2015-16 to support this work. See the summary of all investments in the Financial Model chapter (page 172).

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Priority 9: Effective instructional leaders (principals and assistant principals) Research shows that principal effectiveness is second only to teacher effectiveness among school controllable variables that impact student achievement 27. Establishing a clear understanding of the characteristics of effective and ineffective leadership is thus among the most important tasks of the district. Districts establish this understanding through their observation rubric. Historically, the observation rubrics used by districts have been of poor quality, have been poorly implemented, or both. To improve this problem, districts have introduced more robust frameworks and have incorporated other measures into principal evaluations, such as student value-added data. This development is critical. Only if evaluation is a meaningful representation of principal performance can it be used to understand principals professional development needs and deliver against those needs. Further, an accurate system is needed to make better decisions about who is a principal and how they are compensated. For many years, districts have rated virtually all principals above average. But with such an outcome, principals cannot receive the professional development and coaching they need to improve, the district cannot dismiss those principals who cannot or will not improve, and the Human Resources office cannot compensate principals for sustained effectiveness. The effective instructional leaders section covers each of these ways to promote effective school leadership. These are listed as: Priority 8a) Principal evaluation Priority 8b) Principal support and professional development Priority 8c) Decisions about who is a principal Priority 8d) Principal compensation The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first Educators and staff are our most important resource We have high expectations We aim to enhance our district by balancing stability with needed change We desire excellent community schools and options for all We value strong leadership This is our once-in-a-lifetime opportunity Summary of current state Priority 8a) Principal 28 evaluation Research shows that principal effectiveness is second only to teacher effectiveness among controllable variables for student achievement. Establishing a clear understanding of what it means to be an effective principal is, thus, critical. Both districts are in their first year implementing the state principal evaluation model outlined below.

27 28

Leithwood, Louis, Anderson, and Wahlstrom 2004 and 2010. This document uses the term principals to refer to principals and assistant principals. 76

The Principal Evaluation Model Is the Same in MCS & SCS

Priority 8b: Principal professional development and support The same four types of professional development that exist for teachers also exist for principals formal, team-based, independent study, and one-on-one attention.
MCS Formal The National Urban Education Center runs formal programs to develop a pipeline of principal candidates and support them in their jobs. MCS holds monthly PD meetings aligned to district initiatives and best practices. Team-based The regions function as small group collaboratives that meet monthly to review key performance metrics and work to solve individual and systemic issues. Regions also break into smaller clusters that meet to work together every other month. Independent Small group collaboratives that meet monthly are SCSs primary approach to professional development. Their work is driven by a core learning team of building and central office leadership that select long-term topics of focus. SCS SCS conducts monthly PD meetings aligned to district initiatives. A core learning team of building and central office leadership selects long-term topics of focus for these meetings.

The VAL-ED (Vanderbilt Assessment of Leadership in Education) 360 is part of the evaluation process, and the districts both use it to create individualized and differentiated professional development plans. While principals are observed regularly, there are not currently strong peer coaching or peer observation program. There are plans in development to bolster this aspect of professional development. Principals are observed regularly, and new principals are assigned mentors. Beginning in 2012-13, principals rated below satisfactory on more than two standards of the evaluation rubric will also be assigned mentors.

One-on-one attention

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Priority 8c: Decisions about who is a principal In both districts, few principals resign or retire each year (approximately 5%). MCS has, however, turned over approximately one-third of its principals and reassigned approximately one-fifth in the last four years. SCS has not turned over any of its principals over this period. Priority 8d: Principal compensation Principals are compensated on years of experience and either type of school (SCS) or size of school (MCS). Neither district currently compensates principals based on effectiveness. The biggest difference between principal compensation in the two districts is that principals salaries are, on average, $14,700 more in SCS than in MCS. Principal Compensation Varies Across MCS & SCS

Findings from benchmarks and other districts Leadership is second only to classroom instruction among all school-related factors that contribute to what students learn at school 29. Leadership effects are usually largest in schools that need leadership the mostschools do not turnaround without a great leader. Over the last few years, research has emerged that the primary way principals increase achievement outcomes is through their human capital decisions 30. Research has found specifically the following skills common among more effective principals (identified using value-added data): Retain higher-quality teachers and remove less effective teachers Attract and hire higher-quality teachers to fill vacancies Have teachers who improve at a greater pace than those in schools with less effective teachers (significant but weaker evidence for this than other two) Unfortunately, researchers also find that principals spend less time on these activities (Horng, Lasik, and Loeb 2010). On average, only one-fifth of a principals time is dedicated to such activities, while more than a third of their time is spent on administrative tasks such as managing student discipline and fulfilling compliance paperwork[activities] that do not appear to be related to improved school outcomes.
29 30

Murphy & Hallinger 1998, LaRocque and Coleman 1990, Cawelti and Rotheroe 2001 Beteille, Kalogrides, and Loeb 2009

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With instructional, operational, and public engagement roles to balance, principal time is at a premium. Green 2010 finds that time management and balancing the roles and responsibilities of instructional leadership, operational management, and public engagement are critical to principal performance and organizational effectiveness. Additionally, though principals cannot be content specialists in all instructional areas, a deep understanding of effective teaching practices enhances the teacher observation process, a core part of the teacher evaluation process, which is the basis for principal decisions about who teaches. While research on principal evaluation is not as developed as that on teacher evaluation, it is reasonable to believe that many of the findings from the Measures of Effective Teaching Project (in which MCS is one of the study sites) are applicable to principals. The following summarizes the findings (which are described in more depth in the Teaching sections of this chapter): Multiple measures are better than any single measure of teacher performance Multiple observations are better than single observations Observers should be required to demonstrate accuracy before rating teachers It is important to track system level reliability by double-scoring at least some teachers with impartial observers. Verify that teachers with higher observation scores also have higher student achievement gains Measures of success, selected 31 Priority 8a: Principal evaluation Meaningful distribution of overall evaluation scores and distribution of each component of the evaluation (e.g. observation, TVAAS, stakeholder perceptions survey)target no more than 20% Level 5 and no less than 20% across Levels 1 and 2 Extent to which principals agree: - I was evaluated fairly - I was evaluated rigorously - The evaluation process has helped provide me with information and strategies to become more effective Priority 8b: Principal professional development and support Extent to which principals agree that each of the following forms of professional development help them become effective in the classroom: - Formal structured programs - Team-based - One-on-one attention - Independent study Priority 8c: Decisions about who is a principal Principal selection: - Ratio of applicants to vacancies overall and by school - Offer acceptance and declination rates overall and at high priority schools Principal dismissal: - Number of principals in district receiving persistent 1s (3 or more consecutive years) on overall evaluation is zero - Number of principals in district receiving persistent 1s (3 or more consecutive years) on TVAAS (in order to ensure that teacher evaluation tool is successfully identifying the lowest performers) is zero

31

For a complete listing of measures of success, please see Appendix B.

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Priority 8d: Principal retention Turnover of principals by overall evaluation level and by school-level TVAAS - Overall - In high priority schools Recommendations In the area of Priority 8a: Principal evaluation, the TPC recommends: 68. The districts work together to develop a principal evaluation model that meets state guidelines but better meets district needs, including: a. Developing a more robust rubric for principal observation to enhance TILS (Tennessee Instructional Leadership Standards) that includes school culture and climate, employee morale, and parental involvement but preserves current elements, including meeting nationally accepted standards and responsibility for professional development for teachers b. Developing a robust methodology for holding principals accountable for the quality of their teacher observations, including the quality of their feedback and suggested supports to teachers c. Developing a measure of the human capital decisions that principals make (e.g. selection, retention, dismissal) to add to the evaluation model d. Where relevant, aligning the principal evaluation with the teacher evaluation In the area of Priority 8b: Principal professional development and support, the TPC recommends: 69. The district develop an annual strategy for professional development based on an assessment of the districts needs. The strategy should make consideration of each of the four types of professional developmentformal structured programs, team-based, one-on-one attention (including coaching and peer observation), and independent study. In constructing the strategy, the district should make use of needs identified by principal evaluation and student achievement data and seek opportunities to give principals professional development that is job-embedded and linked to specific development opportunities identified by the principals evaluation. It should make special consideration of the various responsibilities of the principal and how to balance them in order to achieve organizational effectiveness. The district should also seek to provide an array of learning platforms for the delivery of professional development. Further, it should consider whether and how the approach to professional development should vary based on the overall performance of the school. Professional development that does not meet needs identified in the strategy should be discontinued. Such strategy should be revised annually based on student achievement and principal efficacy data as well as on educational priorities. The revised strategy should then be reviewed with a committee of key stakeholders. 70. Each principal have an individual growth plan that is linked to his or her principal evaluation 71. Small group collaboratives be the districts primary approach to team-based professional development for principals. Time must be scheduled for principals to meet in their collaboratives at least once a month. Such time shall be focused on sharing successes and seeking assistance in addressing problems in implementing district initiatives. Where possible and when necessary, such conversation should be rooted in data and inquiry. Such planning time shall not be used for dealing with calendar, consequences, or content issues. In the area of Priority 8c: Decisions about who is a principal, the TPC recommends: 72. The district take the following actions to improve principal selection: a. Put differential effort into identifying and attracting candidates that are good fits for principal positions in high priority schools. 80

b. Track the number and quality of graduates hired via each pathway and meet semiannually with the largest of them to provide feedback on their graduates. This feedback will also be shared with the State. 73. The district take the following actions to improve dismissal: a. Dismiss principals rated significantly below expectations b. Provide principals rated below expectations with intensive supports the next year. Those principals have that year to improve to meeting expectations or higher or will be dismissed. In the area of Priority 8d: Principal compensation, the TPC recommends: 74. The district recognize and honor effective principals both financially and through other means 75. The district redesign principal compensation to better attract, reward, and retain effective principals, including attracting and retaining principals to high priority schools. Principals with demonstrated and sustained effectiveness are eligible for salary increases and career advancement. 76. Principal compensation reform be fiscally sustainable. No increases in total average compensation will be entered into without provision for the ongoing increase in expenditure 77. The compensation reform process engage principals and other stakeholders through focus groups and a targeted survey to establish the principal value proposition for merged SCS that meets the aspiration of recommendations 1 and 2 of this section and the financial constraints outlined in 4 of this section 78. The district analyze the effects of principal compensation and make adjustments to compensation policies based on learning

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Priority 10: Culture and climate of high expectations The following guiding principles are most relevant to the recommendations in this section: The academic success and well being of our students come first We have high expectations We desire excellent community schools and options for all Summary of current state Accountability between each level of an organization is important to ensuring a climate and culture of high expectations. While significant strides have been taken in both districts to create instruments to hold teachers and principals accountable through new evaluations that utilize multiple measures to build a complete picture of their performance, there are still some organizational pairs that do not have reciprocal accountability. Specifically, while there are mechanisms for the districts to hold principals and teachers accountable, there are presently no mechanisms for principals and teachers to hold the central office staff, the superintendent, or the school board accountable for providing support and oversight that is timely and responsive to their needs. Reciprocal Accountability Requires Ways to Measure Performance in Both Directions

While students are held accountable through grades, attendance is an area where standards need to be raised for all students. Approximately 11% of students enroll for the first time after the 10th day or transfer at some point during the school year. And while the attendance rate is 94.3% for SCS, MCS has an attendance rate below the state average at 90.4%. Additionally, there is not currently a formal way for students to directly engage personnel in the district about areas of student concern.

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Measures of success Attendance during first month of school is tracked and managed and improves at least 10% each year until it is the same as attendance during the rest of the year Whether instruments are in place to measure accountability in both directions for every pair of relationships (e.g. teacher-principal and principal-teacher; teacher-student and student-teacher, district-principal and principal-district, etc.) Creation of a Student Congress that meets with district staff at least four times annually - Each secondary school has a representative to the Student Congress - Whether a program is developed for elementary school students Average overall evaluation and TVAAS scores of those dismissed, those choosing to leave, and those retained Recommendations In order to foster a culture and climate of high expectations, the TPC recommends: 79. The district employ reciprocal accountability throughout all levels of the district. For example, teachers hold students accountable for learning (e.g. through attendance and grades) and students hold teachers accountable for teaching (e.g. through a twice annual student perceptions survey that is part of the teacher evaluation). Likewise, the district holds principals and teachers accountable for performance (e.g. through performance evaluations with multiple measures, including student achievement and culture and climate of high expectations), and principals and teachers hold the district accountable for providing appropriate service levels (e.g. through a service provider satisfaction survey). The Board and Superintendent are also held accountable for performance. The Board and Superintendent release their progress toward meeting their goals at least twice annually. Additionally, for both the Board and the Superintendent, stakeholder feedbackboth from employees and from the communitybe collected and shared at least twice annually. In order to implement reciprocal accountability, the district continues to use or implement relevant instruments for collecting performance information between every reciprocal pair, for example, creating a survey on quality of service delivery of central office divisions since one does not currently exist. The district regularly use data from such instruments to inform instructional and administrative decisions and to set goals for continuous improvement. 80. Instruction start on the first day of school, and continue until the last day of school. The district and its community partners expect and communicate that it is not acceptable for students to show up when they are ready, and likewise it is not acceptable for instruction to end prior to the conclusion of the year. 81. The district create a Student Congress to represent the students of the district. Each middle and high school select a representative to the Congress in a well-publicized election. The student representative also serves on the student council for his or her school. Student representatives are responsible for effectively collecting, synthesizing, and prioritizing their peers input, as well as communicating back to their peers and their schools council the work of the Congress. District representatives give serious consideration to students input, meeting with them at least four times annually. Additionally, the district works to create a developmentally appropriate way to collect input from, train, and develop elementary school students to take responsibility for their voice in improving their learning. 82. The district celebrate and reward highly effective individuals and teams and dismiss individuals who are not able to meet expectations after receiving coaching and support 83

EDUCATION PLAN: Administrative Organization

The Education Plan for the district includes two sections: first, the educational services that the district will provide, and second, the administrative structure that will deliver these services. This chapter now covers the administrative structure recommendations.

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Context The Education Plan: Administrative Organization chapter includes recommendations for the highlevel administrative structure of merged SCS. This includes the organizational structure, central office design, school autonomies and responsibilities, student assignment policies, and schools footprint. The first recommendation in this chapterthe Multiple Achievement Paths modelputs forward a theory of action that lays the foundation for all other recommendations. This theory of action emphasizes a focus on maximizing the number of students in effective schools, and is neutral about who operates those schools. The TPC expects that the district's strongest schools will, over time, include a mix of district-operated, charter, and Achievement School District (ASD) schools. The direct cost of this organizational model is approximately $1M in incremental central office staff additions for the Office of Planning and Performance Management. An additional $1M in incremental cost for the new Office of Innovation will be covered by grant funding. See the summary of all investments in the Financial Model chapter (page 172). Indirectly, the reality of the organizational model is that a greater variety of operators can be more expensive, due to the potential loss of scale. This indirect cost is detailed in the Financial Model chapter (page 169), which identifies cost recovery initiatives to minimize the impact. The TPC believes that the administrative structure is just one element in a school district and that no particular organizational design can guarantee the districts success. Districts of many different sizes and structures have demonstrated strong academic outcomes, while low-performing districts also come in a range of shapes and sizes 32. The most important question about administrative structure is not whether a structure is right, but whether it supports the district in achieving its strategic goals. Structure above all should be an enabler, not an inhibitor, of the critical drivers of student achievement: Strong district leadership, strong school-level leadership, and effective teaching. This chapter of the Transition Plan details an administrative organization and governance structure which the TPC believes meets this aspiration. Summary of current state Organizational structure Memphis City Schools (MCS) manages its schools within four regions with additional supports provided by the central office. Regional Superintendents are the managers and evaluators of principals of all district-operated schools, except for alternative schools. Charter schools are supported by two liaisons that support the authorizing function and are a point of contact between charter schools and the district. Shelby County Schools (SCS) divides management of its schools among the senior leadership of the district. The Superintendent, his direct reports, and three grade-level directors split the management and evaluation of the district's 52 principals. The three grade-level directors provide additional support to principals in Elementary, Middle, and High Schools. The district has one new, small charter school in the 201112 school year, and does not have a staff member dedicated to the charter authorization or liaison function. SCS does not have any ASD-eligible schools or schools managed with a turnaround focus.

32

Center for American Progress, Return on Educational Investment Report, Jan 2011

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Central office design MCS and SCS currently organize the first layer of their central office with a similar number of direct reports to the Superintendent and a similar set of functions among those direct reports (see below). There are some differences in the precise position of specific roles (e.g. in MCS the Chief Financial Officer reports to the Deputy Superintendent of Business Operations, where in SCS the Chief Financial Officer reports directly to the Superintendent), but there are more similarities than differences. MCS & SCS Direct Reports, 201112

School autonomies and responsibilities Neither MCS nor SCS has a formal structure for granting autonomy to principals. Instead, greater autonomy is given to principals on an informal basis once they have demonstrated their ability. This autonomy typically involves school staffing, scheduling, and some curriculum decisions. Autonomy is granted at the discretion of Regional Superintendents in MCS and the senior district leadership in SCS. Neither MCS nor SCS grant autonomy to principals with regard to operational services. Although MCS provides transportation and nutrition services to some charter schools on a fee-for-service basis, it has not developed a shared services approach to other operational functions (e.g. custodial, IT, procurement). Student assignment Both MCS and SCS assign students to attendance zones. Students are generally zoned to the nearest school, and schools generally are part of a single feeder pattern (e.g. students who attend the same elementary school will eventually attend the same high school). Both districts evaluate attendance zones annually, and consider: Current student enrollment Projected enrollment growth Facility capacity Feeder patterns Community input The districts differ in their transfer policies and the frequency of transfers. The next table illustrates the differences:

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Current State: MCS & SCS Student Transfer Policies

Schools footprint MCS and SCS operated a combined 243 schools during the 201112 school year. These include: 141 district-run elementary 52 district-run middle 47 district-run high 3 adult education 44 district-run optional 16 alternative 69 that have been labeled Priority by TN DOE and are eligible for the ASD This list is not mutually exclusivethere is crossover between the categories Additionally, there are 26 charter schools across the two school districts. Across these different types of schools there is a range of performance, enrollment trends, and capacity utilization, which inform recommendations on the schools footprint going forward. Further information on this can be found in the chapter entitled Operations Plan. Findings from benchmarks and research The TPC found successful and promising practices exhibited within two different administrative models. Many award-winning large districts exhibit a more traditional, centralized model, which remains the predominant structure among U.S. school districts of all sizes. The TPC reviewed several leading examples of this structure, including Gwinnett County (GA), Montgomery County (MD), and CharlotteMecklenburg (NC). Such districts tend to be united by several common characteristics: A focused strategy and sustained attention to a small number of priorities that drive student achievement Stable leadership A deep commitment to high expectations for all children 87

Strategic use of assets to benefit the entire community, often through directing funds based on the level and types of student needs

The TPC also found that in such districts, the centralized structure does not mean a wholly top-down approach to management. The central office values the role of the principal and may grant autonomy and flexibility to school leaders in areas such as staffing (and in some cases, budget) as a management practice. In contrast to the more centralized approach, the TPC also reviewed examples of the emerging portfolio-based school system structure. Most substantially, the TPC discussed the examples of New Orleans, which is the most extreme example of this model in existence, with over 80% of students attending schools not operated by the school district, and Denver, which continues to operate the majority of its schools. Over 25 large U.S. districts are pursuing some form of this new portfolio approach. New Orleans has the most mature model, having implemented this approach in the wake of Hurricane Katrina in 2006. The results to date in New Orleans are impressive. The system has cut the performance gap between the city and the state from 26 points in 2005 to 10 points in 2011, and it has reduced the proportion of failing schools from 62% to 10% of schools in the same period. 33 According to the Center for Reinventing Public Education at the University of Washington, portfolio models have seven key elements. Note that not all elements are implemented in every system pursuing this model: Options and choices for all students School autonomy Pupil-based funding Talent-seeking strategy Open market for support services Performance-based accountability Extensive community engagement Elements of both the more centralized and portfolio approaches are included in the Multiple Achievement Paths model recommended by the TPC, which is described further below. Finally, the TPC also researched a Chancellor Model in which multiple sub-districts operate with a significant degree of academic and operational autonomy and a relatively large staff. In such a Chancellor Model, a central office provides services and coordinates across the sub-districts. Districts that have previously pursued this approach, such as Montgomery County, New York City, and Los Angeles, have either abandoned the model entirely or have consolidated sub-districts over time. Two of the major drawbacks observed with this model are duplication leading to excessive administrative cost and tension surrounding the division of roles and responsibilities between the central and regional offices. The TPC was unable to find a successful example of this model currently operating in K12 education within the United States, and thus, the TPC did not recommend it. The TPC also evaluated various options for the central office organization. Across benchmark districts, the number of direct reports to the Superintendent and positions in the first layer vary widely. More than any specific design, however, it is most important that the central office organizational structure supports the districts theory of action and strategy. The TPC also benchmarked the way in which other districts structure two critical offices: the regional office and the office of innovation. Interviewees cited several key elements in regional office structure: Focusing the regional superintendent role on instructional leadership
33

New Orleans-Style Education Reform: A Guide for Cities, New Schools for New Orleans. http://www.newschoolsforneworleans.org/documents/03012012NOLAstylereform.pdf. January 2012.

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Adding regional directors with complementary skill sets (e.g. hiring a regional director with elementary experience if the Regional Superintendent has High School experience) Keeping the size of the regional office lean to prevent duplication of work with the central office and to control costs

The Committee also looked closely at Denver Public Schools and Metropolitan Nashville Public Schools to better understand how these districts have organized their office of innovation and what has made it successful. Both districts cited several important functions for the office of innovation: Serving as an advocate for change for all schools by studying the impact of different approaches on human capital, professional development, and instructional methods and by sharing what works well across the entire district Supporting the growth of a broad portfolio of schools by identifying student needs, bringing in new school operators, and supporting their growth Serving as an advocate for innovation in the district by helping the central office take a case management approach toward schools, moving toward transparent pricing of services, and building a customer service orientation in the central office Across benchmark districts that have a diverse portfolio of schools, one commonality was the existence of a centralized, transparent, and equitable school enrollment processfor both districtoperated schools and charter schools. Greater school choice has the potential to lead to greater confusion for parents. Other districts have found that managing the application, enrollment, and transfer process in one place, and with one set of deadlines, helps parents navigate their options. When the number of applications for any school exceeds the number of spots available, most districts use a lottery system to assign students. Aspirations The Administrative Organization and Governance Committee set out its aspirations for the structure of the new district. These aspirations are to have an organization that: Places a premium on equal, accessible, high-quality education for all students Places management decision-making close to students so unique needs are met Keeps schools connected to their local community Ensures governance structure is responsive to the county and creates a sense of community ownership Enables innovation Enables district to make district-wide changes when needed Connects schools that serve the same children over time (feeder patterns) enabling PK12 coordination and accountability Connects schools with similar challenges to enable both peer learning and specialized support from the district Keeps spending on management to the minimum needed to be effective Enables the district to attract and retain top talent Enables senior management to make informed decisions on principal evaluation and gives them flexibility in compensating, promoting and exiting principals Allows for some degree of choice for students and families

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Recommendations Organizational structure 83. The Multiple Achievement Paths model builds upon best and promising practices from the current districts and elsewhere, and it is tailored to the unique needs and context of Shelby County. The goal of this structure is to give each school, regardless of its status or location, the support and autonomy that will best enable it to deliver on the districts educational priorities. Multiple Achievement Paths Model

The TPC recommends that the organizational model have several key characteristics: 84. All schools within the district are held to common high performance standards 85. Most community and optional schools are managed in regions. 34 These schools receive autonomies from central leadership as a management practice. Some autonomies are granted to all schools, and others are awarded to a subset of schools. 86. The district works in close partnership with the ASD, which operates or contracts with operators for eligible low-performing schools. 87. ASD-eligible schools not in the ASD may become part of the Innovation Zone, which is managed by the district separately from the regions. These schools may be direct-run, or the district may choose to contract with outside operators. 88. The district authorizes schools that organize to become charter schools (new or conversion), as provided for in Tennessee Code Annotated. The district oversees a rigorous charter school application process, which ensures both educational quality and equitable access for students.

Starting point is six regions: the four current MCS regions plus SCS divided into two regions. Number and alignment of regions is subject to change based on number and locations of schools moving out of the regional structure (including ASD, municipal, and/or charter)
34

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89. The district provides high-quality, cost-effective support services. In addition to serving all district-operated schools, the district builds the capability whereby it may enter into service agreements with charter, ASD, and (should they exist) municipal schools in order to maximize economies of scale. See Operations Plan chapter (page 137) for further explanation of shared services model. The Multiple Achievement Paths model does not include a change in the districts high-level governance. The SCBE continues to provide policy governance and oversight directly to the Superintendent and administration. The Board continues to oversee the management of districtoperated schools and holds decision-making authority (subject to applicable law) to govern the granting of charters to charter schools authorized by the district. The model also envisions that the ASD continues to be overseen by the State of Tennessee as provided by law. Central office design The design of a school districts central office should reflect the districts greatest priorities and how the district intends to ensure every student has the instruction and support he or she needs to be successful. The central office also should address the unique local context. 90. In this light, and in the context of the Multiple Achievement Paths model, the central office in the merged SCS district must fill six roles in order to perform exceptionally well: a. Take all necessary action to ensure that an increasing number of students have access to effective schools and teachers. This requires strategic action at both the individual employee and school levels. At the individual level, the central office will prioritize the district's efforts to recruit, retain, and develop effective teachers and leaders (see Education Plan: Educational Services recommendations, beginning on page 53). At the school level, the district should seek to create and expand high performing or high potential schools (district operated or charter schools), and should look to seed them strategically in areas of the district where they are most needed. Additionally, the district will intervene by bringing schools into the Innovation Zone or by closing schools when those schools are not providing students with high quality opportunities. b. Support high-quality instruction in district-operated schools. The academic and student support functions of the regional offices and central office should exist to serve the needs of district-operated schools. The district will maintain a central focus on quality instruction, both by ensuring that schools are staffed with effective teachers and leaders and by providing support to teachers, principals, and staff to help them develop their skills over time. The district will manage the administrative burdens it places on schools and should aim to keep decision-making as close to students as possible (see subsection below: School autonomies and responsibilities). c. Work in close partnership with charter schools and the ASD. Within the Multiple Achievement Paths model, the TPC expects that fulfilling the first function above increasing the number of students who have access to effective schools and teachers requires the district to work closely with the ASD and charter schools. This partnership requires that the district, the ASD, and charter schools exchange services, share best practices, develop fair funding arrangements and policies, and coordinate communications with families and the community. d. Measure performance. Another central office role within the Multiple Achievement Paths model is to promote and provide common metrics, platforms, and processes for measuring performance at the individual employee and school level. At the school level, the district should ensure that common metrics are used to measure the performance of districtoperated, charter, and ASD schools, and that metrics include both status and growth measures to account for schools' different starting points. At the individual level, the district should continue its progress in improving teacher and principal evaluation (see Education Plan: Educational Services recommendations, beginning on page 53). 91

e. Provide high-quality operational and support services. For the sake of efficiency, scale, and preserving principal time to focus on instructional leadership, the central office is in the best position to provide operational services to schools. In the Multiple Achievement Paths model, the district seeks to provide high-quality, cost-effective services to district-operated and, for a fee, non-district-operated schools (including charter, ASD, and municipal district schools, should they exist). f. Ensure compliance, fiscal responsibility, and equity. The central office has a responsibility to ensure compliance with laws, regulations, and policies, to ensure that funds are spent wisely, and to ensure all students and families are treated fairly. More than any specific organizational chart, the TPC recommends that the district office be organized to support these critical roles. The TPC recognizes that the merged SCS district's Superintendent should have discretion to design the district central office in a way that fits his or her management approach. Accordingly, the TPC is comfortable with reasonable variations from the model described in this section provided that the adopted design supports the roles above and includes and embraces the distinctive functions below. Note, however, that all financial assumptions in the TPC report are based on the model described in this section, and any changes to this model may have a differential cost impact. 91. The TPC recommends that the Superintendent have 810 direct reports. The proposed organizational chart for the Superintendent and his or her direct reports is pictured below. The next chart illustrates the functions that sit in each department in more detail. Recommended Organizational Chart

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Detailed Recommended Organizational Chart

There are many critical functions that a school district central office performs. This section aims not to describe all of them, but rather to describe functions in the TPC's design that are less common among central offices and/or represent a distinct choice among multiple options: 92. The TPC recommends that the merged district create Regional Offices as below: Recommended Regional Office Design

The regional office design is focused on two critical roles. The primary role of the regional office is to foster and develop greater instructional leadership among principals. In addition, the regional office has an important role in supporting parent, family, and community engagement. This design intentionally excludes some other functions sometimes found in regional offices, including professional development and school operations. See further description of recommendations on professional development for teachers on page 61 and for principals on page 81. See further description of recommendations on shared services, which include school operations, beginning on pageShared Services 137. The regional offices report to the Chief Academic Officer in order to ensure that the academic expertise in the central office is deployed in direct support of the schools. Although this means that Regional Superintendents do not report directly to the Superintendent, they should nonetheless be a part of the Superintendent's cabinet and core leadership team. 93

Regional office staff members each play a role in supporting the purpose of the office: The primary role of both the Regional Superintendent and Director of Instructional Support is to provide ongoing support to principals in honing their instructional leadership through planning, goal-setting, professional development, and advising principals on staffing decisions. In addition, these staff members evaluate principals and play a significant role in principal selection and dismissal decisions. 35 Assuming regions vary in size between 26 and 46 schools, each Regional Superintendent and Director of Instructional Support will manage 13-23 principals. The Parent and Community Liaison, with the support and guidance of the Regional Superintendent, interacts with parents and support schools in their collaboration with parents and community organizations. This role also helps the Regional Superintendent and Director of Instructional Support to keep their primary focus on instructional leadership. The Administrative Assistant provides administrative support to the other staff members in the office, and will serve as a first-line responder to questions, comments, and concerns from parents and community members. Finally, as an extension of the regions core roles, the Regional Superintendent ensures that the regional office supports the effective transitions of students between schools (e.g. elementary to middle school, middle school to high school) and helps to facilitate and promote strong communications within the district. Regional Superintendents and Directors of Instructional Support are critical to the success of this regional model, and finding the right people for these positions is critical to its success. Over time, as the district builds its pool of school- and region-level instructional leaders, the district may want to consider adding additional Directors of Instructional Support in order to decrease the number of schools supported by each Regional Superintendent and Director. Geographically-aligned regions additionally allow for entire feeder patterns and smaller municipalities to be managed as a whole to foster collaboration between schools within the community. While the TPC has not drawn specific boundaries for the new regions, the TPC recommends six regions with the following three features: Dividing the district into six regions. As a starting point, this division can be accomplished by using the current four MCS regions and dividing the current SCS into two regions. Keeping entire municipalities (excluding Memphis) in the same region and keeping entire feeder patterns intact Equalizing the size of the regions to include approximately the same number of schools in each The TPC recognizes that as the number of district-operated schools changes, the size and number of regions may necessarily vary. The TPC recommends the SCBE revisit the time and number of regions in advance of the 201314 school year. The TPC estimated that the cost of the regional office recommendation is cost-neutral. This is because the size of the regional office in this recommendation is smaller than what currently exists in MCS, and so adding two regions redistributes the same number of staff cost across more regions.

The definition of instructional leadership used throughout the Transition Plan follows: Working intensively and continuously with teachers to examine evidence of the quality of their teaching and to use that evidence to improve how they teach. Interviews with other districts and a review of academic literature highlighted the importance of the regional superintendent working with principals closely to develop these skills. Honig, Meredith. District Central Office Leadership as Teaching: How Central Office Administrators Support Principals' Development as Instructional Leaders. Educational Administration Quarterly. April 2012.
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93. The TPC recommends that the merged district create an Office of Innovation as below: Recommended Office of Innovation Design

The purpose of the Office of Innovation is to ensure that the district is able to provide more highquality school options for more children, through traditional and non-traditional Achievement Pathsincluding charter schools, Innovation Zone schools, and community schools. To that end, the Office of Innovation will ensure that all types of schools have the access to innovative approaches that are effective. The Office of Innovation encompasses several roles, each represented by a report to the Chief Innovation Officer: Regional Superintendent of the Innovation Zone: Manage the turnaround of low-performing schools with Innovation Zone status. This group will start with six schools in 201213 and could grow to 35 schools by 201516. Director of Charter Schools: Support the authorization of charter schools and monitor their performance over time Director of District Innovation: Ensure school-level innovations are shared district-wide, so that all schools can benefit from the best practices of other schools Director of Operations: Support Innovation Zone, charter, and ASD school operations; work in collaboration with the Chief Services Officer to develop a flexible services model to accommodate schools that have the option of purchasing district services (and over time, schools that have the option of opting out of district services) Given this office is different from what either MCS or SCS have today, the TPC estimated the incremental cost to staff this office is $1M, which will be funded by grant-funding. 94. The TPC recommends that the merged district create an Office of Planning and Performance Management The purpose of the Planning and Performance Management Office is to have a consolidated, districtwide view into performance, enrollment, and student needs across the districtand across all school types. This Office supports the district, Superintendent, and SCBE in strategically managing the creation of new schools, school closings, and the transition of schools from one path to another. To support the purpose of this office, the TPC recommends that the following functions sit within the Planning and Performance Management Office (function descriptions are illustrative, not exhaustive): Planning: Understanding trends in demographics and student needs, and developing strategies to meet those needs. Working closely with Finance to understand how available resources can be allocated to meet different needs. One critical planning role is studying the access all 95

students have to high-quality school options. The Office should develop plans to increase the number of quality school options available to students who currently have fewer quality options. Performance management: Developing and tracking common metrics across all schools of all types, and determining appropriate differentiated responses. Coordinating with human capital function to align school and central office performance management with performance management practices at the individual employee level. Research and evaluation: Conducting strategic research and program evaluation to help the district evolve and refine its practices over time Enrollment and student data: Managing and coordinating the forecasting, tracking, and reporting of enrollment and other student data Special projects: Leading strategic projects that require cross-department collaboration Transition management (sunset this function approximately two years after merger): Coordinating implementation of the merger transition, including tracking progress against milestones, overseeing coordination processes, holding owners accountable for transition activities. See more detail in the Migration Plan chapter (begins on page 188).

Given this office is different from what either MCS or SCS have today, the TPC estimated the incremental cost to staff this office is $1M. 95. The TPC recommends the merged district create a Human Capital Office, as below: The Human Capital Office is an intentional departure from the traditional human resources function found in most school districts. First, it reports directly to the Superintendent, elevating the importance of this office and its critical role in student achievement. Second, and more importantly, it is designed to emphasize a strategic, fully-integrated approach to human capital within the district. Its key roles include: leading the implementation of teacher, principal, and staff evaluations; partnering with the Academic Office to provide targeted professional development aligned with standards and needs identified by employee evaluations; supporting school leaders in making critical human capital decisions (e.g. hiring, dismissal); running a strategic selection and staffing process; managing transfer, layoff, and dismissal processes; setting compensation packages; administering benefits; and managing employee grievances. This office would lead the district's continued work in the areas of effective teaching and leadership. See more detail in the Education Plan: Educational Services chapter (beginning on page 53). 96. The TPC recommends that the merged district create a Services Office: The purpose of the Services Office is to manage the district's operational services by providing highquality cost-effective services across different school types (including district-operated, charter, and ASD schools). In the Multiple Achievement Paths model, the Services Office will seek to variablize costs and create transparent pricing to facilitate the transition to a model where a number of its customers are non-district-operated schools. This will be critical over time as more schools transition into the ASD and the number of charter school grows. See more detail in Operations Plan chapter recommendations on the shared services model (page 137). School autonomies and responsibilities The concept of school-level autonomy is central to the Multiple Achievement Paths model. While charter schools operate with contractual autonomy, the TPC believes autonomy is an important concept in other schools as well. The TPC recognizes that different levels of autonomy will be appropriate in different schools and, accordingly, puts forward four recommendations: 97. The district design the central office and its operational services in a way that is flexible to provide fee-based services to autonomous, non-district-operated schools (including charter, ASD, and municipal district schools, should they exist). In general, it is to the district's advantage from a financial and planning perspective to offer services to other operators. 96

98. The district should embrace a range of approaches (and potentially, outside operators) in its Innovation Zone schools. These schools, which have been identified among the lowest performing 5% of schools in the state, have unique needs which should be addressed through innovative approaches. As such, Innovation Zone schools should have highly-talented leaders and leadership teams who are granted autonomy particularly in areas related to instruction. Although many details regarding Innovation Zone schools are in the process of being determined, some details are known. The Innovation Zone schools will, for example, operate with extended learning time and, likely, with other instructional approaches that are different from other district-run schools. 99. For community and optional district-run schools that operate within the regional structure, the TPC recommends a differentiated approach to autonomy. This will start with what is referred to in the exhibit below as Extended instructional responsibilities, which will be granted to principals and schools that demonstrate success or put forward strong proposals for how the additional flexibility will lead to improved student achievement. It is important that proven leaders with strong plans be given autonomy; autonomy should not be reserved for schools that already have strong performance. Initially, district operated schools will not have autonomy to opt-out of district-provided services in the Operations category, though over time, district leadership may choose to extend autonomy in this area to principals and schools who have the demonstrated expertise and interest to make those decisions for their school. 100. The TPC believes that principals should be responsible for instruction and human capital within their building. Given that, the TPC recommends that all responsibilities in the School-site instructional category, which includes decisions about who fills teaching and support roles in the school, be granted to all principals (see Education Plan: Educational Services chapter for recommendations on principals, beginning on page 76). District and school responsibilities

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Autonomies and responsibilities across operators

Student assignment Student assignment includes both the assignment of students to schools based on where they live as well as the option that students have to transfer into a school of their choice. The TPC strongly values stability, student/family choice, and equity in student assignment, and makes the following recommendations: 101. Preserve current student attendance zone assignments through at least the 201415 school year. This would not apply: a. In locations where schools are closed (e.g. due to low enrollment) b. In locations where new schools are opened (one planned for 201314 school year in Southeast Memphis) c. To changes approved by the SCBE prior to the district merger d. In areas impacted by the creation of municipal school districts, if such districts are formed 102. Maintain and expand current transfer types to the entire district starting in the 201314 school year. a. Prioritize (child of) employee transfers, optional program transfers, final year transfers (following the current MCS definition), sibling transfers, and academic transfers (following the current SCS definition) on a space-available basis b. As a second priority, allow transfers for any reason on a space-available basis c. The Superintendent may continue to allow additional transfers (e.g. safety transfers) on a case-by-case basis 103. Institute a lottery system for situations where the number of transfer requests exceeds the available spots in a given school/program. 104. Over time, include charter and ASD schools (in addition to district-operated schools) in a centralized enrollment system that is developed and managed in partnership with ASD and charter school leaders.

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Schools footprint The Transition Plan includes at least four different sets of recommendations that impact the schools footprint: the number, size, location, focus, and attendance policies of schools in Shelby County: Multiple paths: Embrace multiple types of schools (multiple paths) that help students achieve at high levels, and hold all schools to common high performance standards Strong community schools: Value strong community schools, and guarantee students a spot at their zoned school Quality and equitable choices: Preserve and expand school choice. Some schools and programs draw from the entire district, and all schools accept student transfers on a space-available basis. Transfers and enrollment are be managed centrally, and the district utilizes a lottery when demand exceeds spots available Efficiency that enables support: Reduce the number of below-capacity schools, in order to ensure that all schools have the resources they need to lead their students to success

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OPERATIONS PLAN

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Introduction This chapter includes the go-forward operational model and identifies efficiency opportunities for merged Shelby County Schools (SCS) in key operational support functions including transportation, facilities, purchasing, IT, safety & security, and nutrition. In addition to these six areas, the chapter includes a framework and design principles for shared services. These operational recommendations support the well-being of all students by focusing on creating safe and clean buildings with high quality services. Additionally, the recommendations prominently feature the following TPC guiding principles: We must save where we can to fund what we need We aim to enhance our district by balancing stability with needed change The recommendations are based on gaining an understanding of the current state of operations, incorporating community input and best practices from other districts, and conducting deeper analysis. These recommendations are a substantial piece of merged SCSs financial picture, and the districts ability to deliver on academic priorities.

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Custodial Summary of current state Currently both districts provide the same basic services but through different models and at different costs. SCS outsources custodial services and supply/equipment purchasing through GCA. In addition, SCS employs 65 school-level plant managers who report to principals and are responsible for managing custodial staff as well as minor maintenance and repair. MCS provides custodial services in-house utilizing a staff of approximately 1100, which includes managers, custodial helpers, and building engineers (approximately 260 total personnel, serve a similar role to SCS plant managers). Currently, MCS spends $44.1M per year ($2.19/sq. ft.) while SCS spends $9.5M per year ($1.29/sq. ft.). MCS has about 20M of square footage in schools and administrative buildings that require custodial services; SCS has about 7M of square footage. For MCS, costs include personnel (management, building engineers, custodians), supplies, and equipment. For SCS, the GCA contract covers supplies and equipment and the only additional cost is for plant managers, who are employees of the district. MCS costs include projected overtime pay, while SCS overtime pay is covered through the GCA contract. Both district costs include ancillary services such as deep cleans and pandemic response. Of the $54M total current custodial spending across the two districts, ~$37M is for custodial services and ~$17M is for management (plant managers and building engineers). Staffs that work for the outsourced service providers today receive salaries and benefits within a comparable range to their in-house counterparts. These benefits include health insurance, retirement/401(k) plans, and vacation and sick leave. Findings from benchmarks and other districts Compared to 43 large US school districts analyzed in the 2011 Council of The Great City Schools study Managing for Results in Americas Great City Schools, MCS custodial cost per square foot is $0.42 above the median cost of $1.77 per square foot, while SCS is $0.48 below the median. When analyzing four districts closer in size to MCS and SCS, the average custodial cost per square foot is $1.14. See table below. MCS is more than $1.00/sq. ft. above average (approximately 90% above average) SCS is $0.15/sq. ft. above average (approximately 15% above average) District Memphis City CharlotteMecklenburg Shelby County Fairfax County Gwinnett County Detroit Students 106,000 138,000 47,000 178,000 162,000 73,000 Square Footage (M) 20.1 21.1 7.3 26.1 27.4 15.8 Custodial Costs ($M) 44.1 30.2 9.5 30.6 28.9 14.3 Costs/Sq. Ft. 2.19 1.43 1.29 1.17 1.05 0.90

*Total custodial costs have been adjusted for cost of living using NCES (2005) National Comparable Wage Index In order to increase quality and promote cost efficiency in recent years, some school districts have moved to an outsourced model similar to SCS: In 2010, Nashville (79,000 students) outsourced their custodial services for annual savings of $3M in the first year (or 12% of total custodial costs) 102

In 2010, Fort Wayne, Indiana (31,000 students) outsourced their custodial services for an annual savings of $4.4M in the first year (37% of total custodial costs) Since providers often include equipment purchase costs in the initial year, run-rate savings in years beyond the first few years should have greater savings

Best practice is for contractors to give first preference in hiring decisions to district employees that pass background checks and are recommended by their principals and custodial management staff. This was the practice followed in both Nashville and Fort Wayne, and it resulted in close to a 50% rate of retention for current employees. Additionally, some districts have moved towards creating an operations manager role that is shared between schools (similar to plant manager and building engineer role in SCS and MCS): Cleveland Metropolitan School Districts barrier breaker roleoperations support shared at approximately 1:810 schools The majority of school districts that work with the current SCS provider (one of the largest custodial vendors in the United States) do not require a building engineer or plant manager at the school level. Rather they share this role across multiple schools or deploy centrally as needed Aspirations The TPC used the following aspirations to guide its custodial recommendation. The TPC recommends going forward, that the district uses these aspirations to inform specific measures of success to track progress. Go-forward model in custodial services will be high quality and cost effective. High quality custodial services are indicated by clean and well-maintained facilities, excellent customer service from staff and flexibility to serve different school models present in merged SCS. Quality measures should be assessed by combination of quality inspections from facilities staff and report cards from principals. Currently GCA assesses performance through internal quality inspections (average grade of 92.7 last quarter) and principal report cards (average grade of 89.52 last quarter) Recommendations General Fund Migrate to the SCS model of outsourced custodial services through a proven service provider with experience in K12 school districts. 105. Initiate a competitive Request for Proposal (RFP) process to select a custodial contractor and incorporate language in RFP that encourages the contractor to preferentially hire current district employees for new roles 106. Fully outsource custodial services and supply/equipment purchasing a. Create clear quality measures and a system of performance evaluation for the contractor that includes gathering feedback from facilities management, principals and other district staff b. Ensure that the contractor preferentially hires current district employees Note: The TPC does not have an inherent preference for outsourcing, but recommends outsourcing this service because there is no evidence the district can achieve the same level of cost savings in-house 107. Maintain an in-house operations management staff presence at the school level that is shared between schools and reports to both facilities management and the school principal. This will result in one building manager for every two schools. Move grounds maintenance responsibility to centralized maintenance staff in SCS (this reduces the scope of the role of the plant manager). This is the current model in MCS 103

Both MCS and SCS will have a significant number of employees eligible for retirement before the merger date. The TPC recommends advising employees of their rights under their current employment prior to the merger, and the details of their retirement eligibility and benefits after the merger. As provided by Norris-Todd, accrued pension benefits are expected to remain. Cost impact General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated impact: $22M25M savings (total costs $1.05/sq. ft. to $1.14/sq. ft.) See the summary of all efficiencies in the Financial Model chapter (page 172). - Custodial contract: $14M16.5M in savings, based on achieving the current per-square foot costs of SCS today ($0.78/sq ft) across the merged district - District operations staff: $8.2M in savings Based on reducing ~50% of plant manager and building engineer positions, or about 160 fewer positions, across both districts Increase in grounds maintenance cost for SCS reduces overall savings by $1.2M (netted out in savings above) Savings as a percentage of current general fund spend: 4246% Key assumptions - Low-end estimate of custodial contract savings is based on the assumption that the new contract will include upfront equipment costs amortized across the length of the contract. This is in line with discussions with SCS and their current custodial vendor. - High- end estimate of custodial contract savings assumes that in a formal RFP process, the combined district will at least meet current square foot costs of SCS today ($0.78/sq. ft.) - Both estimates may be conservative given that some scale benefit should be achieved with the increase in volume in the combined school district - District operations staff savings are based on the assumption that operations managers will be shared across schools with geographic proximity at level of approximately one for every two non-charter district-operated schools - Increased ground maintenance responsibilities for SCS will cost approximately half that of MCS ground crew (approximately $1.2M)

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Utilities Summary of current state Currently, both districts receive utilities by the same method. Both districts receive gas and electricity through Memphis Light, Gas and Water (MLGW). SCS purchases water and sewage through the municipalities in which the schools reside, while MCS receives water through an in-kind donation from MLGW (valued at ~$700,000 annually). Both districts have the technology and systems necessary to actively manage school-level utility usage through the central office. Additionally, both districts have tried to implement various school-level energy management campaigns (e.g. turning lights off at end of day) with varying levels of compliance among school staff. Currently, MCS spends $29.5M on utilities ($1.47/sq. ft.) while SCS spends $9.1M ($1.24/sq. ft. Utility costs are often driven heavily by the level of deferred maintenance for a location. Buildings with greater deferred maintenance are often more costly to heat and cool. Findings from benchmarks and other districts In recent years, many school districts have taken steps to reduce their utility costs. For example, Seaford and Colonial School Districts in Delaware have aimed to reduce approximately 20% of utility costs by employing demand management techniques which include: Establishing and enforcing energy policy at staff-level Preventive maintenance Energy efficient investments (e.g. high efficiency bulbs, motion sensors for lights) Aspirations The TPC used the following aspirations to guide its utilities recommendation. The TPC recommends going forward, that the district uses these aspirations to inform specific measures of success to track progress: High quality utilities are indicated by environmentally friendly policies and comfortable facilities. Quality measures should be assessed by a combination of quality inspections from facilities staff and report cards from principals. Cost effectiveness is indicated by competitive cost per square foot. Recommendations General Fund In both districts, continue current model of sourcing power and electricity through MLGW, and implement the following incremental recommendations: 108. Pursue a Board-approved demand management policy to reduce school level energy usage, and provide financial incentives and penalties to schools based on level of compliance a. Policy enforced through inspections that carry financial incentives for schools that meet outlined standards b. Policy focuses on reducing plug load based on classroom-level appliances (e.g. microwaves, foot warmers) left plugged in over the course of the year 109. Dedicate at least one staff member for the entire district to energy management to help enforce school-level energy policies, and pursue other energy efficiency opportunities such as grants for energy efficiency investments Special Revenues Fund 110. Pursue grants to support energy efficient investments

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Cost impact General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated savings impact: $3M5M. See the summary of all efficiencies in the Financial Model chapter (page 172). - Demand management policy: $4M6M - Investment for one additional energy management full time equivalent: ($100,000) - Impact of MLGW requiring new district to pay for MCS water: ($700,000) As a percentage of current general fund spend: 813% Key assumptions: - Demand management policy will achieve 1015% utility cost reduction Uses a conservative estimate of savings that is below benchmarks and the estimate from district facilities managers who estimate 2025% savings Takes into consideration the level of deferred maintenance for MCS buildings, which may limit savings Also, provides that savings above 15% should be rewarded as financial incentives to the schools that show the greatest adherence to the new policy - MCS received water/sewage valued at approximately $700,000 in FY2011 free of charge from MLGW. This estimate conservatively assumes that this will not continue to be provided free-of-charge to merged SCS. If the free-of-charge service does continue, there will be incremental run-rate impact for utilities. Special Revenues Fund Potential exists for increased revenue based on receipt of grants for pursuing the most promising energy efficient investments

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Maintenance Summary of current state Currently both districts provide a similar level of service through a similar model. Basic maintenance (e.g. plumbing, electrical, HVAC, carpentry, grounds) is handled through crews deployed by the central office based on the needs of the district. Both districts also have smaller specialty maintenance teams for specialized areas such as fire safety, asbestos removal, roofing, and regulatory compliance. Currently, MCS spends $21.7M per year ($1.05/sq. ft.) while SCS spends $9.2M per year ($1.26/sq. ft.). Maintenance costs largely depend on each district's ability to finance maintenance projects. Currently, deferred maintenance at MCS is $343M, while deferred maintenance at SCS is $43M. School closures will reduce the level of deferred maintenance. Findings from benchmarks and other districts The average maintenance cost per square foot for seven other comparably-sized school districts benchmarked is $1.68/sq. ft. (see table below). MCS is more than $0.60/sq. ft. below average costs SCS is more than $0.40/sq. ft. below average costs District Detroit Duval Baltimore Prince George's Wake County Nashville CharlotteMecklenburg Shelby County Memphis City Students 73,064 123,947 104,331 127,039 143,000 79,117 138,000 47,000 106,000 Square Footage (M) 15.8 15.0 15.5 15.3 18.5 14.0 21.1 7.3 20.1 Maintenance Costs ($M) 34.6 31.9 27.7 26.2 25.0 18.7 26.4 9.2 21.7 Costs/Sq. Ft. 2.18 2.13 1.79 1.71 1.35 1.34 1.25 1.26 1.05

*Total maintenance costs have been adjusted for cost of living using NCES (2005) National Comparable Wage Index Aspirations The TPC used the following aspirations to guide its maintenance recommendation. The TPC recommends going forward, that the district uses these aspirations to inform specific measures of success to track progress: The go-forward model in maintenance will be high quality and cost effective. High quality maintenance is indicated by clean and well-maintained facilities, excellent customer service from staff, timely work order completion, timely funding of deferred maintenance plans and flexibility to serve different school models present in merged SCS. Quality measures should be assessed by a combination of quality inspections from facilities staff and report cards from principals. Cost effectiveness is indicated by competitive cost per square foot and supply costs. These metrics should be measured against benchmarks from comparably-sized urban school districts.

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Recommendations General Fund 111. Continue the deploy as needed service model used by both districts today, and implement the following incremental recommendations. Push major purchases of maintenance equipment and supplies through the procurement department (savings potential estimated in procurement sub-committee) Capital Fund 112. As capital funds become available, prioritize the following capital maintenance projects: a. Capital improvement needs b. Deferred maintenance c. IT projects that can be capitalized Cost impact General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated impact: Cost neutral As a percentage of current general fund spend: Cost Neutral Capital Fund Available capital funding will need to be prioritized for: Current capital expenditure plans for next five years including new construction Critical deferred maintenance projects Potential IT investments The Needs Assessment Committee should be convened to begin this prioritization exercise. Relevant considerations Optimizing warehouse location placement could yield efficiency savings by reducing transit time for maintenance personnel. Given the threshold of spending today on warehouse operations and some initiatives already underway to improve efficiency, the TPC did not explore in detail any incremental savings. The district should evaluate warehouse location placement during the implementation phase to assess possible incremental savings.

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Capacity utilization Overview School capacity utilization is a measure of the number of students who attend a school relative to its available space, adjusted for the school's specific programs. Programmatic capacity is the number of available seats given the space requirements of the school's programs (e.g. general education, special education, science labs) and is determined through school visits. Target utilization for a school is 8590%. Capacity utilization is important both for its impact on students and its impact on finances. Students attending an under-utilized school face an inequity when compared with their peers who attend schools closer to 85-90% utilization. Under-utilized schools have to spread the fixed costs of running a school (e.g., utilities and maintenance expenses, principal and AP positions) over fewer students and thus have a lower portion of per-pupil funds to spend on additional teachers and support staff for the school. Students in better utilized schools have access to more resources. By closing under-utilized schools and sending students to better-utilized schools nearby, those students benefit from greater access to resources and a richer learning environment. Lower average utilization across a district (as observed in MCS today) has a secondary impact on schools that are not under-utilized. Because under-utilized schools often need proportionally more staff in order to offer the same programs, the remaining schools in the district often have to staff at higher student-teacher ratios to help balance the overall budget. Therefore, addressing the underutilization problem provides students across the district with access to a better education. This section outlines the current state of capacity utilization across both districts and makes recommendations about how the district can optimize its schools footprint to provide all students with a richer experience and contribute to fiscal savings. Summary of current state Capacity analysis shows that there is an under-utilization of capacity in western Memphis and overutilization of capacity in eastern Memphis (see "Shelby County School Utilization," below). This trend is driven by an overall decline in enrollment in the district, and more significantly, a population shift from western Memphis to eastern Memphis. There are 89 schools with under 80% utilization of which 70 are in Memphis and 19 are in Shelby County. The under-utilized schools in Memphis are primarily clustered in Northwest and Southwest Memphis. There are approximately 65 schools with over 100% utilization, primarily in current Northeast and Southeast MCS regions.

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Shelby County School Utilization

A note on utilization measurement methodology Programmatic capacity was used in this analysis. MCS calculates programmatic capacity on an annual basis, while SCS revises only based on major changes to a building or student population. Neither definition takes into consideration the use of portable space. MCS has an additional 4,600 portable seats and SCS has an additional 2,000 portable seats. Enrollment data is based on the 2012 forty-day enrollment by school.

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Majority under-utilized schools in SW & NW Memphis Eastern Memphis and select municipalities over-utilized

Some school closures and building construction are already planned for the coming years: Three under-utilized schools in western Memphis are planned for closure prior to the 201213 school year: Lakeview Elementary, Georgia Avenue Elementary, and Graceland Elementary. Students will attend other elementary schools nearby. Construction of a new elementary school with 900-student capacity is planned for 2013 in the current Southeast MCS region Construction of a new high school is planned for Shelby County in 2016; the location is to be determined. Original projections suggest that the new building will be located between the current Arlington and Collierville High Schools. Findings from benchmarks and other districts Many districts across the country have engaged in school closure processes. Most of these districts evaluate their facilities footprint in the context of enrollment declines, population shifts, and broader reorganization based on academic or programmatic need (e.g. based on opportunity to expand high performing or turn around low-performing schools). As these districts look for opportunities to optimize their schools footprint and re-organize, the target capacity utilization level at schools is 85 90%. The three primary considerations for closure that are common to most such districts are: academic performance, enrollment/demographic need, and building condition. The following districts have closed a significant number of schools in recent years: District of Columbia Public Schools closed 23 schools in 2008 to address low utilization and create better learning environments for students Pittsburgh Public Schools reorganized in 2006, closing 22 schools, expanding 10 schools, and turning eight low-performing schools into achievement academies Cleveland Metropolitan School District closed 16 schools in 2010 and an additional 7 schools in 2011 as part of its Academic Transformation Plan to improve utilization and redirect resources Chicago Public Schools (CPS) closed or consolidated 12 schools in 2009 but is known to annually consider schools for closure 111

Columbus City Schools in Ohio used a task force in 2005 to recommend 12 school closures that would bring school capacity to roughly match enrollment Seattle Public Schools closed five buildings and five programs, relocated eight others, and opened a new elementary school in 2009 in order to rebalance utilization

Criteria for closure In this analysis, schools were first considered as candidates for closure if they had low capacity utilization (under an 80% threshold) in the 2011-12 school year. However, it is insufficient to recommend closing a school for this reason alone. Schools recommended for closure should also meet the following criteria: A declining enrollment trend over the past 5 years Academic performance below the district average Poor facilities condition (reflected in the facilities condition index, or FCI) Capacity for current students to attend nearby schools For more details regarding school closures, see Appendix D for a detailed description of the recommended process to identify the specific set of schools for closure and minimize negative impact on the community. Schools with Positive Enrollment Trends Not Considered Good Candidates for Closure

Closure Opportunities for Under-Utilized Schools Prioritized by Both Academic Performance & FCI 112

Recommendations 113. To address under-utilization, analysis indicates an opportunity for at least 20 school closures prior to the start of the 2013-14 school year. This would raise the utilization in the current Northwest and Southwest regions of MCS from ~58% to ~86%. The TPC recommends: a. At least 6 schools in the current Northwest region of MCS (suggested split of three elementary, one middle, and two high schools) b. At least 14 schools in the current Southwest region of MCS (suggested split of seven elementary, five middle, and two high schools) In this analysis, under-utilized schools currently in SCS were also considered for closure but there were no schools that met all of the criteria above. Of the 19 schools in current SCS with under 80% utilization, there are 2 below 50%. The TPC does not recommend any closures in SCS, given the lack of space in nearby schools to absorb students if schools were closed. These recommendations exclude schools in the Achievement School District (ASD) and three elementary schools slated for closure by the SCBE in the 201213 school year. The TPC is not recommending specific schools for closure, as that is a role of the school board. The TPC would recommend these closures be completed prior to the start of the 201314 school year. 114. To address overcrowding at schools in eastern Memphis, the TPC recommends: a. Enrollment shifts in and near Cordova for both elementary and middle school students b. New school construction (as slated in a new elementary school in the current Southeast MCS region c. Use of capacity utilization as one input among others in location planning with charter schools 113

Cost impact (efficiencies and strategic investments) The estimated, ongoing operational savings of at least 20 closures is roughly $21M in total, of which ~$19M is from the general fund and ~$2M is special funding. See the summary of all efficiencies in the Financial Model chapter (page 171). This analysis is triangulated across different sources: Benchmarks indicate $300,0001.2M annual savings from a school closure Recent SCBE closures estimate average annual general fund run-rate savings of $600,000 to $800,000 per school (all closures at the elementary school level) Bottom-up analysis currently estimates an average general fund savings of ~$625,000 per elementary, ~$1M per middle, and $1.5M per high school Note: ~$3M is deducted from the aggregate operational efficiencies to account for the overlap in savings that would result from the school closure, custodial and utilities initiatives all being implemented. Assumptions for run-rate cost savings in the bottom-up analysis Maintenance and utilities savings were determined by building square footage and assumed 90% savings in closure due to residual cost of building upkeep once a building is decommissioned Custodial savings were determined by current cost per square foot in MCS ($2.19/sq. ft.) and 100% savings assumed; any necessary upkeep or maintenance on a decommissioned building is captured in residual maintenance costs Personnel savings determined by recent MCS closure data and district staffing ratios - 100% of principal compensation - 100% of cafeteria personnel (all special revenue savings) - Approximately 80% of other administrative personnel, including librarians, counselors, and IT supportsome necessary carry-over based on district ratios (e.g. an Elementary Assistant Principal is needed for current MCS schools with over 660 students) - 5060% of elective and vocational teachers and general education paraprofessionals - 1520% of general education teachers (conservative estimate based on benchmarks from other districts; Recent MCS closures assumed a higher teacher savings from closures at 2030%) - 0% savings on any special needs teachers or paraprofessionals (assuming the majority of those staff will move with the students) Transportation: Assumes ~$200,000 average incremental transportation cost per closure, acknowledging that elementary closures will likely need less and high schools will likely need more One-time impact There will be one-time closure costs for relocation and decommission of buildings. Benchmarks suggest these costs could be $50,000 to $75,000 per school. This totals to approximately $1.3M, assuming an average of $62,500 per school Additional capital funds can also be generated from the sale or lease of decommissioned facilities, although discounts to buyers on expenditures to demolish buildings before selling the property may be necessary and would reduce revenue. The financial impact of selling or leasing the buildings was not estimated in this analysis.

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Transportation Summary of current state Currently both districts utilize different transportation models to serve their students. MCS outsources General and Special Education transportation services, maintenance, and bus depot management through Durham. Durham provides MCS with all district bus drivers and Special Education monitors. In addition, Durham provides MCS with a fleet of approximately 420 buses (including spare and Special Education buses). All buses are currently between one to three years old, are air-conditioned, and include GPS and security cameras. MCS has a small in-house team including management, routing, and administrative support. SCS provides all transportation in-house, including management, drivers, Special Education monitors, mechanics, bus depot management, routing, and administrative support. SCS employs approximately 250 bus drivers as well as about 40 Special Education monitors. SCS owns a fleet of approximately 310 buses (including spare and Special Education buses). Buses are an average of seven years old and include security cameras and GPS. Only Special Education buses are air-conditioned. Currently both districts operate multiple bell times. MCS runs on two bell times at 7:30 and 8:30 and SCS runs on three bell times at 7:00, 8:00, and 9:00. Fewer bell times are often a driver of increased cost. Spreading student transportation over more bell times reduces the cost by enabling districts to utilize fewer buses to serve the same number of students. Currently, MCS transports an average of 28,535 students (26,388 General Education and 2,147 Special Education) at a total cost of $20.8M. SCS transports an average of 23,875 students (23,253 General Education and 622 Special Education) at a total cost of $15.6M. Transporting Special Education students is more costly than transporting General Education students because of the need for monitors, equipment, and longer routes. See table below for details:

District MCS SCS MCS SCS

Student Type Gen Ed Gen Ed SPED SPED

# of students 26,388 23,253 2,147 622

Cost to serve 9,372,657 13,012,382 11,439,096 2,592,239

$/student 355 560 5328 4168

Findings from benchmarks and other districts Given that costs of transporting a student vary dramatically based on population type (e.g. General Education vs. Special Education), it is less relevant to use benchmarks that only use a blended average to assess student costs (e.g. Council of the Great City Schools studies). Case studies, however, can still help districts understand strategies and best practices. In recent years in order to increase quality and promote cost efficiency, some school districts have moved to an outsourced model of transportation. In 2010, Detroit outsourced transportation services for approximately 5,000 students (less than 25% of SCS ridership) and achieved a savings of $5M8M in their first year. Additionally, the sale of district owned buses to the new outsourced provider netted a $5.1M one-time revenue gain. Some districts also use optimized bell times in order to create cost savings. In 2009, Seattle centralized school day scheduling in order to appropriately stagger start times and allow for better bus utilization. The district saved $2.2M by eliminating 49 buses. Outsourced vendors typically give first preference for rehiring to current employees provided that the employees pass background checks and are recommended by their management. 115

Aspirations The TPC used the following aspirations to guide its transportation recommendation. The go-forward model in transportation services will be high quality and cost effective. High quality transportation services are indicated by on-time arrival, safe transportation (including conditions inside of the bus), buses kept in excellent condition, and compliance with Special Education guidelines. Quality measures should be assessed by a combination of quantitative metric tracking, quality inspections, and student/parent/staff surveys. Cost effectiveness is indicated by competitive cost per student served and by bus purchasing costs. Recommendations General Fund Adopt MCS model of outsourcing transportation services to a proven service provider with experience in K12 school districts, and adopt the SCS model of three bell times to maximize utility of the bus fleet. = 115. Initiate a competitive RFP process to select a transportation contractor and incorporate language in RFP that encourages the contractor to preferentially hire current district employees for new roles Note: The TPC does not have an inherent preference for outsourcing, and recommends outsourcing this service because there is no evidence the district can achieve the same level of cost savings in-house (with the exception of special education transportation). 116. Sell the current SCS fleet 117. Maintain an in-house staff comprised of management, routing capability, and administrative support 118. Adopt the SCS model of three bell times Both MCS and SCS will have a significant number of employees eligible for retirement before the merger date. The TPC recommends advising employees of their rights under their current employment prior to the merger, and the details of their retirement eligibility and benefits after the merger. As provided by Norris-Todd, accrued pension benefits are expected to remain. Special Revenue Fund Both districts use Special Revenues to fund some portion of Special Education transportation and No Child Left Behind transfers. The recommendations make the assumption that those funds will continue to be available for transportation services. Cost impact General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated savings impact: $9.3M10.3M. See the summary of all efficiencies in the Financial Model chapter (page 172). - Outsource transportation services: $7.3M - Move from two to three bell times in MCS: $2M3M As a percentage of current general fund spend: approximately 2528% Key assumptions: - Total transportation costs in the combined district today are $36.4M 116

The estimate of $7.3M in savings to outsource transportation services assumes that competitive RFP process will yield per student costs in-line with lowest current district costs today. Achieving current MCS general education per student rate in SCS would approximately yield a $200 per student savings for the MCS general education population. Similarly achieving current SCS special education per student in MCS would yield an approximate $1,150 per student savings for the MCS special education population This is a conservative estimate and savings may increase in a competitive RFP with competition between vendors and benefit of having increased scale If competitive RFP did not yield lower per student special education costs than are currently achieved in SCS, the district could consider keeping special education transportation in-house, though this would require increased capital investments to purchase new buses equipped for special education transport needs (e.g. wheelchair accessible buses) or consider contracting with a separate vendor for Special Education services The cost estimate above includes both SCS and MCS Special Education monitors at the same cost that the districts pay today and assumes the same ratio of Special Education students as today The estimated cost also includes outfitting all district buses with air conditioning (today only MCS had air conditioning on all buses) Best practice is to maintain a small in-house transportation function in order to manage reporting and compliance as well as to hold vendors accountable for meeting performance and cost metrics Routing costs are to be determined given that the decision regarding which software to use will be made during the migration planning process Savings from moving from two to three bell times in MCS is based on estimates from MCS Director of Transportation and MCS outsourced vendor: MCS: Decrease of 124 buses for $3M in savings Vendor: Decrease of 94 buses for $2M in savings Both estimates are less than the savings seen in benchmarks above

One-time impact Estimated savings impact: $6M incremental revenue from sale of SCS fleet to outsourced provider Key assumptions: Sale of buses will yield savings in line with the estimate from current outsourced providers for the sale of roughly 310 buses at an average age of seven years. In a competitive bid, the incremental revenue might be higher than this Relevant considerations If the volume of students transported increases, per student costs will decrease and vice versa. For example, if the volume of students transported decreases by 20%, cost per student should increase by 23%, and if the volume of students transported increases by 20%, cost per student should decrease by 12%. The difference in percentage ranges is driven by the fact that scale benefits are not linear and thus decrease in magnitude as the number of students increases. The outsourcing vendor chosen will establish a process for obtaining accurate counts of daily ridership and student-level detail on a per bus level. The Multiple Achievement Paths administrative structure will create greater school choice and the potential for unique school models which will have an implication for how transportation services are delivered in merged SCS. The district may need to reconsider transportation policy for transfer students and will need to develop capabilities to effectively price and deliver tailored services to new operators (e.g. charter schools, ASD). This capability is detailed more in the Shared Services section. During implementation, three key equity considerations will need to be resolved: 117

Currently, MCS only provides transportation to high school students who live more than two miles from the school site. If merged SCS adopts SCSs policy of busing those who live more than 1.5 miles, such policy adoption would likely result in a cost increase over current estimates Currently, MCS also does not provide transportation services to 11 schools (though not all schools have students eligible for transportation). These schools have never received nor requested transportation services. If merged SCS offered transportation services to these schools, estimated costs would be between $800,000 and $1,000,000 Currently, both districts have different policies for assigning Special Education monitors to buses. MCS only assigns monitors to students that require that service in an IEP, while SCS assigns a monitor to every bus transporting a Special Education student. Under current policy, only a small percentage of MCS Special Education buses do not have a monitor. Our recommendation is that merged SCS adopt a consistent policy on the assignment of Special Education monitors.

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Purchasing Summary of current state Currently, SCS and MCS have similar purchasing models and policies. Both districts have central purchasing departments, but many expenditures under $500 are made at the department or school level. Board approval is required for any purchase greater than $250,000. A bid or RFP is required for purchases greater than $10,000, and a purchase order is required for purchases greater than $500. Over the past three to five years, both districts have engaged in strategic sourcing activities in a number of areas including food, IT, painting services, playground equipment, and audio-visual equipment. Savings across the two districts in the last year have exceeded $15.5M. Both districts also have similar aspirations to use technology to increase spend visibility and to enhance processes (i.e. e-RFP, reverse auctions), but they differ in levels of adoption. MCS currently uses several small systems to supplement the mainframe, including eSchoolMall (to manage sealed-bid processes), Zycus (spend management), Hedgehog (reverse auctions), and a contract database. SCS uses its APECS accounts payable function for cataloging and paying vendors, but primarily uses their website, email, and paper-based tools for their other needs. The exhibit below denotes the current combined spend on goods, services, and capital which is ~$320M. Among these categories, several top areas of spend are not addressed by the Purchasing recommendations because they are covered by other sections within the Plan or were deemed out of scope. The areas excluded are explained in more detail below, but that leaves ~104M in "addressable spend" for the purchasing recommendations. Addressable spend areas are indicated with numbers in the exhibit. Utilities, student transportation, custodial, and IT software/maintenance which are addressed in other areas of the Transition Plan. Food services as it is 100% special-revenue funded, and the purchasing teams of both districts have already made significant progress in category savings which can be further enhanced with greater volume of food orders for the new district. Textbook purchasing due to its heavy regulation by the State of Tennessee. The process for ordering and controlling book inventory is already being addressed by district staff Healthcare, office supplies, and telecommunications as efforts are currently underway and because these areas have been addressed in the past. Additional savings may be possible through increased volume and overlap of services in the new district. See health insurance purchasing recommendation 145. The remaining categories, including waste management, travel, temporary staffing, legal contract services, security equipment, and numerous uncategorized purchases in miscellaneous, are smaller spend areas which may necessitate a closer look in the future for further sourcing efforts and savings opportunities.

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~$320 Combined District Spend on Goods, Services, & Capital ~$104M in "addressable" spend for purchasing recommendations (addressable bars denoted with numbers within table)

Findings from benchmarks and other districts Findings from other districts and the private sector suggest that there are five strategic sourcing levers that may be utilized to help gain efficiencies and savings: Supplier management: Consolidating number of vendors, using negotiation tactics to ensure best prices, terms, and conditions Bundling: Consolidating orders to achieve purchasing scale, comparing against benchmarks and external partners, optimizing orders and contracts over time Demand management: Assessing buying needs periodically, optimizing order quantity and quality, managing contract compliance Process optimization: Standardizing process for vendors, using e-tools such as reverse auctions, optimizing inventory with suppliers to share risk, transmitting orders and invoices electronically Standardization: Standardizing specifications, using market standard products Although SCS and MCS may have used one or more of these levers on some spend categories in the recent past, lessons from other districts suggest that districts receive the greatest value by using all possible levers in each area. 120

Aspirations The TPC used the following aspirations to guide its purchasing recommendation. The TPC recommends going forward, that the district uses these aspirations to inform specific measures of success to track progress. The purchasing recommendations focus on obtaining high-quality products and extracting the most value when procuring high-spend goods, services, and capital. Aspirations include: developing robust processes to decrease the administrative burden of purchasing on school and district staff and preservation of some choice for end users while balancing scale benefits achieved by pooling demand and having fewer vendors. Recommendations 119. The TPC recommends the district pursue strategic sourcing & vendor consolidation Priority spend categories for strategic sourcing were identified by evaluating the addressability of the largest spend categories. These areas are shown in the next chart and include: repeat construction/capital maintenance, IT hardware, maintenance supplies and equipment, classroom supplies, instructional services, professional development, and print services. The identified addressable spend totals $104M which breaks-down across all three fund types: $40M in the general fund, $17M in special funds, and $47M in the capital fund. In particular, SCS and MCS have a unique opportunity through the merger to conduct a formal contract-compare. The goal is to ensure that the new district receives the best prices, terms, and conditions in major spend areas when compared to previously negotiated contracts by MCS or SCS by taking advantage of the newly increased purchasing volume. Additionally, a targeted look at the number of vendors utilized in each category will likely yield savings. For example, within MCS alone, more than 500 vendors provide IT hardware, while more than 400 vendors provide classroom supplies. Vendor consolidation offers opportunities for price negotiation, decreased shipping costs, and savings on administrative functions. In the general fund, estimated savings on a base of $40M is $6-8M which would come from achieving 15-20% in efficiencies. The estimated percentage savings are based on procurement best practices from other school districts and the private sector and estimates from Memphis and Shelby County district staff. Sourcing actions for priority areas Repeat construction: Vendor consolidation, standardizing specifications and designs, and scaling demand for repeat constructions (e.g. HVAC repair, re-roofing). Best practice is also to evaluate different efficiency levers for material, labor, and overhead IT hardware: Supplier consolidation (over 500 vendors today), standardizing specifications, and bundling volume across both districts Classroom supplies, instructional services, professional services: Pooling demand on schoollevel purchases, performing a more detailed assessment of school-level buying need Print services are currently provided in a fragmented way throughout the districts. Some printing and printer purchasing is done centrally, while other small printers are purchased at the school or classroom level. The districts have identified that there is potential for savings in this area through more optimized management of print services (e.g. more central printing, fewer classroom printers) Maintenance supplies: Pooling demand and optimizing stock levels

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Strategic Sourcing Against Priority Categories

120. Improving spend visibility through technology and/or p-cards MCS has over 190,000 annual transactions under $500 (totaling $18.5M in spend), and SCS has over 11,000 annual transactions under $500 (totaling $2M in spend). Since most of these purchases do not require advanced purchase orders, merged SCS will invest in procure-to-pay technology and procurement cards (p-cards) to give comprehensive visibility to this and other dispersed spend, as well as to enable the strategic sourcing levers mentioned above. Such investment is expected to reduce transactional overhead costs. While MCS has some technological capabilities, they are not integrated and thus are difficult to use effectively. An investment in a fully-integrated e-procurement system, such as Ariba or Basware (industry leaders in procurement software that is capable of integrating with existing financial systems), is a critical step towards enabling strategic sourcing activities. Industry-leading systems provide visibility into transaction history which allows for more detailed spend analytics, encourages district personnel to buy from a catalog of pre-negotiated options, and enables the establishment of work rules to determine which expenditures go straight to suppliers and which expenditures get flagged for strategic buyer review. In addition to an e-procurement system, the use of p-cards may be a good way to gain further visibility into the over 200,000 transactions under $500 that occur today. In order to achieve this visibility, the district will specify the need for the transaction-level data to mirror as closely as possible purchaseorder data (e.g. unit of measure, order date, price) with the p-card vendor. This will enable the Purchasing Committee to conduct more comprehensive analytics. P-cards have been implemented in several other large urban districts. In these districts, controls such as sign-off at various seniority levels and disciplinary action for failure to follow p-card policies have been put in place to address concerns about potential abuses in p-card usage.

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Cost impact Strategic sourcing savings General Fund Run-rate impact (savings net of run-rate cost impact) Estimated impact approximately $6M8M which would imply a 15-20% savings on the addressable General Fund base. The majority of this would come from strategic sourcing initiatives, but p-card savings could yield an estimated $0.8M$1.2M. The p-card savings would be on a base of approximately $21M spent on transactions below $500 today primarily through program rebates. Incremental savings from reduced administrative time have not been factored in here. See the summary of all efficiencies in the Financial Model chapter (page 172). Capital Fund Savings from strategic sourcing initiatives on repeat construction would yield $3M to $5M and will enable additional capital projects and priorities to be addressed annually. Special Fund An additional approximately $1M in special fund savings will result from strategic sourcing initiatives in classroom supplies and professional development, both spend categories with significant portions drawn from federal and special monies. One-time CostsCapital Fund The cost of a comprehensive e-Procurement system is estimated to be between $500,000 and $750,000 to implement, not including annual maintenance. The TPC recommends treating this as a long-term investment that can be capitalized. One option may be to purchase this system based on savings from strategic sourcing initiatives in the repeat construction area (which would all be capital fund savings). A second option would be to place this on the priority list for the Needs Assessment Committee when they allocate capital funds. Finally, if capital funds cannot be allocated, the new district should consider financing this investment from the general fund, as it is a key enabler for strategic sourcing. A new system would also require 10 to 15% on-going software maintenance costs, but these would be cost neutral against the nearly $120,000 that is currently spent annually on eSchoolMall and Zycus within MCS. P-card programs do not have specific associated costs. Program administration should be drawn from personnel time spent on management of small transactions. Transitioning to p-cards may require some up-front time for training Finance Department and school staff on usage parameters.

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IT Summary of current state Technology Departments of both districts perform three roles: Core system support: Support required to manage core systems and network (e.g. HR, finance, payroll, work order, student systems) IT support services: Technical service requests, customer-support Instructional technology: Coaching and professional development to help teachers integrate technology into instruction Currently, MCS spends $25M per year ($4.6M special revenues) on IT, while SCS spends $12.2M per year (does not include estimated $1.3M in special revenues e-rate reimbursement). Budget numbers do not include IT spend from school-level budgets and other central office functions. IT departmentspecific costs are broken down predominately between salaries and contracted services in both districts. Contracted services include consulting services and maintenance contracts. IT-specific fulltime equivalent (FTE) deployments against these areas are: Category Core System / Network Support IT Support Instructional Technology Management / Administration Total number of personnel MCS 46 52 8 4 110 SCS 15 40 28 5 88 Total 61 92 36 9 198

Core Systems Currently both districts have a distinct catalog of core systems maintained by IT.
Core system Email MCS Current State Exchange (Staff), gaggle (students) Anti-Virus Sophos, Authentication Active Directory ENA WAN/internet SCS Current State Zimbra (Staff) Observations SCS piloting Google docs for students No unified system for SCS Both districts ERate portion of charges

IT Security

Anti-Virus Sophos, Authentication Application specific ENA WAN/internet

Network

Maintenance Work-Orders SchoolDude Student Information System / Student systems Data warehouse Chancery N/A

SchoolDude PowerSchool N/A Both Pearson products Joint School Board invested in OtisEd data warehouse Both districts ERate portion of charges

Phone

VOIP service

Traditional through PBX

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Core system Document Imaging

MCS Current State Documentum (and other similar systems) Numara Footprints

SCS Current State N/A

Observations

IT Lifecycle Management (including help tickets) Parent Notification Systems Library Automation Medical Claim Management

IT direct

IT direct is a SchoolDude product

Parent Link Atrium Gould and Lamb

Blackboard Connect Alexandria N/A SCS tried to implement similar system in previous years

Student Assessment System Discovery Formative Assessment Risk Management Teacher Assessment Nutrition Safety and Security Transportation HR/Finance/Payroll Lotus notes application TEM by RANDA One source, CAFS Security cameras, student badges Edulog

Discovery Formative Assessment N/A State TAP model, Oasys by MyLearningPlan Primero Edge Security cameras Versatran 30+ distinct systems on MCS side

Numerous main-frame based APECS systems

IT support services The districts operate different service models for IT support services. SCS (40 FTEs) utilizes a hybrid model with mix of embedded school-support and dispatched services. Embedded school technology support personnel are assigned directly to schools at a ratio of one FTE to two schools. Dispatched technology support services respond to support requests. MCS (52 FTEs) utilizes a pure help desk model with support dispatched based on IT help tickets. Support is provided remotely, via phone, and in person. Instructional technology services Both of the districts operate different service models for instructional technology. SCS (28 FTEs) personnel are embedded in schools at a level of one FTE to two schools. Staff provides coaching and project-level support. MCS (8 FTEs) utilizes a small central team who produce professional development videos that are housed on a website and watched by teachers. The MCS team also includes managers for library services and online teaching. Findings from benchmarks and other districts In the 2011 report, Managing for Results in Americas Great City Schools, the Council of The Great City Schools uses IT Spending per Student as a means of assessing the cost effectiveness of district IT departments. The median district spend was found to be $141 per student. MCS and SCS IT spend per student are currently $235 and $260 respectively. According to the Council of The Great City Schools, this metric is influenced by: Budget development and staffing Age of technology, applications portfolio, and new enterprise implementations 125

District IT maturity, department standards, technology investments, and support model

Therefore, higher pure student cost may reflect district priorities and investments and not necessarily a lack of cost-effectiveness. Aspirations The TPC used the following aspirations to guide its IT recommendation and recommends their use to inform specific measures of success to track progress. The go-forward model in IT will be high quality and cost effective. A high quality IT department is indicated by: supporting student achievement and highperforming school programs, enhancing capabilities of other departments by using IT, and possessing the capability to scale to serve needs of merged SCS, promoting ease of use for end customerstudents or staff. A cost-effective IT department is indicated by one which minimizes complexity where possible (e.g. consolidates vendors, uses fewer vendor suites), minimizes implementation costs of new systems, and minimizes cost of on-going support (through internal staff or maintenance contracts). Recommendations General Fund 121. Core Systems a. Adopt the go-forward models outlined in the table below. b. Reduce level of core systems support as investments in less support-intensive systems (e.g. APECS) come to maturity.
Additional Considerations Ramp up period required to launch and support Google docs

Core System Email

Proposed Future State Exchange (staff), Google docs (students)

One-time impact

On-going impact - $47,000 (MCS annual general fund payment for gaggle) Cost neutral (some savings potential when at scale) TBD Potential savings after competitive bid

IT Security

Anti-Virus Sophos, Authentication Active Directory

+ $65,000 (already invested)

Network

Competitive RFP N/A process for joint vendor; subsidize through e-rate N/A

Maintenance Work- SchoolDude Orders Student Information System / Student systems Chancery (pending changes to PowerSchools' capabilities)

Cost neutral (some Transfer to MCS savings potential support structure when at scale) (separate help desk) Cost neutral (some PowerSchool savings potential currently not when at scale) designed to serve large school districts

TBD depending on transfer of PowerSchool licenses to Chancery

Data warehouse

OtisEd

+ $1.6M (already + $2.1M (already On-going cost approved by approved by school estimate is likely school board) board) high given estimate is 25 data coaches that split their time amongst projects As needed VOIP will likely require less support at scale

Phone

Connect current systems and slowly upgrade SCS to VOIP

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Core System Proposed Future State One-time impact On-going impact Document Imaging Pre-work to establish + $24M (based Potential for document strategy, on potential $600K+ in savings joint RFP for new license fees, from transitioning system, and dedicated consulting fees, away from current FTE to manage system temp work) MCS system when in place IT Lifecycle Competitive RFP for a +$11.5M +$60100K Management product with help (maintenance fees), (including help ticket, power however long-term tickets) management, savings expected in inventory, and virtual level of IT support IT capabilities (similar required and to Numara Footprint utilities based on Suite) power management Parent Notification Move SCS to Parent Systems Link N/A N/A

Additional Considerations

Cost and quality comparable but MCS Parent Link currently has double the users so there will be lower training needs About $400 differential in fees per school-site Costs will depend on level of investment in new system

Library Automation Medical Claim Management

N/A Choose between existing systems in year Low (TBD) 2 of merger

Under $100K savings / cost increase Low (TBD)

Student Continue w/ Discovery N/A Assessment System formative assessments barring change in policy from academic team Risk Management Develop in-house risk N/A management program to serve the needs of both districts Teacher Assessment Technology needs to be TBD determined after decision is made on goforward model

Cost neutral (some savings potential when at scale) N/A

TBD

Based on HR recommendation but since both systems currently have the same model, the costs of merging are not expected to be high Implementing central kitchen model expected to carry IT investment of under $500K (funded out of nutrition budget) Costs will depend on level of additional investment in new system

Nutrition

Horizon One-Source Covered out of Covered out of (front of house) surplus (Special surplus (Special revenues) revenues) In-house written (back of house)

Safety and Security To be determined Low (TBD) during implementation

Low (TBD)

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Core System Transportation

Proposed Future State

One-time impact

On-going impact Low (TBD)

Additional Considerations Since both systems currently have a routing system, this is expected to be cost neutral

To be determined Low (TBD) during implementation

HR/Finance/Payroll Migrate to APECS barring setback in process mapping exercise Asset Management TBD

$12-15M Long-term savings including license in level of core fees, migration, system support and consulting required services TBD This system was identified later in analysis and recommendation work is in-progress

The APECS migration that is recommended for an integrated HR/Payroll/ Finance system is one that requires a substantial investment. The estimated $12M15M capital investment needed is estimated based on conversations with the vendor and is comparable to what other districts are spending on mid-level ERP systems. The business case for investing in APECS as a single HR/Payroll/Finance system includes: Reducing system complexitythere are currently over 30 mainframe-based systems in MCS that serve the functionality of what APECS does for SCS. A fragmented systems architecture leads to the need for an increased level of support Reducing the required level of service supportthere are approximately 14 staff members in MCS who support the mainframe systems, but it is believed that only half that number would be needed with a transition to APECS. Only three staff members support APECs for SCS today Enabling employee self serviceAPECS is an easy-to-use system that enables employees to view and analyze data in an efficient manner; the complexity of the MCS mainframe restricts self service Enabling more efficient cross-functional analysiswith a single backbone, analytics that cross HR and Finance are more efficiently completed on APECS than a mainframe system that often requires manual coordination of data from different systems The TPC strongly recommends an investment in the migration towards APECs for the reasons mentioned. The TPC also emphasizes the criticality of this investment for Day 1 and that the migration process must begin well in advance. Without an integrated HR and Finance system for Day 1, the district will risk: Inability to accurately pay staff Absence of a central repository from which to assign school staff Absence of common data metrics and reporting capabilities from which to inform important decisions (e.g. assessing cash flow problems prior to the County distribution of local revenue in January, assessing whether the right level of revenue is passing through to charter schools, determining whether all critical central office positions are filled in merged SCS) Inability to conduct a joint audit without significant manual coordination Lack of a single dashboard view of where students are enrolled, which is even more important given the Multiple Achievement Paths organizational structure Requirement of significant administrative and IT staff time to bridge data gaps between multiple systems

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122. IT Support Model. Move to a less resource-intensive help desk model enabled by investments in IT life-cycle management technology. Migrate the position of dedicated school-based IT resources (currently present in SCS) to a centralized, deploy-as-needed help desk model. Make investments in IT life-cycle management technology to better enable remote/virtual IT support. Reduce total IT support personnel as remote/virtual IT capability comes to scale 123. Instructional Support Model. Adopt decentralized (school-based) instructional support model with small virtual professional development team. Scale-up the position of dedicated schoolbased instructional technology resources (currently present in SCS) at an average of 1:3 schools. Deploy based on school size. Scale down virtual instructional technology team (current present in MCS) to a smaller team responsible for capturing professional development performed by dedicated resources and posting those videos on a website available for teachers. Together, recommendations for IT support and instructional technology should be budget neutral. Special Revenues Fund 124. Apply for joint e-rate reimbursements for all possible systems and applications. Cost impact See the summary of all investments in the Financial Model chapter (page 172). General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated savings impact: $0.5M1M - Core systems savings as a result of APECS migration: $0.5M1M - Remainder of core systems support: expected to be cost neutral in steady state though some investments may need to be made in first years after the merger. - IT Support and Instructional Technology: cost neutral with personnel shifts between IT and Instructional Technology in order to scale up instructional technology Key assumptions - Migration to APECS will result in potential to reduce core systems support corresponding with run-rate savings of $0.5M1M - Remainder of core systems support will remain cost neutral as efficiencies savings from new less labor-intensive systems will be offset by new efforts required to launch new systems, with the potential for increased efficiency as systems reach maturity - Though there will be personnel shifts between IT and Instructional Technology, the total budget of the two departments will remain cost neutral Capital Fund One-time impact (technology investments required in merger) Estimated impact (major new investments): $15M20.5M - APECS assessment and implementation (essential for Day 1): $12M15M - Document imaging (longer-term investment) : $2M4M - IT Life-cycle management (longer-term investment): $1M1.5M - Data Warehouse has not been included here as the decision has already been reached by SCBE prior to the merger planning process. Key Assumptions (based on estimates by district staff) - APECs estimated costs to cover process mapping of current state processes and fees paid for license fees and implementation support - Document imaging costs are estimated to cover an initial consulting project to determine the strategic direction of the systems, potential investment in the new 129

system, and scanning and organization of hard-copy documents which would require an external vendor An RFP would have to be completed to confirm the estimated cost of IT life-cycle management

Relevant considerations Of three new major IT investments recommended, only APECS implementation is critical for Day 1. Though IT Life-Cycle Management and Document Imaging are important strategic initiatives that the TPC recommends prioritizing as part of the merger, they can be delayed until Year 2 if necessary. See more detail in the Migration Plan chapter (page 188). Given the recommendation to increase the level of Instructional Technology resources across merged SCS, both IT departments may wish to consider whether the level of data coach support currently estimated for the new Otis Ed Data warehouse is still necessary. The IT department will prepare the district to participate in online state testing planned for the 201415 school year. If tests cannot be administered wirelessly, the district will incur substantial costs in building the infrastructure necessary to support wired testing. No firm recommendation can be made before state policy and potential grants for implementation are finalized. The SCBE has had some early discussions about e-textbooks, but has not made any firm decisions. This decision will also rely on State level decisions concerning textbooks. The asset management system was identified later in the work of the IT sub-committee. The districts should work together in the implementation year to determine the best path forward in this area.

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Safety & Security Summary of current state Today, Safety and Security is broken into different functions across both districts: Crossing guards (entirely subsidized by the County and City) School-level security: Handled through law enforcement officers (partially subsidized by local law enforcement) and security officers (funded entirely by the district) Security management and administration: Supervisors, clerks, administrative assistants, and analysts for the departments listed above Pupil Services: Department which mediates and manages school suspensions (within student services in SCS) Other programming: Student-facing intervention programming (e.g. gang prevention) (within student services in SCS) Currently, MCS spends $13.5M per year (of which, $250K is special revenues) on Safety & Security, while SCS spends $1M (of which, $46K is special revenues). This cost deferential is driven largely by personnel costs (MCS has approximately 80 more district-funded security officers than SCS) and model differences given that pupil services and intervention programming sit in the Safety and Security department for MCS but not SCS. See tables below: Personnel Category Law enforcement Officers (Partiallysubsidized) Crossing Guards (Fully-subsidized) Security Officers (District-funded) Central Office (MCS includes security operations, pupil services, school safety initiatives) Total Spend Category ($) Security Officers Equipment/technology (including alarm) Subsidy to law enforcement Maintenance/repairs Central office (includes management, admin, night surveillance, analysts, training) Central Office: Programming Central Office: Pupil Services Total MCS 43 211 84 68 406 MCS 4,800,000 1,100,000 1,000,000 400,000 2,400,000 SCS 43 31 5 4 83 SCS 200,000 100,000 200,000 100,000 400,000 Total 86 242 89 72 489 Total 5,000,000 1,200,000 1,200,000 500,000 2,800,000

2,850,000 2,850,000 950,000 950,000 13,500,000 1,000,000 14,500,000

Findings from benchmarks and other districts Based on benchmarks of five other major school districts in the state of Tennessee (Knox, Hamilton, Nashville, Rutherford, and Montgomery), the majority of district Safety & Security departments are almost entirely subsidized by local law enforcement. Every district analyzed has a higher local law enforcement officer to student ratio than the ratio in MCS and SCS. The average officer-to-student ratio across these five districts is 1:1,500. MCS and SCS augment their law enforcement officers by 131

providing district-funded security officers84 for MCS, and five for SCS. Thus, the MCS and SCS total officer to student ratios are 1:866 and 1:833 respectively.
Total # security officers in schools 127 65+ 42 21 48 40 15 # security officers provided by local law enforcement 43 65 42 21 43 40 15 Student to Officer Ratio 866 1215 1381 2000 833 925 2000 Fees paid to local law enforcement by district $1M TBD, but likely under $500k $0 $0 $200K $0 $0 # Security officers provided by district 84 TBD, but not more than ~$1M cost 0 0 5 0 0 Annual cost for district provided security ~5M TBD, but likely under $500k $0 $0 <$500K $0 $0

School district Memphis Metro Nashville Knox Co. Hamilton Co. Shelby Co. Rutherford Co. Montgomery Co.

Student enrollment 110,000 79,000 58,000 42,000 40,000 37,000 30,000

Across the country, large urban school districts vary in their respective approaches to school security. Some larger districts (e.g. Houston and New York City) run school security through local law enforcement, while others (e.g. Miami, Philadelphia, and Cleveland) handle school security through in-house, district-funded models. Aspirations The TPC used the following aspirations to guide its Safety & Security recommendation. The TPC recommends going forward that the district uses these aspirations to inform specific measures of success to track progress. The go-forward model in Safety & Security will be high quality and cost effective. High quality safety and security is indicated by safe and secure schools for all students and the use of ancillary services (e.g. gang prevention programming) to proactively help support disciplinary and other behavioral goals in the district. A cost-effective Safety & Security department seeks to meet the quality standards detailed above at a competitive cost to the school districts and local law enforcement.

Recommendations Maintain current blended security model of district-funded security officers and local law enforcement: 125. Continue to employ security officers and law enforcement officers in merged SCS in similar proportion to their presence across both individual districts today. 126. Keep the total officer-to-student ratio relatively unchanged, subject to revisions following a joint needs assessment by the district security staff, the Sheriff's office and the Superintendents. This is recommended as the first step in the implementation process. 127. Continue to operate security technology (e.g. access management, security cameras) in house to maintain confidentiality of student information. 132

128. Maintain and deepen current safety programming and pupil services as part of the student services department. Rationale Maintaining a blended security model is recommended for policy and fiscal reasons From a policy perspective, there is benefit to having both law enforcement and security guards present in the district: - Benefits of law enforcement: Ability to begin a formal investigation (and continue action off school premises), respond more quickly in crisis situations, create connection to broader law enforcement community - Benefits of security guards: Integral staff to school culture, potential for different type of relationship with students based on difference in credentials Maintaining a blended security model is a more financially viable path for the district - Replacing all 89 (84 MCS, 5 SCS) security officers with Sheriff's deputies would cost the district an additional $1.5M given that wages of Sheriff's deputies are on average $17,000 more than the wages of security officers Special Revenues Fund 129. Continue to seek government grants to fund proactive Safety & Security programming (e.g. Safe and Drug Free Schools). Cost impact See the summary of all investments in the Financial Model chapter (page 172). General Fund Run-rate impact (savings net of run-rate cost impacts) Estimated impact: $3.2M additional cost to the general fund to cover the potential elimination of in-kind support from the Memphis Police Department (43 law enforcement officers and 211 crossing guards). Should the City choose to continue some or all of these services, it would lower the additional cost burden for the district Key assumptions - Pass-through from District general fund to subsidize in-kind services expected to remain at same levels - Recommend the Sheriff continues to get $200k that is passed-through today from SCS for in-kind service (43 officers, 31 crossing guards) - Recommend the Sheriff gets the $1M subsidy that is currently passed through to MPD from MCS if the Sheriff picks-up a similar level of services to what the MPD provides in-kind today in the merged district - The total law enforcement and security officer-to-student ratio will stay roughly the same in merged SCS - Additional security costs related to technology, equipment, maintenance, and management will continue at the same level - Pupil services and programming will continue at same level (though will now report through student services department instead of the Security department) Special Revenues Fund: Incremental revenue may be generated by securing government grants to fund Safety & Security programming, but will be included in Student Services.

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Nutrition Summary of current state Currently, the districts provide nutrition services using different models. MCS uses a central kitchen model and sources food direct from manufacturer. All meals are processed and prepped at a district-owned central kitchen before being shipped to school-sites in district-owned delivery trucks. School sites also have a cafeteria staff that focuses on reconstituting central kitchen meals and serving them to the student population. MCS currently serves breakfast, lunch, dinner, and snack to students and faculty across the district. The school dinner program is in its first year and is still coming up to scale. SCS uses a decentralized model and sources food through distributers that ship directly to school-sites. All food is prepped and served at school-level cafeteria facilities. SCS has a small in-house delivery capability that is responsible for shipping paper disposable goods (e.g. napkins) to school-sites. SCS currently serves breakfast, lunch, and snack to students and faculty across the district. 85% of MCS students and 38% of SCS students are eligible for free or reduced price lunch In FY2011, MCS served 21.7M meals at an overall cost of $53.9M (all special revenues) for a cost of $2.48 per meal. SCS served 6.3M meals at an overall cost of $16.4M (all special revenues) for a cost of $2.62 per meal. Given that certain meal types are more labor-intensive to prepare than others (e.g. breakfasts are lower cost than lunches), it is important to disaggregate costs by meal type. The chart below uses the National Food Services Management Institute (NFSMI) ratio to control for meal type and produce a weighted cost per meal (cost per meal credit) that can be fairly compared. Each meal type (e.g. breakfast) is assigned a meal credit based on how labor-intensive it is to prepare. For example, breakfasts convert to meal credits at a rate of 1 meal to .66 credits meaning they are easier to prepare than lunches which convert at 1 meal to 1 credit. After controlling for meal type, the cost per meal credit metric allows an accurate comparison of MCS and SCS for cost effectiveness. NFSMI meal credit ratio 1 to .66 1 to 1 1 to .33 1 to .33 MCS MCS actual meal meals credits 7,016,964 4,677,508 12,830,918 12,830,918 85,331 28,441 2,666,078 888,693 18,425,560 53,864,910 2.92 SCS actual meals 1,131,424 4,262,168 4,611 1,291,321

2011 actuals Breakfast Lunch Snack Ala carte $ to meal Meal credits Total costs Cost/meal credit

SCS meal credits 754,207 4,262,168 1,537 430,440 5,448,352 16,416,769 3.01

*NFSMI ratio: National Food Service Management Institute method for controlling for meal type when budgeting. See further explanation: http://www.nfsmi.org/documentlibraryfiles/PDF/20080225030902.pdf In the last three years, both districts revenues have exceeded their annual costs creating a surplus in the school nutrition departments. School nutrition surpluses can be rolled over year to year but cannot be used for general fund expenditures. Additionally, surpluses may not exceed 10% of operating expenses in a given year, and total funds may not exceed three months worth of operating budget. 134

MCS and SCS Surplus Rate ((rev cost)/cost) 20092011

Category MCS Revenue MCS Cost MCS Surplus Surplus % Category SCS Revenue SCS Cost SCS Surplus Surplus %

FY 11 56,844,810 53,864,910 2,979,900 6% FY 11 16,649,563 16,416,769 232,794 1%

FY 10 56,048,582 51,981,818 4,066,764 8% FY 10 16,554,091 15,788,161 765,930 5%

FY 9 52,411,288 48,226,997 4,184,291 9% FY 9 16,121,437 15,882,510 238,927 2%

Findings from benchmarks and other districts The Council of Great City Schools 2011 study, Managing for Results in Americas Great City Schools, cites total cost per revenue as a key financial metric for school nutrition programs. Of the approximately 50 schools surveyed, the median total cost per revenue was 96.24%; meaning that the median school surveyed needed to dip into its general fund or surplus to cover about 4% of their costs. By this metric, both MCS and SCS are over-performing median school districts by operating at a 6% and 1% surplus respectively in fiscal year 2011. Aspirations The TPC used the following aspirations to guide its Nutrition recommendation. The TPC recommends going forward, that the district uses these aspirations to inform specific measures of success to track progress. The go-forward model in school nutrition will be high quality and cost effective. High quality school nutrition is indicated by providing fresh and healthy ingredients for all meals served, possessing excellent food sanitation practices, providing on-time delivery of meals to schools, offering a variety of food to meet student need and possessing the flexibility to serve different school models present in Multiple Achievement Paths administrative model. A cost-effective school nutrition department is indicated by preserving the district's ability to deliver food services within the special revenue fund, with no run-over into the general operating budget. Recommendations Special Revenues Fund 130. Adopt the central kitchen model (current MCS model) across the merged district: a. Continue efforts to incorporate fresh and local foods into meals. b. Use budget surplus to upgrade central kitchen to improve quality and efficiency. c. Continue programs to expand school breakfast and dinner programs. d. Consider opportunities to expand offerings to other school operators as long as these efforts generate revenue that can be reinvested in the food services department or the general fund of the merged school district.

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Rationale Allowing a dual-model (central and decentralized) to continue in new district would be suboptimal for the following reasons: - Creates potential for different levels in quality of food/service - Lower scale benefits will be achieved - May necessitate two different infrastructure support models (e.g. IT systems, finance processes) creating complexity for other departments - Creates management challenge to oversee two models under one umbrella Adopting central kitchen model across both districts is recommended for the following reasons: - Creates potential food cost savings by increasing direct-from-manufacturer purchasing and scale of purchasing - Allows for greater flexibility to serve variety of new schools and models in the new district through a fee-for-service model (e.g. charter schools, ASD schools) - Allows for ability to improve efficiency and quality as funds become available - Allows for greater creativity and innovation with processing being done in-house - Promotes ability to utilize fresher and more local products in processed goods as processing can occur closer to purchase for perishable goods. For non-processed goods, both models can utilize fresh and local products - Lowers school-level kitchen equipment needs for new construction Cost impact Special Revenue Fund Run-rate impact (savings net of run-rate cost impacts) Estimated impact: Expected to be cost neutral, and once model is scaled across merged SCS, expect incremental contribution to budget surplus Key assumptions - Central kitchen model cost per meal credit will remain at least the same in merged SCS (though on an annual basis should decrease with increased scale) - Revenue (meals served + reimbursement rates) will remain the same as in separate districts in FY 2011 One-time investments Estimated impact: $800,0001.2M (can be financed from current budget and/or surplus) Key assumptions (based on assessment from MCS Director of Food Services): - 46 new refrigerated delivery trucks (one truck per 10 schools): ~$500,000 - Additional food preparation equipment: ~$200,000 - Potential IT investments (scanners, additional computers): $100,000500,000

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Shared Services Context for new capability in merged district As the district moves towards a multi-operator environment (e.g., District, charter schools, ASD), there is an opportunity for merged SCS to expand service provision across operators and develop options to provide excellent services for all students in Shelby County. An extensive shared service capability does not exist in either district today, so this group of recommendations builds that capability in the merged district. Shared services can help address the reduction in scale for each operator as enrollment becomes more distributed. Shared Services Vision
High-quality product
High-quality, competitive service delivery Culture of excellence Readily makes changes based on feedback

Customer service
Clear communications, no ambiguity Responsiveness to questions / concerns Flexibility to meet needs of each school

Cost effectiveness
Better prices based on increased volume More distributed overhead expenses

Findings from benchmarks and other districts Many other districts have created shared service functions in order to improve quality and achieve greater cost efficiencies. A few examples include: Denver Public Schools: Provides a fee-based service menu to its Innovation Schools for operational (e.g. custodial, human resources, textbook acquisition) and academic (e.g. credit recovery, professional development, Career & Tech Program) services Detroit Public Schools: For 201213, Detroit Public Schools will introduce a new central office function called Enterprise Services Group which will provide services, such as food, payroll and policing, to self-governing schools, charter schools, and other districts in a fee-for-service model Chester County, PA: Formed a public entity that provides shared services to 86,000 students in 12 small districts. The county utilizes a hotline to forward inquiries from districts and schools to one of eight service departments. Prices are based on competitive rates in the market place and are re-evaluated every three to five years. The fully-loaded price to account for overhead costs varies between 4% and 20% above service cost Recommendations In structuring a shared service function, the TPC recommends the following design principles: 131. High-quality service a. Customer service: Based on interviews with the ASD and local charter schools, customer service from a vendor is often more important than price. The merged district will explicitly focus its attention on customer service processes and policies in order to successfully implement shared services. This may include customer service training, rewriting process maps for incoming school inquiries, and/or new mechanisms for customer communications, such as having a customer hotline. b. Accountability: In addition to ensuring customer satisfaction, the district will ensure highquality service provision. Accountability for exceptional service quality begins with basic internal quality control mechanisms and metrics, but additionally should include regular 137

feedback (surveys or meetings) from customers. This feedback should then be used to modify services in a cycle of continuous improvement. c. Customer advisory council: The TPC recommends creating an advisory council, including representatives from the district and the other operators who are potential customers. The goals of this council initially would be to identify the best near-term service offering opportunities, to provide support for establishing customer service and accountability metrics, and to determine when and how contracts can be terminated by either party bearing in mind the associated consequences. In the long-term, this council would foster collaboration between operators in the district to benefit all children. 132. Transparent, fully-loaded prices and financial controls a. Fully loaded prices: Prices for all services will comprise of the cost of materials and labor for the direct service and the overhead costs to deliver the service. The District will need to inventory all administrative costs associated with providing particular services, divide those cost by all students who receive the service (district and non-district), and then charge this total to all external customers on a per student basis. Any service that is selected for a shared capability should be cost neutral or better at minimum; if there is risk of financial loss, the district should not build it as a shared service capability. b. Transparency on cost of last minute decisions: The district will set a strict schedule for schools and operators to opt-in to a given year's services. This will allow for the district to have an accurate volume estimate when establishing vendor contracts or changing internal resource allocation. If an operator cancels its contract after the deadline, any expenses that are incurred because of the change should be the responsibility of the customer. c. Separate fund for shared services: The district may want to consider establishing a separate fund for shared services which would house all overhead costs related to shared services. This would not only make it easier to be transparent on overhead costs to other operators, but also encourage this function to be financially self-sustaining 133. Flexibility to meet schools needs Flexibility was another key characteristic mentioned by the ASD and charter schools in selecting their preferred service vendors. In some instances this flexibility may come with an added cost to the customer. For example, the ASD and charter schools have expressed interest in purchasing transportation services from the district, but they are likely to have different bell times than districtoperated schools. If separate vehicles are required to provide this differential service, the District could still consider providing this flexible option with an additional cost. In the near-term, the TPC recommends that the district keep its menu of service offerings simple in order to give the district sufficient time to achieve stability and steady-state operations upon merging. However, as the district improves its understanding of the needs of other operators, it should contemplate how to strategically offer different service packages (that are priced accordingly) to meet varying needs. 134. Organizational capabilities a. The TPC recommends that in the first three years of the merged district, strategic planning and cross-functional support for shared services could be provided through a dedicated leader under the Chief Services Office and a liaison role in the Office of Innovation. The recommendation to house the lead role in the Chief Services Office is based on interviews that suggest that the strongest near-term appetite from the ASD and charter schools to partner with the district is in operational services (e.g. transportation, custodial, nutrition). b. During this time, the leadership team of each department providing shared services will need to expand its vision, planning, and execution to include service provision to multiple 138

operators. This represents a significant shift in the districts' operations mindsets, therefore the TPC recommends that the strategic leader first focus on communicating shared services management best practices to the district and focus on helping to identify and develop the district's skills and capabilities in customer service, pricing, and accountability to quality standards. In the longer term, as more departments begin to offer shared services (see description of gradual roll-out below) and more operators buy the services, it may be appropriate to expand the district's strategic and operational capabilities in this area. c. Because shared services is a new operations mindset for most departments in the district, it will take experience and focused leadership to implement successfully. The TPC recommends a phased roll-out over the first few years of the merged district, with services offered in FY2014 primarily those that are currently prepared to service multiple operators. Services that are currently or planned to be outsourced, and thus have greater flexibility in terms of service volume, are also good starting points. The specific shared services for FY2014 will need to be determined with enough lead time to enable contracts to be set-up for the right volume levels. The ASD and charter schools have expressed interest in a broad range of services, and thus in the long term, the district can expand offerings to a full spectrum of operations and academic services. Below is an illustrative roll-out:

d. For merged SCS to achieve stability, the TPC recommends no opt-out option for districtoperated schools in the first several years. In the long-term, in line with the Multiple Achievement Paths model, the district may choose to selectively offer opt-out opportunities for district-operated schools. We recommend carefully monitoring operator interest in particular services and holding internal departments and outsourced vendors accountable for service quality and price to guarantee that an opt-out program would not mean a sudden flight of schools and decrease in service volume (thus impacting cost for remaining schools).

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PERSONNEL MODEL

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Summary This chapter provides recommendations for the Personnel model for the merged district, including: Central office staffing School staffing Compensation Benefits In forming these recommendations, the following TPC guiding principles are especially relevant: The academic success and well-being of our students come first We value strong leadership Educators and staff are our most important resource We aim to enhance our district by balancing stability with needed change We must save where we can to fund what we need The largest recommendations in the Personnel Model include: Saving $14.3M, or 26% of current spend, on central office staffing Implementing evaluations for all central office staff to foster a culture of service and continuous improvement Complying with the Norris-Todd Act by creating salary schedules no lower than the highest component salary schedule within three years of the merger date Saving approximately $16.9M on health insurance benefits through a combination of adopting the SCS effective district share, a requirement that spouses eligible for their own health insurance use their employers insurance, a dependent audit, and no individual mandate

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Central office staffing Summary of current state The compensation of full-time, general-fund supported central office personnel is approximately $54M, or about five percent of the approximate $1.1 billion the combined districts spend on total compensation. This figure excludes those central office personnel who are paid out of special funds, work part-time, or work in non-managerial logistics roles. The analysis is restricted to the general fund because it is used to pay for most education expenses and the extent to which central office staff draws on this fund encroaches on the ability to use it to fund educational priorities. Those who work part-time are excluded from the analysis because district data is incomplete for these workers. Operations staffing is excluded here but is considered in depth in the Operations Plan chapter of this report. Profile of Central Office Spending, FY2012 36
Central office general fund personnel spending General fund staff Average compensation including benefits Spending / student $39.6M 479 $83k $397 MCS $14.7M 170 $87k $314 SCS Total / average $54.4M (total) 649 (total) $84k (average) $371 (average)

The largest functions within the central office are academics, student services, IT, and logistics management. Almost 60% of central office staff works in one of these four functions. Findings from benchmarks and other districts The central office staffing of the combined district is in line with peer districts. Data from the National Center for Education Statistics (NCES) shows that there are few districts the size of the combined district that have fewer employees than the two districts combined. NCES data includes the total number of central office staff, including logistics staff and those paid out of special funds, which are excluded from analysis of central office staffing. Still, this data suggests that if the combined district is to significantly reduce spending on central office staffing, it will have to move to best in class rather than improving to the average.

36

Spending on central office staff for FY12 as of February 2012, scaled up to a year.

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Central Office Personnel to Number of Students

To determine the approximate savings opportunity for the combined district, the efficient size for both districts is calculated and then a 65% scale curve is applied to the weighted average cost of the efficient MCS plus SCS central offices. To get the efficient size for MCS and SCS, a de-layering technique is used. De-layering sets minimum numbers of employees per manager, called spans of control. Wider spans of control are not only less expensive because there are fewer managers, but they also create a flatter organization, bringing employees closer to the top of the organization. By setting minimum spans of control of six employeeseach manager manages at least this many employeesMCS and SCS could save a collective $3.5M, $2.8M from MCS and $0.7M from SCS. Once the efficient size for each district has been found, a scale curve is applied. A scale curve is an analytic technique showing the relationship between volume and cost, or in this case, number of students and cost to staff a central office. With scale, per student spending on the central office should decline as the number of students increases. In the case of a 65% scale curve, when the number of students doubles, the average cost per student falls by 35%. The scale curve suggests a target savings level, which management can determine how to achieve. The appropriate scale curve to use depends on the nature of the work. Education systems do not always exhibit as much scale as one would expect. For example, a BCG analysis of school districts in Delaware showed a scale curve of approximately 90%. For business functions such as strategic management, finance, human relations, and legal, previous BCG work suggests scale curves of 60 70%. The gap between these benchmarks is likely driven by at least two factors. First, in the public sector, it is difficult to observe scale because spending levels are more dependent on local income and politics than on district size. Second, approximately 30% of district staff works in academic operations and student services, which are not necessarily as scalable as those business functions that exhibit 60 70% scale. Balancing these benchmarks against each other, as well as against the need for fiscal sustainability for the school system, a more aggressive 65% scale curve is selected. 143

Using a 65% scale curve results in a numerical savings target of $14.3M, more than 25% less than the districts spend on central office personnel today. Central office effectiveness cannot be achieved solely through a one-time target in reduction in central office spending. It is dependent on a clear understanding of what success looks like for each function and a culture where it is expected that all staff improve every year. Oakland (CA) has, for example, created a performance management system for its central office functions that utilize multiple measures of performance including achievement of key metrics and customer satisfaction in order to evaluate their central office effectiveness. 37 Overall customer satisfaction is publicly reported, and there is an expectation of improvement year over year. Measures of success Total general fund spending on full-time central office personnel is at least $14.3M less in the 2013-14 school year than in the baseline year (FY12). 100% of central office staff members have an annual evaluation that utilizes multiple measures including observation, customer satisfaction, and performance on key metrics. Customer satisfaction data for each business unit is made public Recommendations In the area of central office staffing, the TPC recommends the district: 135. Set a target of $14.3M in savings from central office staffing. This is approximately 26% of the current spending on general fund central office personnel. As a proportion of all central office staff including special-fund positions the reductions recommended in the Plan represent an approximate 19% reduction in current central office spending. See the summary of all efficiencies in the Financial Model chapter (page 172). 136. Ensure that all central office employees receive an annual evaluation that includes multiple measures, including feedback from their supervisors, customer satisfaction data, and performance against key metrics.

37

Oakland Unified School District, Service Leadership Team: Performance Management Guidebook, Fall 2009.

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School Staffing Aspiration The aspiration of the TPC is that all schools have the staff they need in order to provide an excellent education for children. This aspiration will be pursued in a way that is fiscally sustainable, fair, and balances stability with needed change. Consequently, there are five different types of recommendations with respect to school staffing: Areas in which additional investment is recommended Areas in which the districts have different policies and a cost neutral approach is recommended Areas in which reallocating existing staff to serve different functions is recommended Areas in which the districts already have similar approaches and continuing these similar approaches is recommended Areas in which cost savings are recommended Summary of current state MCS and SCS have nearly the same number of school-based staff per thousand students: 96 in MCS and 95 in SCS. Yet the average number of staff per school is much higher in SCS85 staff per school versus 50 in MCS. This disparity is driven by the fact that there is a much larger average school enrollment in SCS. The difference is not just driven by a need for more teachers in larger schools. As the chart below illustrates, MCS has many small schools with small non-teaching staffs. FTEs per school (excluding teachers) by school enrollment

Smaller schools require a heavier resource load per student given that costs for fixed positions (e.g. principals and custodians) will be absorbed across fewer students. Additionally, small schools tend to overstaff compared to target student-teacher ratios for positions like classroom teachers (given total students in a grade may not evenly divide by desired ratio) and ESL teachers (given total ESL students may not meet desired student-teacher ratios). This results in an average of approximately four fewer students per school staff member in schools under 500 students compared to those over 1,500 students. Consequently, MCS staffs fewer school-level staff roles across all large-sized schools to balance their budget

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The chart below breaks down school-building staffing of non-teaching positions. While SCS spends less per student in all personnel categories except assistant principals, it is able to have more staff per building in all categories because of a larger average enrollment. MCS and SCS School-level Staffing, Select Positions

While both MCS and SCS are subject to the same state laws governing teacher-to-student ratios, the two districts implement compliance with those laws differently. As shown in the image below, MCS has 1.9 more students per general education class than SCS. While this difference might seem insignificant, moving to the SCS effective staffing ratio would cost the district $23M annually. Effective Staffing of General Education Teachers in MCS and SCS

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Findings from benchmarks and other districts The Education Plan: Educational Services chapter outlines findings from benchmarks and other districts as it pertains to educational investment priorities. This section focuses on recommendations not covered in that chapter: Class size, assistant principals, and librarians. Class size Research evaluating the impact of reducing class size on student outcomes shows mixed results. The Tennessee STAR experiment shows the largest effect of any rigorous study of class size reduction (CSR). In that study, when class size was reduced from 22 to 15, students increased student achievement by approximately three months, when measured four years following the reduction. 38 The same data from the STAR experiment, however, shows that the quality of teachers has an even larger impact on student outcomes than class size reduction does. Meanwhile, other large-scale studies in Florida and Connecticut have not found a positive impact on student achievement from CSR while studies in Texas and Israel have found only small effects. 39 While in aggregate the research is mixed, there are some groups for whom research shows a more consistently positive impact from CSR. For example, researchers in California, Texas, and Israel have found larger impacts for students in early grades, while researchers in Tennessee have found larger impacts for students from disadvantaged backgrounds. 40 Assistant principals Assistant principals are responsible for instructional leadership, school operations, and public engagement. The new teacher evaluation in MCS and SCS requires principals to spend substantially more time observing teachers and providing feedback to them than they had previously. This increase in instructional leadership responsibility came without a corresponding increase in staff support. While there is no comprehensive national survey that covers assistant principal staffing, the Southern Association of Colleges and Schools sets a conservative guideline of one principal per 500 secondary students and one assistant principal per 700 elementary students. The 422 students per assistant principal in SCS is below this staffing level, while the 647 students per assistant principal in MCS is above this staffing level. Librarians The districts currently make a differential investment in librariansboth in terms of the number of librarians employed and the salary provided. While the national average is one librarian for every 961 students, MCS and SCS have almost twice this number. MCS has one librarian for every 527 students, and SCS has one librarian for every 558 students. On average, librarians in both districts have higher salaries than teachers. The average MCS librarian salary is $78,000, and the average SCS librarian salary is $60,000. In comparison, the average teachers salary in both districts is $54,000. Recommendations In the area of school staffing, the TPC recommends: 137. Implementing school closures consistent with those outlined in the Operations Plan chapter in order for school staffing both to serve children better and to make more efficient use of funds. 138. Investing in the following areas:
38 Alan B. Krueger, Experimental Estimates of Education Production Functions, Quarterly Journal of Economics, 115(2): 497532 (1999). 39 Chingos, Matthew and Whitehurst, Russ, Class-Size: What Research Says and What it Means for State Policy, Brookings Institute (2011). 40 Chingos, Matthew, The Impact of a Universal Class-Size Reduction Policy: Evidence from Floridas Statewide Mandate, Harvard University, Program on Education Policy and Governance Working Paper. 10-03 (2010).

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a. Increasing the number of school counselors by adopting a policy similar to the current SCS policy, but driven by ratios based on enrollment. This increase will add 25% more counselor positions to elementary schools in both districts and 25% more counselor positions to high schools in MCS. This recommendation adds about 60 school counselor positions across the merged district, at a cost of $4M. See the summary of all investments in the Financial Model chapter (page 172). b. Increasing the number of assistant principals by adopting a policy similar to the current SCS policy, but with elementary schools under 500 students sharing an assistant principal. This recommendation adds about 18 assistant principal positions across the merged district, at a cost of $2M. See the summary of all investments in the Financial Model chapter (page 172). c. Increasing the number of special education clerks by allocating one special education clerk to schools with 150 or more special education students, 0.5 special education clerks to those with 25150, and 0.2 special education clerks to those with fewer than 25 special education students. This recommendation will require schools with a smaller number of special education students to share a clerk. This recommendation adds about 70 special education clerk positions across the merged district, at a cost of $2.5M. See the summary of all investments in the Financial Model chapter (page 172). 139. Reallocating existing staff in a cost neutral way to serve different functions in the following areas: a. Ensuring every middle and high school has an in-school suspension aide. In the shortterm, elementary school in-school suspension aides may have to be shifted to middle and high school in order to implement this policy. b. Ensuring that every school has three hours of dedicated clerical staff time each day to take accurate attendance by prioritizing and protecting use of clerical staff time for this purpose. 140. Setting school staffing ratios in a cost neutral way in the following areas: a. K12 teachers b. Instructional specialists and coaches c. English as a Second Language teachers d. Elective teachers e. Vocational teachers 141. Continuing similar approaches in the following areas: a. Special education teachers b. Special education assistants c. Psychologists d. Occupational and physical therapists 142. Seeking cost savings in the following area: Staffing librarians in line with the minimum guidelines of the Southern Association of Colleges and Schools. Schools with fewer than 250 schools will be allocated 0.5 librarians (meaning two schools share a librarian), and schools with more than 250 students will be allocated one librarian. This recommendation eliminates about 40 librarian positions across the district, for a cost savings of $3M. See the summary of all efficiencies in the Financial Model chapter (page 172). 143. In the staffing of school programs and the provision of services, principals will be sensitive to the needs of under-achieving students

148

Compensation The Norris-Todd Act makes several requirements with respect to salary schedules. First, it requires individual salary schedule preservation of all teaching and non-teaching personnel. This means that while, statutorily, no ones salary may be diminished from 2012-13 levels, no ones salary must be immediately leveled up. Instead, the law requires that within three years of the merger new salary schedules be established that are not lower than the highest component salary schedule from 2012-13. Further, it requires that the basis on which these salaries are paid remain the same. In the case of teachers, for example, this means being paid on the basis of years of experience and training (degree attainment). 144. In the area of compensation, the TPC recommends meeting the legal requirements of NorrisTodd with respect to salary schedules by: a. Not lowering the salary schedule of any individual who is in the same job position after the merger as he or she was prior; b. Establishing new salary schedules not lower than the highest individual component salary (as of 2012-13) for all job positions in the third year after the merger. c. Not increasing the salary schedules of employees who are paid on the lower component salary schedule until the third year after the merger. The cost of implementing this recommendation, including associated increases in FICA and retirement, is approximately $18M per year, starting in the third year after the merger. This estimate is conservative, as it accounts for resulting increases in FICA and retirement contributions and does not include the material possibility that some portion of this leveling may be accomplished through cost of living adjustments made after the merger date. See the summary of all investments in the Financial Model chapter (page 172). The TPC has made additional recommendations with respect to the compensation of teachers and instructional leaders that are covered in the Education Plan: Educational Services chapter (beginning with recommendation 59).

149

Benefits Summary of current state The districts spent approximately $220M on benefits in FY12just over 20% of compensation. 41 Three benefitsretirement, health insurance, and FICAdrive this expense, accounting for over 95% of benefit costs. Of these benefits, only health insurance, which is 33% of benefit cost, is a locally controlled expense. FICA is set by the federal government and retirement by the state government. District Spending on Benefits

Both districts are self-insured and use CIGNA as their administrator. Together, they have nearly 14,000 employees enrolled in health insurance. Approximately 85% of MCS and 70% of SCS full-time employees are enrolled in district health insurance. It is possible that the difference in enrollment percentage is driven by MCSs requirement that an employee must carry district health insurance to be eligible for Accident on the Job coverage. Together, the districts spend over $70M on health insurance annually. This total cost breaks down to approximately $6,200 per enrolled in employee in MCS and approximately $5,500 per enrolled in employee in SCS. More than 90% of the difference in cost between the districts comes from the districts different approaches to cost sharing. For each of its plans, MCS pays 70% of the cost and the employee pays 30%. SCS, however, offers each of its three plans at a different share of cost (see chart below). For example, SCS pays as high as 79% of the cost for an employee plus one who use a health reimbursement account (HRA) and as low as 60% for a family that uses the OAP-Plus plan. Overall, SCS pays approximately 63% of the cost of employees health insurance.

41

Payroll data scaled as of February 2012, scaled up to full year.

150

District Share of Health Insurance by Plan

In both districts, the richest plans are the most popularthe Co-Pay in MCS and the OAP-Plus in SCS. Over 80% of MCS employees are on the Co-Pay; over 70% of SCS employees, the OAP-Plus. In MCS the Co-Pay is priced at a discount to its actuarial value, which may encourage additional selection of this plan. Finally, both districts currently offer dental and vision at a full pass-through to employees. SCS also offers a flexible savings account to employees. Approximately 10% of SCS employees elect to participate in the FSA. Both districts also provide health insurance to retirees who are not eligible for Medicarethose 65 and under. These benefits are often referred to as OPEB, or Other Post-Employment Benefits. To be eligible, MCS requires employees to retire with at least ten years of continuous enrollment in an MCS healthcare plan. SCS requires employees to retire with at least fifteen years of eligible serviceat least five of which are in SCSand be enrolled in an SCS healthcare plan in the year prior to their retirement. The average annual cost of retiree benefits for the combined district was ~$36M over the last three years. The following table lays out the districts approaches to OPEB management.

151

Overview of district approaches to OPEB

While the cost of retiree healthcare benefits is substantial, both districts have implemented changes to manage OPEB costs in recent years. Both districts now require employees to use Medicare and have implemented a Medicare Supplement plan for those over age 65. Additionally, MCS reduced its share of the healthcare premium from 80% to 70%. In the longer-term, the district may look for additional measures such as updating eligibility requirements or shifting towards a plan that specifies the amount a employer will contribute to an account annually (as opposed to a plan that specifies the benefits that will be provided upon retirement) to help further manage OPEB costs. Findings from benchmarks and other districts In Managing for Results in Americas Great City Schools, the Council of Great City Schools benchmarks health insurance costs for 21 urban school districts across the U.S. The median health benefits expense per employee they report is $6,544, higher than both the approximate $6,200 expense of MCS and the approximate $5,500 expense of SCS. District employees also pay a somewhat higher share of health insurance costs when compared to their private sector counterparts, particularly for employee only coverage. The 2011 Kaiser Family Foundation and Health Research and Educational Trust employer survey finds that employees pay an average of 18% of the premium for single coverage and an average of 28% of the premium for family coverage. MCS employees pay 30% of the cost of coveragewhether individual or family. SCS employees pay 37% of the cost of coverage on a weighted average basis. While overall health insurance spending is in line with other districts and employees pay a share that is somewhat higher than in private industry, there are a few additional ways that the district could save on health insurance beyond cost sharing. These include: Spouse out: SCS will implement a spouse out policy for the 201213 school year. This policy will require all spousal dependents eligible for their own health insurance to carry their own 152

health insurance rather than district health insurance. SCSs actuaries estimate that about 35% of dependents will leave the SCS plan on account of this policy change. Dependent audit: Mercers consulting practice finds that when organizations conduct dependent audits, they generally find that 38% of the dependents for whom they have been paying health insurance are ineligible for that benefit.42 This finding is consistent with the experience of two Fortune 500 companies headquartered in the Mid-South. 43

Measures of success Cost per employee for health insurance is less than $5,500 (current SCS) Administration costs are at least 10% lower on a per member per month basis A dependent audit is conducted every four years All legal requirements for health insurance (both state and federal) are met There is no individual mandate Flexible savings accounts, dental, and vision are offered at full pass-throughs to the employees 75% of those with health insurance fill out a health risk assessment Recommendations In the area of health insurance, the TPC recommends that the district: 145. Re-negotiate with the health insurance administrator and/or seek bids for new administration of the plan 146. Work with its administrator to design a plan offering that: a. Meets the state requirement of offering a plan equal or superior in value to the state plan; b. Meets the state requirement for cost-sharing (at least 35% paid by the district) to be eligible for full BEP funding; c. Includes a low-cost, high-deductible plan; and, d. Does not offer any plans at a discount to their actuarial value 147. Drop stop-loss insurance if further analysis of the claim costs of the merged district show this to be prudent 148. Manage the districts effective share of health insurance costs to the lower of the prevailing district shares at the time of the merger or 63%, the current SCS district share 149. Provide spouse coverage only for those spouses who are not eligible for their own health insurance. Spouses eligible for their own coverage will be expected to provide their own health insurance 150. Conduct a dependent audit every four years to ensure that only those eligible for district health insurance are receiving it 151. Not have an individual mandate for health insurance for employees to be eligible for Accident on the Job coverage 152. Not subsidize Medigap for classified employees on a go-forward basis 153. Finalize plan details, including covered and excluded items, before the merger date 154. Continue to offer dental and vision at a full pass through to employees 155. Offer all employees the option of participating in a flexible savings account
42 43

Strategies for Human Resource Management, August 2009. Interviews with two senior executives at Fortune 500 companies.

153

156. Encourage all employees to fill out a health risk assessment to use to target interventions by giving a discount to those who do and assessing a penalty to those who do not In the area of retiree health insurance, the TPC recommends: 157. The same provisions that apply to current employee health insurance are extended to retirees. Financials See the summary of all investments and efficiencies in the Financial Model chapter (page 172). Summary Personnel Model Financials Investments Central office staffing School staffing Compensation leveling up Health insurance current employees Health insurance retirees TOTAL +$1M +$8.5M +$18M +$0 +$0 $27.5M Efficiencies -$14.3M -$3M -$0 -$13.4M -$3.5M -$34.2M Net run-rate -$13.3M +$5.5M +$18M -$13.4M -$3.5M -$6.7M

Starting in 2015-16

Financial Impact of Healthcare Recommendations Category Plan design Recommendations 1. Meet state legal requirement of one plan equal or superior to state plan 2. Offer low-cost high-deductible plan 3. Offer at actuarial value Re-negotiate with CIGNA and/or go out to bid Cost / savings assumptions TBD Run-rate TBD Onetime $0

Re-negotiation / bid on contract

Total annual administration cost in MCS + SCS = 154

$1.2M

$0

$5.7M; stop-loss is dropped in SCS ($0.7M) + 10% savings on remainder Board share Manage to effective district share of 63% (current SCS) and not 70% (current MCS) No coverage for spouses eligible for their own coverage (going into effect in SCS for 2012-13 school year; not in effect in MCS) No individual mandate to be eligible for Accident on the Job coverage Savings of ~$616 per MCS employee * ~10,000 covered MCS employees = ~$6.2M ~3200 MCS spouses * $4918 / year cost for spouses * assumption of 35% of spouses eligible for own coverage = ~$5.5M Every one point drop in enrollment results in annual savings of ~$616k; MCS enrollment/eligible currently 14 points higher than SCS but enrollment decisions tend to be sticky. Assumes range of 1-5 point drop in enrollment. SCS reserves $300k for AoJ. Assume MCS would have to reserve $600k. Cost is $35k for district size of SCS. Mercer estimates 38%. $4918 current dependent cost in Memphis; ~3200 dependents currently covered. MCS pays $350k$400k per year for this subsidy (~$6.2M) $0

Spouse out

(~$5.5M)

$0

No individual mandate for AoJ eligibility

($0-2.4M)

$0

Dependent audit

Dependent audit every four years to ensure all enrolled are eligible

($0.6-$1.1M)

$0

No district Medigap subsidy

No subsidy for Medigap for classified employees (current SCS policy) Determine covered and excluded items before the merger

($375k) if immediate; Less if subject to grandfathering TBD

$0

Plan coverage

$0

155

date Dental and vision Continue to offer at full-pass through; select common set of options $25 discount per pay period for completing HRA & $25 per pay period penalty for failure to complete; allows targeted wellness interventions Offer to all employees to enable tax-free set aside for healthcare spending (current in SCS only) Should lead to better healthcare outcomes over the medium to long-term but no quantification at this point $0 $0

Health Risk Assessment

$0

$0

Flexible spending account

Current cost of ~$4 per member per month in SCS; ~10% participation in SCS holds for MCS employees 10% haircut on total because not all recommendations mutually exclusive; Medigap savings not included

$50k-$75k

$0

APPROXIMATE TOTAL

~$13.4M savings (w/o Medigap)

$0

156

FINANCIAL MODEL

157

Introduction This chapter outlines the projected financials of merged Shelby County Schools in order to validate the overall financial viability of the Transition Plan and support the guiding principle: We must save where we can to fund what we need. This chapter summarizes the efforts in documenting the pre-merger financial baseline, projecting the post-merger revenues and expenditures through FY2016, and aggregating and validating the investment needs and efficiency opportunities. The final recommendations present the plan to address the resulting deficit. Context Both districts manage three major funds. Each fund is treated as a separate accounting entity, and operations must be accounted for in a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues, and expenditures. General Fund: The General Fund is the primary operating budget of the district that is financed primarily by state and local government. There are typically few, if any, restrictions on the use of the General Fund. Special Fund: The Special Fund is the supplemental operating budget of the district that is financed primarily by Federal grants and other donations. It is legally restricted to expenditures for specified purposes based upon contractual agreements with funding agencies. The Special Fund budget is not distributed equally across all students, but is rather tied to specific populations (e.g. economically disadvantaged, disabled, English language learners). Capital Fund: The Capital Fund is the capital budget of the district that is financed primarily by County government through the issuance of bonds. The Capital Fund is restricted to expenditures for capital projects such as the acquisition, construction, or improvement of capital facilities. In this chapter, revenues are identified based on source of funding. Expenditures are grouped by both function (e.g. instruction, administration, operations) and by object code (e.g. salaries, supplies and materials, furniture and equipment). Major Revenue Categories

158

Major Expenditure Categories

Summary of Current State The current state summary was developed by combining the FY2012 budgets of the districts based on common revenue and expenditure categories. The FY2012 budgets were chosen for the baseline analysis as the most recent set of financials issued in an effort to truly reflect the current state. It is appropriate to use budgeted numbers, since only minimal deviation between actual and budgeted financials occurred in prior years. The combined pre-merger baseline for all funds totals over $1.6B. The General Fund accounts for 76% of the combined pre-merger baseline at approximately $1,252M. General Fund revenues: Over 95% of General Fund revenues are financed from State and local sources, including approximately $630M from the State of Tennessee (primarily from the Basic Education Program, or BEP), $500M from Shelby County (primarily driven by property tax and sales tax), and $68M from the City of Memphis. An additional 3% is funded by $36M from the combined fund balance. General Fund expenditures: Over 80% of General Fund expenditures are for salaries and benefits of district personnel with contracted services accounting for a further 12% of the budget. Functional spend is led by instruction at $828M followed by operations ($212M), school-based administration ($82M), student services ($51M), central administration ($41M), and retiree benefits ($39M).

159

General Fund Pre-Merger Baseline

The Special Fund accounts for 18% of the combined pre-merger baseline at approximately $297M. Special Fund revenues: Special Fund revenues are financed primarily from federal formula grants, including $64M for Title I funding for economically disadvantaged students (approximately 70% of the total student population) and $34M for IDEA funding for students with disabilities (approximately 19% of the total student population). Other major formula grants include $79M for school nutrition and $11M in State funding for early childhood education. Additional special fund revenues are from competitive grants, including $25M for the Teacher Effectiveness Initiative, $20M for Race to the Top, and $12M from Education Jobs. Special Fund expenditures: Approximately 67% ($198M) of Special Fund expenditures are for instruction of specific populations (e.g. special education, bilingual instruction, early childhood education). Approximately 30% of Special Fund expenditures are for operations, primarily for free and reduced meal programs in school nutrition.

160

Special Fund Pre-Merger Baseline

The Capital Fund accounts for 6% of the combined pre-merger baseline at approximately $93M. Capital Fund revenues: Capital Fund revenues are financed entirely from County bonds utilizing temporary federal assistance from Qualified School Construction Bonds (QSCB) in order to obtain a lower interest rate. Capital Fund expenditures: Approximately 64% of Capital Fund expenditures are for new construction or major additions and renovations to existing facilities. An additional 32% of expenditures are for maintenance projects (including previously deferred maintenance). The districts have a further $272M in additional deferred maintenance to be completed at a future date.

161

Capital Fund Pre-Merger Baseline

Methodology for Projections Projections for the financials from FY2014 to FY2016 are based on the following methodology: Establishing comparable categories for revenues and expenditures to document the pre-merger financial baseline across the districts based on the FY2012 budgets (see Summary of Current State section in this chapter) Estimating overall Shelby County public school enrollment and enrollment mix among districtoperated schools, charter schools, and the Achievement School District (ASD) for FY2012 to FY2016 Trending the majority of revenue categories based on three-year historical averages, with alternate assumptions in areas with strong rationale for projections to deviate from historical averages Basing the majority of expenditure categories on flat FY2012 levels, with alternate assumptions in areas with strong rationale for projections to deviate from FY2012 levels Including initiatives with financial implications from all TPC recommendations and assuming that both one-time and run-rate impact will be achieved in FY2014 unless otherwise specified Each of these areas is explained in further detail in the following sections. Enrollment Projections As the financial projections are very sensitive to enrollment mix inputs (e.g. State BEP funding and pass-through expenditures calculated on a per pupil basis), it was critical to accurately project both the overall enrollment in Shelby County public schools and the enrollment mix among district-operated schools, charter schools, and the ASD. Overall enrollment projections from FY2012 to FY2016 were triangulated based on the average of the estimates developed by the capital planning departments of the districts and an updated study conducted by DeJONG-Richter, a firm specializing in GIS analysis for school districts that has 162

historically been commissioned by the County to perform projections to inform capital needs assessments. Enrollment mix projections were estimated using a series of assumptions informed by historical and planned enrollment and conversations with the ASD: Existing charter schools: The 25 existing charter schools in the district were assumed to grow to 80% of contractual capacity based on a comparison of planned and historical enrollment.44 New charter schools: The 15 new charter schools approved by the State in April 2012 were assumed to grow at planned enrollment rates submitted to the district, with the four charter schools approved by the Shelby County Board of Education beginning operations in FY2013 and the remaining charter schools opening in FY2014. It was assumed that 10 additional charter schools would open by FY2016 (approximates average annual approvals discounted to represent the fact that additional charter schools will be applying through the ASD) and enter at the average mix of school type and enrollment levels that currently exists in the district. It was further assumed that elementary schools would charter multiple grades and that middle and high schools would scale a single grade at a time. ASD conversions: The ASD was approved by the State to directly run three schools in the Frayser feeder pattern in FY2013. It was assumed that the ASD would convert the seven remaining schools in the Frayser feeder pattern by FY2015. ASD charter schools: The ASD was approved by the State to charter three schools in FY2013. It was assumed that the ASD would charter 13 additional schools by FY2016 at the average mix of school type and enrollment levels that currently exists in the district. It was further assumed that elementary schools would charter multiple grades and middle and high schools would scale a single grade at a time. Final enrollment projections estimated an overall decline of Shelby County public school enrollment of 3% from FY2012 to FY2016, resulting in approximately 147,400 students enrolled in Shelby County public schools by FY2016. Enrollment mix projections estimated an increase of enrollment in other operators from 4% of total public school enrollment in FY2012 to 19% in FY2016, resulting in approximately 118,700 students enrolled in district-operated schools by FY2016.

44

The one current charter school in SCS with very low enrollment was excluded from this analysis

163

Projected Enrollment & Enrollment Mix

Revenue Projections Revenue projections were based on three-year historical averages (FY2010FY2012) with detailed modeling of the following major revenue categories: Maintenance of Effort: TCA 49-2-203 requires Local Education Agencies (LEAs) to maintain the same level of funding each year either in total budget or on a per pupil basis; however, TCA 49-3-314 allows for a post-merger re-set of maintenance of effort levels for three years after the creation of the new LEA. It was assumed that the City of Memphis will no longer contribute $68M in annual maintenance of effort payments when it loses its status as a LEA after the dissolution of the Memphis City Schools. It was also assumed that Shelby County will continue to pay maintenance of effort at existing levels of $361,288,000 per year based on TCA 49-3-356. 2009 Judgment: The City of Memphis is legally obligated to repay $57.4M ($55M net amount due) based on the court ruling in The State of Tennessee, ex rel. The Board of Education of the Memphis City Schools, et al v. City of Memphis, et al. 2010. However, as the status of the lawsuit is still unresolved, it has been conservatively assumed that this one-time payment will not be received during the three years following the merger. If the payment is received by the district, it will be a contribution to balancing the post-merger budget or building up the fund balance. See a consolidated list of actions requiring legal action or clarity in the Migration Plan chapter (page 188). Local Option Sales Tax: Shelby County currently levies a 2.25% local option sales tax, of which 50% is required by State mandate to fund education. It was assumed the County would continue to levy a 2.25% local option sales tax and an average growth in the sales tax base of 2.7% was modeled based on the ten-year historical rate of change from FY2002FY2011 (excluding recessionary years of FY200810). Basic Education Program: Tennessee allocates State education dollars to school districts based on the BEP funding formula which is primarily driven by enrollment as measured by average daily membership (ADM). ADM was calculated based on the average ratio of ADM to enrollment with stable distributions among grade levels and special populations informed by three-year historical averages. In projecting each of the 45 variables used in the formula, all changes legislated in the BEP 2.0 reforms and proposed by the 2011 BEP Review Committee were also examined, but it was conservatively assumed that no pending reforms would be implemented in the post-merger period. However, all State mandated cost-of-living 164

adjustments as applied to instructional salaries were included in the formula (see cost-ofliving adjustments in section on initiatives). See a consolidated list of actions requiring state action in the Migration Plan chapter (page 188). ASD Revenues: The portion of revenues that would be withheld for the ASD was estimated based on the formula used to calculate the per pupil pass-through amount of local and State funding to charter schools as applied to the projected ASD enrollment. General Fund Balance: GASB 54 (governmental accounting standard related to fund balance reporting) only allows for the unassigned portion of a fund balance to be appropriated for budgeting. After the planned usage of fund balance in the FY2013 budgets, the combined districts will have only $17M of available unassigned fund balance to appropriate in future budgets. Although the districts have historically averaged $30M of annual fund balance use, it was recommended for no planned usage of fund balance in future years in order to preserve a small cushion for emergency use or cash flow issuesa significant shift in the districts mindset regarding balancing their budgets. Additionally, it was recommended that the district strategically build up the fund balance in the future. Available General Fund Balance

Competitive Grants: It was assumed major competitive grants (over $500,000) would expire as scheduled, and the only new major grant awarded would be the newly announced Innovation Zone grant of $15M. The three-year historical average of all other non-formula grants was assumed for the remainder of competitive grants.

165

Competitive Grant Expiration Schedule

Special Fund Balance: It was assumed that approximately $6M in special fund carry-over would be available each year based on a three-year historical average; however, as with all special fund revenues, restrictions may apply. Capital Funding: Shelby County officials indicated that $55M in annual capital funding would be available to the merged district beginning in FY2014.

Expenditure Projections The majority of expenditure projections were held flat at FY2012 levels in order to avoid any overlap with initiatives, with detailed modeling of the following categories: Textbooks: The FY2012 budget for textbooks was significantly lower than prior years based on the postponement of textbook purchases as a cost-saving initiative. An investment in textbooks was assumed equal to the three year historical average, which was approximately $2M more than the FY2012 levels. Charter Schools Pass-Through: The portion of revenues passed-through to charter schools was estimated based on the formula used to calculate the per pupil pass-through amount of local and State funding to charter schools, which estimates the available revenue for allocation (State and local funding less fixed costs) per ADM and subsequently multiplies this per pupil amount by the projected charter school enrollment. Healthcare Expenditures: Healthcare costs for current employees were assumed to grow at a net rate of 5% per year to reflect increasing claims costs. This assumed growth rate was based on observed historical MCS growth rates and national healthcare indices (e.g., S&P Healthcare Index, PwC Health Research Institute Index) Retiree Benefits: Retiree benefits were estimated to increase due to an increasing number of retirees driven by the retirement of the baby boomers and the rising cost of healthcare. The three-year average rate of increase of 3.69% was modeled for each year in the period to calculate the cost of retiree benefits. FY2013 Budget Initiatives: All non-overlapping FY2013 budget initiatives from the two districts were assumed to carry forward into the future, specifically $1.1M from the closure of three elementary schools after the 2011-12 school year, $1.2M from the elimination of behavioral specialist positions in MCS, $1.1M from the reduction of select MCS programs, $4.7M from elimination of SCS positions, and $4.8M from SCS spouse out and dependent audit savings Cost-of-Living Adjustment: The State has mandated a cost-of-living adjustment for six of the past ten years and passed a 2.5% cost-of-living adjustment for FY2013. Although the cost-ofliving adjustment is mandated for certified personnel, the districts have traditionally applied the salary increase to both certified and classified personnel. In addition to the FY2013 cost-ofliving adjustment of 2.5%, it was modeled that a further cost-of-living adjustment of 1.9% would be approved for FY2014, FY2015, and FY2016 based on a ten-year average for FY2004 13 (excluding recessionary years of FY200810).

166

In-Kind Services: The City has stated it is no longer likely to continue to provide in-kind donations of water (estimated at $700,000 per year) or security services (estimated at $3.2M). These services have been conservatively modeled in as additional costs on the General Fund. Norris-Todd Salary Preservation: The cost of the legal requirement to preserve salary schedule rights was estimated conservatively at $18M for all certified and classified personnel but following the allowable three-year time period within the Norris-Todd ruling, the estimated cost is factored in FY2016 projections and not earlier (see Personnel Model chapter for detail). Special Fund Expenditures: Special Fund expenditures were assumed to not exceed available Special Fund revenues (including fund balance) in order to avoid placing additional burden on the General Fund. For competitive grants, the district typically assesses whether there should be any incremental burden on the General Fund (e.g. to structurally retain certain positions) once the grant expires. Race to the Top, which funds early childhood and additional programming for under-performing students, is the most significant grant due to expire within the first three years of the merger, but at this time, the districts do not have an estimate on any incremental burden on the General Fund. Capital Fund Expenditures: Capital Fund expenditures were assumed to not exceed available Capital Fund revenues in order to avoid placing additional burden on the General Fund. An analysis was completed of the Capital Improvement Plans of both districts (approximately $200M in required funding over five years), estimated deferred maintenance schedules (approximately $272M in required funding over ten years; note that total deferred maintenance will be reduced by ~$50M if capacity utilization initiative is implemented), and the merger-related IT needs (up to $18M in required funding), and it was recommended that a Needs Assessment Committee will meet to prioritize capital projects not to exceed the $55M in annual available funding.

Initiative Projections The following initiatives developed by the TPC were included in the projections: Investments in Educational Priorities: Estimated at $11M (plus one-time investment of $500,000 in FY2014) for Pre-K expansion, 60 additional counselor positions, college preparation, Common Core professional development, Advanced Placement expansion, and 70 additional special education clerk positions (see Education Plan: Educational Services chapter for detail). Investment in New Strategic Roles: Estimated at $1.1M for 9 new strategic roles in the Offices of Planning and Performance Management. An additional $1M for incremental roles in the Office of Innovation should come from grant funding (see Education Plan: Administrative Organization chapter for detail). Investments in Assistant Principals: Estimated at $2M for adding 18 new Assistant Principal positions in the district (see Personnel Model chapter for detail). Operational Efficiencies: Estimated at $66M for custodial, utilities, transportation, purchasing, IT, and capacity utilization efficiencies. The TPC chose to use the high end of the savings range in estimated logistics efficiencies acknowledging that even the higher end of these ranges had some conservatism built in. $3M is deducted from the aggregate operational efficiencies to account for the overlap in savings that would result from the school closure, custodial and utilities initiatives all being implemented. Note there are one-time revenues of $6M for sale of the SCS bus fleet and a one-time cost of $1.3M for school closures (see Operations Plan chapter for detail). Central Office efficiencies: Estimated at $14M for increasing managerial spans of control, removing duplicative roles, and achieving scale efficiencies in the Central Office (see Personnel Model chapter for detail). Benefits efficiencies: Estimated at $17M for achieving efficiencies from renegotiating benefits contracts, moving to 63% effective board share for both current and retired employees, implementing a spouse out policy, removing the accident-on-the-job mandate, and conducting a dependent audit for current employees (see Personnel Model chapter for detail). 167

Staffing efficiencies: Estimated at $3M for reducing 40 librarian positions in the district (see Personnel Model chapter for detail). Cost management of enrollment shifts: Estimated at $61M (see next section in this chapter for detail). Separation pay: Estimated at $8.3M for merger-related reductions in force to cover separation costs, unpaid vacation, and unemployment benefits.

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Cost Management of Enrollment Shifts Summary A system with multiple school operators (e.g. District, ASD and charter schools) inherently costs more to operate due to loss of scale with fixed costs being allocated across a smaller volume of students. This multi-operator environment is in place today and is projected to expand irrespective of the merger. To date, the districts have found creative ways to manage the increased costs of the existing multi-operator system (e.g. cutting or shifting 400+ positions out of the General Fund). However, with the projected share of students in non-district operated schools expanding rapidly in the next few yearsfrom approximately 4% in FY2012 to 19% by FY2016 (equivalent to approximately $212M of revenues shifted to charter schools and the ASD in FY2016)it is critical to implement strategic cost management to ensure each pathway in the Multiple Achievement Paths model is financially equitable to students. The majority of these enrollment shifts are projected to happen irrespective of the merger, and the increased cost of the system is not the fault of the district or charter schools. Although merged SCS will continue to be responsible for managing most of these costs, other operators will also contribute as participants who benefit from this overall system. Context New operators enter the system through a spectrum of models that vary in the favorability of their financial impact on the district. The exhibit below shows that full school conversions in existing facilities are the most financially favorable to merged SCS because all school-level fixed and variable costs can be passed to the new operator. Lottery system enrollment in private facilities are the least financially favorable to merged SCS because students are not shifted in perfect grade-level portions and because the fixed costs of operating a school burden a smaller number of students in districtoperated schools. Types of Models in a Multi-Operator Environment

Models vary in their financial favorability based on how different costs (e.g. pupil-level, school-level, and district-level) behave during enrollment shifts. The exhibit below shows that per pupil costs move in six unique ways. 169

Types of Expenditures

Variable costs can be fully transferred to new operators in all models Step variable costs can be best managed with conversions of existing attendance zones; lottery enrollment makes it very difficult for the district to cut costs (e.g. because students do not move in perfect grade-level portions) Shareable costs can be best managed when new operators utilize existing facilities Fixed costs can only be transferred in full conversions of existing schools Assignable overhead can be fully shared across all operators opting in for a service Stranded overhead cannot be shared across other operators

Recommendations To manage costs associated with significant enrollment shifts, the district will implement the following set of policy considerations and management practices: 158. Enable attendance zone conversions to allow new operators to participate in full or partial conversions of existing attendance zones. This would necessitate extending the ASD policy of allowing the conversion of attendance zones to all new operators. See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter (page 188). 159. Incentivize new operators to utilize existing facilities and participate in full or partial school conversions where possible through financial incentives. The district could provide free rent to incentivize new operators to choose to utilize district space (versus finding their own facilities) and implement a differentiated contribution to incentivize new operators to fully or partially convert existing attendance zones (versus enrolling based on a lottery system). The district can also encourage shared services in order to provide scale advantage to both district and non-district operated schools. This would apply to splitting facilities costs (e.g. utilities, custodial, maintenance), but could also extend to sharing roles across two schools within one building (e.g. librarian, nurse, therapist). 160. Require all new operators to pay for full cost of services received (e.g. utilities, transportation) including directly related overhead. A fee-for-service model will include the cost of directly related overhead charged on a pro rata basis (e.g. per pupil, per square foot). 170

161. Commit to aggressive cost management of staffing levels and school footprint. This requires active management to maintain constant or near-constant staff-to-student ratios as enrollment declines or shifts, aggressive sharing of school staff (between grades, subjects, buildings), annual review of school and enrollment footprint to look for consolidation opportunities, and aggressive management of the size of the central office. Efforts will be made to make the center less vulnerable to volume shifts by shifting some roles to serve groups of schools. This type of approach is used in Denver Public Schools. 162. Institute strict planning guidelines that require non-district operators to submit target enrollment and service up-take within a pre-defined timeline to allow for proper planning and budgeting. The district could consider charging a penalty for incorrect or late estimates. Enabling these policy changes and management practices can help recover approximately 90% of revenue associated with enrollment shifts from FY2012 to FY2014: From FY2012 to FY2014, the shift of an estimated 9,500 students from district-operated schools to other operators (e.g. charter schools, ASD) will result in a shift of approximately $70M in revenues. Charter school revenue share will continue to be a pass-through to the district and ASD revenue share is expected to be directly provided by the State. If the merged SCS aggressively implements a set of management practices to manage its school and staffing footprint, it can recover an estimated $58M. This assumes 85% of step-variable costs can be recovered with the district pursuing regular staff right-sizing and active management to hold student-teacher ratios constant. For example, with an estimated decline or shift of 9,500 students from FY2012 to Fy2014, the district will have to make the following types of approximate reductions390 general education teachers, 60 elective and vocational teachers, 50 clerks, and 15 central office positionskeeping in mind that new teaching and other employment opportunities would be created in the ASD and charter schools. Other operators paying for benefits received (e.g. utilities and maintenance in shared facilities, shared staff, shared services) can help contribute approximately $3M (see Operations Plan chapter for more details on shared services). A modest and differentiated contribution from other operators of an estimated 4% (blended average across operator types ranging from 0% to 7% depending on specific choices made by the operators, e.g. full conversion of existing attendance zone in existing facilities contribute 0%, lottery system in existing facilities contribute 5% if choose to share school-level costs) can help recover a further approximately $3M. Enforcing contributions will require a legislative change as current Tennessee law does not allow charter school authorizers to require charter schools to contribute to district overhead. Note that benchmarks of other large urban districts show contributions to range from 2% (Denver) up to 20% (Chicago). Implementing these policies and practices in FY2014 would reduce the net gap associated with enrollment shifts to an estimated $6M.

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Summary of Projected Future State The projected future state for FY2014 estimates the shift from the FY2012 baseline based on changes in non-merger-related revenues and expenditures, merger-related revenues and expenditures, investments, and identified initiatives (both one-time and run-rate). Independent of the costs of the merger, the budget of the combined districts would be projected to as a deficit of $71M in FY2014, which assumes aggressive cost management and treats the costs associated with enrollment shifts as net impacts (~$0.3M for ASD and ~$9M for charter schools). The merger increased the deficit by $72M with the TPC recommending an additional $14M in investments, leaving merged SCS with a gap of $157M in FY2014. These investments are primarily in educational priorities including pre-K, counselors, and additional special education support, are key aspects of the path to delivering a world-class educational system. The TPC has identified $100M in net efficiencies to close a significant portion of the gap, leaving a $57M deficit that must be addressed in order to balance the budget in FY2014. This gap is projected to widen by $15M in FY2015 and an additional $37M in FY2016. The steep jump in FY2016 is mostly driven by the timing of the Norris-Todd salary preservation requirement (estimated at $18M incurred in FY2016) FY2014 Fiscal View

163. In order to identify additional efficiencies in the near and longer-term, the TPC recommends the establishment of a district-led cross-functional working committee supported by the Transition Office. The working committee will consist of the Superintendent and Chief Academic Officer, individuals from key departments (primarily Finance, HR, and Operations), and representatives from the County and the business community. The working committee will identify any specific additional initiatives in FY2014 and subsequent years to help address the deficit. Recommendations coming from this committee will be a direct input into each year's budget cycle. 164. An Operational Effectiveness Council will be established to provide ongoing guidance on improving operations of the merged district on an on-going basis. This Council should be established by December of 2013. 172

FY2014 DetailsNon-Merger-Related Revenues

FY2014 DetailsNon-Merger-Related Net ASD Impact

FY2014 DetailsMerger-Related Revenues

173

FY2014 DetailsNon-Merger-Related Expenditures

FY2014 DetailsNon-Merger-Related Net Charter Schools Impact

FY2014 DetailsMerger-Related Expenditures

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FY2014 DetailsInvestments

FY2014 DetailsOne-Time Identified Initiatives

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FY2014 DetailsRun-Rate Identified Initiatives

Incremental Gap for FY2015 and FY2016

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Recommendations In order to close the $57M fiscal gap remaining after all TPC recommended investments and efficiencies have been incorporated, the TPC recommends that the district pursue the following four actions in parallel: 165. The Shelby County Board of Education will vigorously pursue additional sources of City and local sources of funds and in-kind support not in the district's control including: a. City repayment of FY2009 judgment: $55M net amount due from legal ruling regarding FY2009 maintenance of effort payment, to be strategically allocated (e.g. approximately $11M per year over five years). The SCBE will aggressively pursue legal action to resolve the dispute and collect the amount owed prior to FY2014. See a consolidated list of actions requiring legal action in the Migration Plan chapter (page 188). b. City investment in education priorities: A contribution of $11M toward the TPCs recommended educational priorities is less than 17% of the annual pre-merger maintenance of effort payments. The City has formed a committee to specifically explore the Citys role in education and will be strongly encouraged to invest in the identified priorities. c. City provision of in-kind services: Estimated at $4M in cost savings in FY2014 if the City continues to provide in-kind donation of water and security. The Board will encourage Memphis Light, Gas, and Water and the Memphis Police Department to continue their inkind support post-merger. d. Contributions from other operators: Estimated at $3M in additional revenue in FY2014 from a differentiated contribution ranging from 0% to 7% from all other operators in the district (see section on Cost Management of Enrollment Shifts above for details). The Board will lobby the State for the legislative changes necessary to implement this initiative, which includes allowing charter school attendance zones (precedent exists with the ASD) and enforceable contribution requirements (similar to other large urban school districts, e.g. Chicago, New York City). 166. The SCBE will seek additional funding from the State. There are reforms passed in the State BEP 2.0 formula that are pending funding for full implementation. Some of these reforms, including an increase in the State share for instructional components in the formula from 70% to 75%, could yield as much as $30M in incremental revenue. Additionally, the State may provide transitional funding for consolidation (similar to what was suggested in TCA 49-2-1262). See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter (page 188). 167. The SCBE will set a $15M target for additional district efficiencies that do not increase student-teacher ratios or otherwise impact the classroom. The district-led cross-functional working committee will create the specific plan to meet the $15M efficiency target. This plan must be completed in the fall of 2012 as an input into the FY2013 budget preparation process. Illustrative efficiencies that could be explored by the committee include: removal of any vacant positions, efficiencies in part-time staff, standardizing titles, consolidating warehouse space, selling surplus property (one-time impact) 168. The SCBE will request increased local funding from the County either through a reallocation of funds from within the County budget and/or through implementing a tax increase

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The TPC firmly recommends the path described in the exhibit below to address the budget deficit and emphasizes that the SCBE must exhaust all available resources from the City, the State, and the County to fully fund the Transition Plan recommendations prior to considering any contingency measures. Path to Address Budget Gap

Contingency Plan If all four recommendations for additional funding have been exhausted and a budget deficit remains, the TPC has identified potential incremental cost reductions worth $48M as a reluctant contingency plan. This contingency plan is not a recommendation of the TPC. The TPC believes that these types of reductions, which would increase class size and reduce school-level staff, undermine the potential of the Plan to create a world-class educational system, and should only be pursued as an absolute last resort. The exact initiatives would need to be identified by the district-led working committee; however, some illustrative examples are detailed below. These examples total $48M in annual savings. Shifting to State minimum ratio of librarians which would result in a $5.5 additional annual savings from about 115 fewer librarian positions Retracting investment in additional Assistant Principals and shifting toward a 'SCS minus one' staffing model which would provide an additional $11.4M in annual savings from eliminating close to 100 AP positions 15% reduction in other school staff positions (e.g., clerks, educational assistants, therapists) for an annual savings of $10.5M Moving to a student-teacher ratio of 'MCS plus one' for an annual savings of $20M resulting from eliminating 280 teaching positions

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Other Relevant Considerations Cash Flow District cash flow is impacted by the timing of the receipt of major revenue sources including: State BEP payments received through 10 monthly installments beginning on August 15th County MOE payments split into two large payments based on the timing of the collection of property taxes in December and February Local sales tax revenues distributed to districts on a monthly basis Formula grants funded on a cost reimbursement basis (typically 710 day lag time between submission of expenditures and actual reimbursement from government) As the majority of revenues are not received until January, the district must actively manage cash flows to ensure adequate funding for items such as payroll, and often it will be necessary for the district to postpone large purchases or investments. Additionally, the district is required to distribute pass-through payments to charter schools at the beginning of the school year, regardless of when the source of that funding is actually received. The district has managed to support this mismatch of funding receipt and distribution by using fund balance; however, with a lack of fund balance in the future and the rapid expansion of enrollment in charter schools, this practice will become unsustainable. 169. The TPC recommends that all operators (e.g. district, charter schools, ASD) receive state and local funds in the same timeframe, whether on the current staggered district payment schedule or on a revised payment schedule that more closely matches how charter schools currently receive funds. See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter (page 188). Major Balance Sheet Commitments The merged district has over $1.9 billion in balance sheet commitments as detailed below. Accounting treatment of major asset and liability categories were compared across districts in order to identify significant differences requiring a single approach going forward. FY2011 Combined Balance Sheet

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170. The TPC recommends developing a single set of accounting policies and practices postmerger, including: Cash and equivalents MCS currently maintains an amount of current cash and equivalents sufficient to meet accounts payable and accrued liabilities obligations, whereas SCS is dependent on future receipts and investments to meet such obligations Investments MCS manages its own investments, whereas SCS operates under an investment agreement with the County Trustee Due from other governments grant reimbursement lag times in both districts range from 10 days to 45 days depending on the efficiency of processing grant applications Capital assets although both districts use the straight-line method of depreciation, policies related to useful life may differ across similar asset categories, as may practices related to inventorying, cataloguing, and selling idle assets Accounts payable MCS currently does not accrue payables for the utilities and payroll currently received in-kind from the City of Memphis (e.g. water from MLGW, security from Memphis Police Department); if these in-kind services are discontinued, the merged SCS will need to accrue the appropriate payables Long-term liabilities primarily consist of Other Post-Employment Benefits (see next section) Other Post-Employment Benefits Other Post-Employment Benefits (OPEB) are benefits other than pensions for eligible retirees (specifically health insurance and life insurance). OPEB is accounted for as both a long-term liability under GASB 45 standards and an annual cost incurred equal to the district share of the cost of claims paid out to retirees for benefits each year. The OPEB liability is an actuarial estimate based on multiple variables (including the retirement rate, mortality rate, healthcare cost trends, etc).

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Summary of FY2011 OPEB

The districts currently account for OPEB using two different methods. MCS uses the pay-as-you-go method, which accounts for OPEB as a general operating expense in the amount equal to benefits claimed each year. SCS uses the actuarial method, which accounts for OPEB as a long-term liability in the amount expected to be sufficient, if invested now, to finance future benefits. SCS has also begun pre-funding OPEB by contributing $1M to the Tennessee School Boards Association GASB 45 Trust in FY2011. 171. The TPC recommends that merged SCS use the pay-as-you-go method. The pay-as-you-go method, used by most state governments as well as other large urban school districts, is recommended primarily because of the districts lack of funding and fund balance and because it allows for greater contributions towards annual OPEB expenditures. 172. The TPC further recommends that a policy be implemented for equitably allocating OPEB costs across multiple operators in the district. Specifically, it is recommended that each operator be responsible for the OPEB liability related to their employees. The district will continue paying all of the costs of benefits of existing retirees. Active employees who switch between operators (e.g. transfer to ASD) during the merger will voluntarily exit district employment, be hired as a new employee of the other operator, and thus, be treated as the responsibility of their employer upon retirement from the system. For information on managing OPEB costs, see the Personnel Model chapter (page 150).

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LEGAL ASSURANCES

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Introduction This chapter provides legal assurances for how the Transition Plan has met the nine legal requirements of the planning commission as outlined in TCA 49-2-1201. TCA 49-2-1201(1): Administration organization of the proposed consolidated system The administration organization of merged SCS will be the Multiple Achievement Paths model that structures the district so that each school, regardless of its operator or location, has the support and autonomy that best enables it to deliver on the district's educational priorities. Community and optional schools will be managed in regions and receive autonomies from central leadership as a management practice. The district will work in close partnership with the Achievement School District, which operates or contracts with operators for eligible low-performing schools. ASDeligible schools not in the ASD may become part of the Innovation Zone, which will be managed by the district separately from the regions. The district will authorize schools that organize to become charter schools (new or conversion), as provided for by statute, through a rigorous charter school application process. The district will also provide high-quality, cost-effective support services to all district-operated schools and any other operators entering into service agreements with central leadership. The detailed proposal for the administration organization is set forward in the Education Plan: Administration Organization chapter. TCA 49-2-1201(2): Method to ensure no diminution in the level of the educational service in the schools in any of the systems involved The district will strive to create a world-class educational system for every student by implementing recommendations related to the identified education priority areas with investments in select initiatives. Merged SCS will also preserve other services in which the TPC has not made specific recommendations and will seek to resolve any programmatic differences between MCS and SCS in a way that does not reduce the level of educational service in the schools. The detailed proposal for the provision of educational services is set forward in the Education Plan: Educational Services chapter. TCA 49-2-1201(3): Appropriate means for the transfer of assets and liabilities of municipal and special school district systems The plan for the transfer of assets and liabilities includes two major steps: Step One: Prepare inventory of assets and liabilities MCS must complete an inventory of all MCS assets, including but not limited to plant, property, equipment, information technology, and working assets (e.g. textbooks, athletic equipment, musical instruments).

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MCS must also complete an inventory of all MCS liabilities, including but not limited to contracts at both the district level (e.g. Teacher Effectiveness Initiative) and the school level, including accounts payable outstanding and accrued liabilities (e.g. accrued vacation days). The inventory will include a detailed accounting of the type, quantity, location, terms, and estimated value of assets and liabilities. A cross-functional team composed of staff from the relevant departments will be responsible for completing the inventory. The inventory of assets will be the responsibility of staff primarily from the Facilities, IT, Academics, and Electives departments. The inventory of liabilities will be the responsibility of staff primarily from the Finance and HR departments. The inventory must be finalized prior to the beginning of the FY2014 budgeting process. The TPC recommends that the staff begin the process by September 2012 to provide adequate time to complete the inventory. The TPC also recommends engaging an audit firm to conduct a high-level, on-site audit of major assets and liabilities in December 2012 (if such an audit has not occurred within the prior year). Step Two: Prepare and file transfer instruments MCS must prepare and file transfer instruments for all District physical property detailed in the assets inventory. The Finance and Legal departments will be responsible for preparing the transfer instruments and recording all title transfer documents with the Shelby County Register. All transfer documents must be filed prior to the first day of the merged school district. The TPC recommends that the staff begin the process of preparing all transfer documents after the completion of the inventory and audit of assets and liabilities in January 2013. The documents will then be filed on July 1, 2013. Timeline for Transfer of Assets and Liabilities

TCA 49-2-1201(4): Plans for disposition of existing bonded indebtedness that shall not impair the rights of any bondholder The plan for the disposition of bonds is based on four key legal opinions: Disposition of existing City bonded indebtedness The legal opinion issued by the County attorney (City of Memphis school debt following the merger of City and County School Districts) addresses the question: Which legal entity must dispose of debt issued by the City of Memphis for the use and benefit of the Memphis City School District? 184

The opinion notes that under TCA 49-2-1002(d), the City of Memphis will remain responsible for the disposition unless the County agrees to assume the debt. The opinion states: Indebtedness issued by the City of Memphis for the Memphis City Schools remains the obligation of the City of Memphis following any school merger, unless the County Commission adopts a resolution that obligates the County to pay off that debt instead. Disposition of existing Rural School Bonds indebtedness The legal opinion issued by the legal offices of Edwards Wildman Palmer LLP (Shelby County Tennessee Special General Obligation School Bonds) addresses the question: Which legal entity must dispose of debt associated with the Rural School Bonds issued in 2003 to be paid from taxes upon property in the County located outside the boundaries of the City Schools? The opinion notes that, under TCA 49-2-1002(d), the Shelby County taxpayers in the area outside the City will remain responsible for the disposition. The opinion states: There is no statutory authorization for the Board to authorize the payment of the Rural School Bonds from County-wide property taxes. Proceeds from disposition of properties financed with County bonds The legal opinion issued by the legal offices of Edwards Wildman Palmer LLP (Disposition of proceeds from sale or transfer of Shelby County School District properties financed with County bonds) addresses the question: Which legal entity has control over the proceeds from the disposition of properties financed with County bonds? The opinion notes that the Shelby County Board of Education has control over the use of all bond proceeds (subject to use restrictions requiring proceeds to be applied exclusively to capital projects). As such, the opinion further notes that the Board must either apply proceeds from the sale or transfer of properties financed with County bonds to other capital school projects or provide the proceeds to the County to repay previous bonds issued for capital school projects, stating that the sales are governed by the same use restrictions. Proceeds from post-merger payment of judgment against the City of Memphis The legal opinion issued by the County attorney (City of Memphis school debt following the merger of City and County School Districts) also addresses the question: Which legal entity should receive the $57M payment (current net amount due of $55M) from the judgment against the City of Memphis as ordered in State ex rel. Board of Education of the Memphis City Schools v. City of Memphis if the payment is made post-merger? The opinion notes that, under TCA 49-2-1002(d), the judgment should be paid to the Shelby County Board of Education for use and benefit of the schools of the former City school district. The opinion states: The judgment is owned by the city school district and would therefore pass to its successor in interest upon transfer of administration or merger, that is, to the county school district, in the event it was not paid prior to the effective date of the merger. TCA 49-2-1201(5): Plans for preserving the existing pension rights of all teachers and nonteaching personnel in the respective systems All full-time employees (25 or more hours per week) of MCS and SCS currently participate in the Tennessee Consolidated Retirement System (TCRS). TCA 8-35-201 gives political subdivisions of the state the option to decide whether "all employees in all of its departments or instrumentalities" will be "eligible to participate in the retirement system. Both MCS and SCS have elected to allow all full-time employees (25 or more hours per week) to participate in the Tennessee Consolidated Retirement System. TCA 49-2-1204 of the consolidation code, linked to by Norris-Todd, requires the districts to maintain pension rights for all teaching and non-teaching personnel. In accordance with this 185

requirement, the merged district will continue to provide TCRS participation for all full-time employees. TCA 49-2-1201(6): Plans for preserving the existing tenure rights, sick leave rights, and salary schedule rights of all teachers and nonteaching personnel in the respective systems In accordance with both TCA 49-2-1201 and TCA 49-5-203, the merged district will continue to enforce all tenure rights granted by TCA 49-5-501 - 49-5-515 All teachers are currently eligible for tenure by teaching for at least five years and receiving evaluations of above expectations or significantly above expectations during at least the last two of their probationary teachers. All full-time employees (25 hours or more per week) of MCS and SCS currently receive one day of sick leave per month. While the accumulation of sick leave for teachers is governed by TCA 49-5-701, that for other employees is by local policy. Both MCS and SCS have the same sick leave policy for all employeesone day per month. TCA 49-2-1204 of the consolidation code, linked to by Norris-Todd, requires the districts to maintain accumulated sick leave for all teaching and non-teaching personnel. In accordance with this requirement, the merged district will maintain any sick leave balances accumulated by employees prior to the merger. Per TCA 49-2-1204(c), existing salary schedules will be preserved by the district following the merger. Within three years of the merger, a new salary schedule will be developed for each position that is no lower than the highest salary schedule maintained by a component part of the system prior to the establishment of the new consolidated school system. In the third year after the merger, the district will move all employees to the new salary schedules. TCA 49-2-1201(7): Appropriate plans for contributions by municipalities or special school districts to the county for the operation of a unified system of schools during the period of transition following unification, which period shall not exceed 3 years Shelby County will be responsible for providing funding to the merged district based on maintenance of effort requirements established by TCA 49-2-203 at the existing levels of $361,288,000 per year at minimum as determined by TCA 49-3-356. The County may reset its maintenance of effort levels for three years after the merger as allowed by TCA 49-3-314. The City of Memphis will be encouraged to contribute to the merged district, especially in support of recommended educational priorities (e.g. expansion of Pre-K program). The City of Memphis will also be encouraged to continue in-kind contribution of water and security services. Shelby County and the municipalities will be asked to continue in-kind provision of security services to the merged district. TCA 49-2-1201(8): Appropriate plans for reapportionment after each federal decennial census of districts for election of members of the school board Reapportionment will continue to remain under the purview of the County Commission, and will do so in compliance with TCA 5-1-111, which requires the County Commission to change the boundaries of districts or redistrict a county entirely if necessary to apportion the county legislative body so that the members represent substantially equal populations based on the latest federal census data. TCA 49-2-1201(9): Any other matters deemed by the planning commission to be pertinent The Shelby County Board of Education will implement the TPC's recommendations to create a worldclass school system that: Provides an excellent education for all students in Shelby County 186

Is led by an administrative structure that can serve the breadth of students and schools in merged SCS Has a human capital model that can attract and retain strong leadership, teaching and nonteaching talent to Shelby County. Identifies areas of efficiencies and opportunities to fuel greater academic investments and ensure the fiscal viability of the merged district Promotes collaboration within the merged district and between the district and other stakeholders in our community Actively seeks out input from the community and uses that input to shape policies and decisions

For more detail on the specific recommendations related to academics, see chapter entitled Education Plan: Educational Services. For more detail on the specific recommendations related to the administration structure, see chapter entitled Education Plan: Administrative Organization. For more detail on the specific recommendations related to the human capital model, see chapters entitled Education Plan: Educational Services and Personnel Model. For more detail on the specific recommendations related to the fiscal viability merged SCS, see chapters entitled Financial Model, Operations Plan, and Personnel Model.

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MIGRATION PLAN

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Overview As the planning phase of the merger comes to a close, the focus turns to implementation. This chapter focuses on the implementation activities that need to occur prior to the merger, while recognizing that there is also important implementation work to be done in the first few years following the merger. For the work that needs to be done in the implementation period defined as the time between the Transition Plan approval and July 1, 2013 this chapter offers guidance on the process and timeline for the implementation of the Transition Plan and the broad set of merger activities. This is divided into three sections: 1. Day one milestones: Summary of the most critical milestones for the merger 2. Transition management: Outlines the responsibilities and structure of a team to lead the transition process 3. Activities and milestones for key initiatives: Provides more detail in the approximately 30 areas identified as key initiatives The implementation process will be challenging, and will require focus on the ultimate goal of a world-class school district to benefit all of Shelby County's children. The following aspirations should guide the implementation of the merger: Students, families and staff are ready for the first day of school in the fall of 2013 The 2012-13 school year is successful in the midst of planning for the merger Merger planning decisions are well-informed and decision-making processes are effective The district retains and attracts the best talent The new district develops its own distinct culture A management structure is in place during the pre-merger implementation year to make tough decisions for the merged district The district hits its financial targets The selection of staff for the central office is fast, fair and disciplined

Day One Milestones Across the wide range of potential merger related activities, there are four aspirations that help focus attention on the milestones that matter most: Equity. All students have equitable access to programs and support. Educational and organizational excellence. Student academic performance improves and the district maintains and improves the effectiveness of its processes and operations. Fiscal stability. The district achieves a balanced budget, while having the resources it needs to support educational excellence. Maintaining the trust of employees, families and the communities. Employees, families and communities are well-informed about the merger and feel the merger is being managed capably and fairly.

This summary includes the most critical milestones related to the merger. Most milestones require multiple months of lead time to complete; please see the more detailed timelines that follow this section. This list is not exhaustive and does not include additional milestones that correspond with the normal start of the school year.

189

Day One Milestones:

Category Transition enablers Education and student services Milestones Superintendent for 2013-14 named Transition Office created, sufficiently resourced, and functioning effectively Merger date confirmed (propose July 1, 2013) All education functions have leaders in place and department charters Plans for a single approach to all academic programs and student support services are completed, approved by district leadership, and in the process of being implemented Teacher, administrator, and staff training on the most important topics (e.g. teacher evaluation, any new policies) is complete or in-process Detailed 5-year plan developed for Pre-K expansion, with the first wave of additional classrooms ready to open with students enrolled School scheduling on-track for completion on normal timeline Schools closures implemented with a strong community engagement process District operating as a single entity within all operational functions (including custodial, IT, maintenance, nutrition, purchasing, safety & security, transportation, and utilities) Key vendor contracts are finalized, including new contracts for custodial and transportation service providers Critical IT systems (including Finance, HR, and Payroll) are "live" and functional Utilities demand management policy created and approved by Board High spend procurement areas identified and vendor consolidation underway Service agreements exist for any services provided by the district to charter schools, the ASD, and/or municipal school districts, should they exist Governance plan for safety and security established and security staff identified and trained to serve merged district Enrollment projections across district-operated, charter and ASD schools confirmed for FY14 Additional revenue contributions from city, state and/or county secured FY2014 budget approved Transfer of assets and liabilities completed Compensation structures approved and in effect Benefits plan approved and in effect Single set of personnel policies approved and in effect, or plan and timeline for developing a single set of policies determined Schools staffed for the 2013-14 school year Merged central office organization is designed and staffed Each central office department has a clear charter agreed upon by district leadership All students, families, and staff know their school assignment for the 2013-14 school year All students, families, staff, and community members have access to the most important information about the merger All students, families, and staff from across current MCS and SCS have had opportunities to meet and interact with their counterparts from the other district Board is operating under a single set of Board policies, and has a plan for reviewing and revising any interim policies in the first year of the merger

Operations

Finance and budget

Personnel

Central office Communications

Shelby County Board of Education

190

Transition management Following the approval of the Transition Plan, MCS and SCS staff will need to work together on merger implementation. As the districts continue to operate two separate school districts during the 2012-13 school year, they will need a Transition Office to lead and manage the key implementation process. The Transition Office serves the following roles: Ensuring accountability to the Transition Plan Tracking progress and managing timelines Raising issues that cut across multiple initiatives Advising the 2013-14 Superintendent on decisions impacting the 2013-14 school year Developing and implementing a change management strategy. This includes helping the district develop a shared culture through activities including affiliation events, cultural awareness training, and the formation of cross-district leadership groups for principals and teachers Facilitating clear and effective internal and external communications Track adherence to the legal requirements of the merger, as outlined in TCA 49-2-1201 The people that fill the Transition Office should: Be selected by the 2013-14 Superintendent Represent a mix of current MCS and SCS staff For most people, fill dual roles during the implementation period continuing to serve in their current management roles, while spending dedicated time in the Transition Office The proposed structure for the Transition Office is depicted in the next exhibit: Structure of Transition Office

Individuals who fill this office should named by October 1, 2012. This is necessary so that the Transition Office can be in place to begin to lead some of the initiatives that require significant action in the fall of 2012 (e.g. IT migration, budgeting). 191

The Transition Office will first need a Superintendent named for the 2013-14 school year, to manage and lead the merger effort. The Superintendent, along with representatives from the SCBE and TPC would serve on the Transition Advisory Council, whose role is to advise the transition process and facilitate strong communications among the board, staff, and community. The Chief Transition Officer is the day-to-day leader of the transition, on behalf of the Superintendent. The Chief Transition Officer manages the Transition Steering Committee a small leadership team focused on the management, coordination, and communication regarding the implementation of the merger. This group would be made up of current cabinet-level staff from both districts. This group would ultimately be responsible and accountable for the implementation of the Transition Plan recommendations and the implementation year initiatives described below. The Transition Working Team would provide a small staff for the analytic and project management support to the merger process, focusing particularly on initiatives that require more attention than Initiative Leaders can devote. This team would report to the Chief Transition Officer. Finally Initiative Leaders would be staff members who make recommendations to the Superintendent, the Chief Transition Officer and the Transition Steering Committee for the specific initiatives where they have expertise. Initiative leaders would not be formal members of the Transition Office. Together this office would provide the support and structure for the merger during the implementation period. The TPC recognizes that staff from both districts will be stretched during this year leading their current districts and supporting schools and students, while planning for the merger. In addition, few staff members have merger experience (and likely none have experienced a merger with all of the complexities of this one). It will be critical to supplement internal capacity with external implementation support and expertise. The district should explore private funding for this one-time cost.

192

Activities and milestones for key initiatives This section of the chapter focuses on recommendations regarding milestones and implementation strategy and in some cases specific timelines for key initiatives. The following high-level timeline summarizes the critical milestones for the implementation year: Implementation year milestones

The following list of initiatives is not exhaustive, but focuses on the areas that are most critical to successful implementation of the merger.

Key initiatives

193

The most important milestone in the implementation of the merger is the first activity listed the naming of the 2013-14 Superintendent. The TPC benchmarked a number of districts that had recently undergone a transition process and having a Superintendent in place to lead the district was consistently identified as a critical factor for success. There are many important decisions to make in the coming year, and the district needs a clear process for making decisions about the 2013-14 school year. The most straightforward way to do that is to have a Superintendent for the 2013-14 school year named by the early fall of 2012. A. Planning and budgeting Student enrollment planning Updated student enrollment projections are critical to get right early on, given their impact on revenue. Enrollment projections will be particularly challenging given school closures, the growth of ASD and charter schools, and the potential for municipal school districts. Given this, it is critical that a broad group is included in defining the assumptions and that the process allows for flexibility to make adjustments as new information becomes available. For the 2012-13 planning cycle, the district should build off the work already begun by the TPC, which forecasts enrollment based on ASD and charter school growth estimates (see Finance Plan chapter). The following timeline details the sequence of activities: September 2012: Transition steering committee and enrollment initiative team agree on an approach and process for enrollment estimates for FY14. This includes agreeing on a common set of assumptions for enrollment projections, an analytical approach for developing the estimates, having an initial conversation with ASD and charter schools to align on enrollment shifts, and developing a more detailed version of this timeline October 2012: Enrollment initiative leaders submit aggregate enrollment projections for the district to the budget initiative leaders February 2013: Following clarity and decisions on school closures, revised ASD and charter enrollment estimates, and the likelihood of municipal districts, the enrollment initiative leaders submit revised aggregate enrollment projections, as well as school-level projections to the budget initiative leaders May 2013: Following student transfer requests, the enrollment initiative leaders submit revised school-level enrollment estimates to budget initiative leaders Summer 2013: Frequent assessment of any changing assumptions and updates provided as needed First week of school, August 2013: Actual enrollment may necessitate personnel adjustments Schools footprint (See Appendix D for detailed plan and timeline) The process of evaluating the district's physical footprint and closing schools to improve regional capacity utilization should be completed by June 2013 and can be broken down into two phases: 1) Analysis and closure plan development 2) Implementation of school closures. This process should build off of the work already begun by the TPC which lays out a process and strategy for identifying at least 20 schools for closure. The detail of this process is provided in Appendix D. This process should be led by the Shelby County Board of Education with the assistance of district staff. The district will need to engage in dialogue with the ASD before the slate of closures is finalized, as underutilization and ASD eligibility are often found in the same schools. Once the analysis is completed, the Board should provide the community with an opportunity for feedback and input before finalizing its recommendations on the slate of schools for closure. Implementation of closures (December-June 2013) Once final closure decisions have been voted on by the board, the implementation phase has four critical components: Administrative/executive responsibilities: Selection or identification of the principals for the merging schools, and the transfer of teachers and other school staff 194

Communications: Continued communication to staff, parents, and students of closing schools Logistics: The physical closing down the schools (e.g. coordinating the movement of records and other assets, managing the decommission process) School Support: Maintaining school morale and ensuring smooth transition process

The TPC is also recommending that an analysis be conducted annually to determine if additional school closures are appropriate. Budgeting The development of the FY14 budget will be challenging for several reasons. First, MCS and SCS will need to partner in the development of the budget, and have a budgeting team in place for the 2013-14 school year. Second, both districts historically use the prior year's budget as the foundation. For the FY14 year, the district can use the Transition Plan's top-down targets for budgeting in select categories (Operations, central office). For the remaining categories, the district will need to develop top-down targets and then do zero-based budgeting. Related, the third challenge is that the districts currently use different accounting and budgeting systems. Implementing the IT migration recommendations (described below) will be critical to the district's ability to budget effectively. Finally, the fourth challenge is that the basis of the revenue estimates enrollment projections are subject to assumptions made about charter school growth, ASD growth, and the potential for municipal school district formation in time for the 2013-14 school year. For all of these reasons, the Transition Office needs to lead the budgeting process and carefully consider the assumptions made. The TPC recommends in the Financial Plan that the district create a cross-functional working committee to develop a specific plan to create a balanced budget, following the TPC's financial recommendations. This group should also serve as the Budgeting Initiative Team. The following timeline provides more detail on the key milestones: August 2012: Transition Office and Budgeting Initiative Team agree on an approach and process for budgeting for FY14. This includes agreeing on a common set of assumptions for revenue estimates, defining a common baseline from which to project future expenditures, and determining who should serve as budget center managers November 2012: Following the receipt of enrollment projections, the Budget Initiative Team projects revenues for the 2013-14 school year, and determines top-down targets by department for cost increases or savings to achieve a balanced budget. During this time budget center managers are trained on new approach and system. December 2012 February 2013: Budget center managers review current state financials across both districts, strategic direction of the Transition Plan and the superintendent, the topdown targets from finance, and develop their budget, in close collaboration with the Transition Office December 2012 February 2013: The Transition Office identifies potential areas for additional savings, should an alternative budget plan be needed in the case of dramatic changes to enrollment estimates March 2013: Transition steering committee and Superintendent review complete draft budget, which include departmental budgets and final BEP numbers. Adjustments made where necessary. April 2013 May 2013: Superintendent presents budget to SCBE, community, and Shelby County Commission B. Human capital Central office design and staffing Central office staffing is one of the most critical and most challenging aspects of the merger process. The first step is to complete the design of the central office, building off of the recommendation for 195

the Superintendent's direct reports in the Education Plan: Administrative Organization chapter. Included in design would be establishing the new district's central office departments, and the mandate of each. In the process to select the central office staff, the TPC recommends that the aspirations set in the beginning of this chapter are met, particularly: Merger planning decisions are well-informed and decision-making processes are effective The district retains and attracts the best talent A management structure is in place during the implementation year to make tough decisions for the merged district The district hits its financial targets The selection of staff for the central office is fast, fair and disciplined With these aspirations in mind, the TPC recommends the following end-date milestones for the staffing of the central office, with the recommendation that these be done earlier if possible: November 1, 2012: The Transition Office, in partnership with the Central Office Staffing Initiative Leader, develops the job descriptions for each direct report to the Superintendent. December 1, 2012: Superintendent names his or her direct reports February 1, 2013: The Transition Office, in partnership with the Central Office Staffing Initiative Leader, completes the design of the entire central office including titles and role mandates for all positions; schools are assigned to regions, and Regional Superintendents are named July 1, 2013: The full central office staff is named. Staff members not selected are notified. School staffing "School staff" refers to all of the staff from principals to teachers to counselors to secretaries that are staffed at a school building. The school staffing initiative covers both the determination of school staffing ratios and the process for confirming staff in positions for the 2013-14 school year. Finalizing staffing ratios early, in alignment with Transition Plan recommendations, is critical because of the significant impact that staffing ratios have on both students and the budget. Confirming staff to fill positions will also be important, to avoid unexpected surprises regarding early retirement, or staff members leaving to join potential municipal school districts. The following timeline addresses the key milestones and activities: Summer 2012: The School Staffing Initiative Leader, in partnership with the Transition Office, develops detailed plans for a single set of staffing ratios and cost reduction targets September 2012: The School Staffing Initiative Leader, in partnership with the Transition Office, determines the process for recruiting and staffing all schools in the unified district, and determines the team that will project vacancies and build pool to fill them October-November 2012: The School Staffing Initiative Leader develops position-by-position plans for school staffing that meet staffing ratio and cost reduction requirements December 2012: The School Staffing Initiative Leader works with teaching partner programs to determine number of candidates needed by subject for 2013-14 school year January 2013: Budget checkout process with principals to share staffing projections/reductions for 2013-14 school year and begin determining surplus totals February 2013: Early retirement/resignation notice due; schools ensure selection committees are trained to conduct interviews March 2013: Finalize teacher surplus and vacancy totals and give notice to those whose positions are being eliminated May-July 2013: The district holds external, partner program, and surplus hiring events 196

Compensation and benefits The district will need to develop a plan for creating a single set of salary schedules and benefits policies for all district staff. The approach must be compliant with the Norris-Todd Act, which requires preserving salary schedules, pension rights, sick leave accumulation, and tenure rights. The timeline, with work led by the Compensation and Benefits Initiative Leader, includes several milestones: September 2012: Salary schedules for 2013-14 developed October 2012: Proposed salary schedules approved by state and board as compliant with Norris-Todd, and health insurance administrator selected November-December 2012: Health insurance plans designed January-February 2013: Benefit plan(s) for the merged district are developed (e.g. life insurance, leave, dental, vision), to go into effect July 1, 2013 April-May 2013: Enrollment and rollout of new premiums and spouse out July 2013: Dependent audit of any employees new to SCS (SCS will have gone through dependent audit in summer 2012) Personnel policies Personnel policies cover the broad range of policies relating to the selection, placement, evaluation, promotion, and exit of all district staff including school-based and central office staff. While personnel policies are just one of the sections of board policies, they deserve extra attention given the impact they have on staff. In order to develop consistent personnel policies, the TPC recommends the following milestones: December 2012: The Personnel Policies Initiative Leader completes an analysis of the differences in policies between MCS and SCS, and identifies prioritized areas of focus February 2013: The Personnel Policies Initiative Leader presents a recommendation for the new policies to the Transition Office and then to SCBE for approval March 2013: The Personnel Policies Initiative Leader drafts or selects the new set of policies for the 2013-14 school year, and presents to the Transition Office and then to SCBE for approval July 2013: The Personnel Policies Initiative Leader ensures all documentation and training is updated for district staff to be informed of the new policies C. Governance Board policies Memphis City Schools and Shelby County Schools currently operate under different sets of board policies. The merged Shelby County Schools will ultimately need to operate under one set of policies. Best practice suggests that it takes large urban school districts at least a year to revise all of its policies. Given the number of merger-related activities that will consume the district leadership's and board's attention during the 2012-13 school year, it is not feasible to start the 2013-14 school year with a fully revised set of policies. Given this reality, the TPC broadly recommends that the Shelby County Board of Education (SCBE) prioritize which policies need to be written prior to the merger. Then, the SCBE can set a calendar for the revision of the remainder of the policies over the next year of the merged district. For the policies that are not drafted by the merger date, the TPC recommends using existing SCS policies until new policies are approved. Given SCS is the surviving entity, this extension of SCS policies can be done with the minimal amount of Board review of individual policies. Legal issues There are a number of outstanding legal issues that the SCBE should seek clarification on, in order to effectively plan for the merger. These include: Setting the effective date of the merger as July 1, 2013, which is the start of the fiscal year 197

Determining seniority rights for current MCS employees who become SCS employees Determining the required process for the "transfer" of MCS employees to SCS

For these items, the TPC recommends that as soon as possible (prior even to the approval of the Transition Plan), the SCBE bring these issues to the TN Attorney General, and/or Judge Mays whichever is more appropriate. The SCBE also needs to ensure that all of the legal requirements of the merger are met, as described in the Legal Assurances chapter, including: Transfer of assets (including plant, property, equipment, information technology, working assets) and liabilities (including contracts at the district and school level, accounts payable outstanding, and accrued liabilities) Disposition of bonded indebtedness City, county, and state action There are a number of outstanding issues that require city council, county commission, or state action. These include: Securing the $55M in funding from the City of Memphis Waiving the Shelby County residency requirement for all SCS employees, given the number of current MCS employees who do not reside in Shelby County Ensuring that all operators (e.g. district, charter schools, ASD) receive state and local funds in the same timeframe Seeking definitive clarity from the state on to whom the "leveling up" requirement of the Norris Todd Act applies, and securing an agreement on that definition Advocating for the legislature to implement the approved changes to BEP funding, and for the proposed changes made by the BEP Review Committee. There are reforms passed in the State BEP 2.0 formula that are pending funding for full implementation. Some of these reforms, including an increase in the State share for instructional components in the formula from 70% to 75%, could yield as much as $30M in incremental revenue Advocating for the state to provide funding during the merger transition period, per TCA 492-1207 (5), and/or TCA 49-2-1262 Advocating for the legislature to approve a charter school and ASD holdback, and charter school attendance zones Repealing TCA 49-5-511 which requires districts to place tenured teachers on a preferred reemployment list if they lose their jobs due to a reduction in force Exploring options to recover the education portion of Payment in Lieu of Taxes (PILOTs) For these items, the TPC recommends that the SCBE engage the state BOE, the Governor's office, and state legislators as soon as possible (prior even to the approval of the Transition Plan) to advocate for these actions, and gain clarity on the likelihood of these items in advance of finalizing the FY14 budget. D. Instruction Teacher evaluation MCS and SCS currently have two different teacher evaluation rubrics and systems. The differences between them and the recommendation to have single evaluation in place for the 2013-14 school year are documented in the Education Plan chapter. Key steps in this work, to be led by the Teacher Evaluation Initiative Leader, include: Summer 2012: Joint MCS-SCS approach to developing better measures for non-tested subjects is established 198

Summer 2012: Work begun with state to have roster of student TVAAS data returned to individual teachers in timely manner July 2012: Unified board approval for MCS and SCS contract with Cambridge Associates for use of Tripod (student perceptions survey) in 2012-13 Fall 2012: Joint MCS-SCS teacher evaluation working group established December 2012: Deadline for finalizing teacher observation rubric for merged district Spring 2013: Pilot of teacher observation rubric; observation rubric available to all teachers for self-evaluation and all evaluators for practice Late spring 2013: Analysis of results to identify any implementation consistency issues End of April 2013: Summative results of 2012-13 evaluation provided to teachers May 2013: Revisions to teacher evaluation model based on pilot developed; official amendment to model sought from state Summer 2013: Training provided district-wide to all educators and administrators August 2013 onward: Monthly norming sessions to ensure consistent implementation, especially between former MCS and SCS schools

Pre-K expansion The TPC recommends the expansion of Pre-K 4 by 2,500 spots over the next 5 years or 500 per year. This recommendation is detailed in the Education Plan chapter. In order to achieve this growth, the district will need to meet the following milestones: October 2012: The Pre-K Expansion Initiative Leader completes a draft analysis of the demand and need for Pre-K 4 across the district, and the classroom capacity required to meet this demand, and shares this with the Student Enrollment and Schools Footprint Initiative Leaders December 2012: The Pre-K Expansion Initiative Leader finalizes analysis of the demand and need for Pre-K 4 across the district, and the classroom capacity across facilities February 2013: The Pre-K Expansion Initiative Leader presents a recommendation for the locations of new classrooms for the 2013-14 school year to the Transition Office for approval March 2013: The Pre-K Expansion Initiative Leader advertises and recruits for students to participate, and recruits and selects the staff for the new classrooms July 2013: The Pre-K Expansion Initiative Leader ensures all Principals, teachers, aides, families, and students are prepared to start the Pre-K 4 program School scheduling; elementary curriculum, programs, and delivery; middle school curriculum, programs, and delivery; high school curriculum, programs, and delivery; professional development The Transition Plan sets a vision for the instructional offering that each student should receive. For successful implementation of these recommendations, the district needs to develop the more detailed program design. The TPC recommends that each of these 5 topics have an Initiative Leader that follows this timeline: December 2012: The Initiative Leader reviews the relevant recommendations in the Transition Plan and identifies any remaining areas requiring more detailed joint planning between MCS and SCS in year 1 February 2013: The Initiative Leader presents a plan for the implementation of the Transition Plan recommendations, and a recommended approach for any other areas requiring alignment to the Transition Office for approval March 2013: The Initiative Leader develops the more detailed design of program offerings and staffing needs to present to the Transition Office for approval July 2013: The Initiative Leader ensures all documentation and training is updated for school staff to be able to execute on the program design E. Student Services

199

Special education; Gifted programming; Health and mental health; Student discipline; Alternative education; Athletics; Driver's education; JROTC, Parent engagement The Transition Plan sets a vision for the support services and tailored interventions that each student should receive. For successful implementation of these recommendations, the district needs to develop the more detailed student services offering. The TPC recommends that each of these 8 topics have an Initiative Leader that follows this timeline: December 2012: The Initiative Leader reviews the relevant recommendations in the Transition Plan and identifies any remaining areas requiring more detailed joint planning between MCS and SCS in year 1 February 2013: The Initiative Leader presents a plan for the implementation of the Transition Plan recommendations, and a recommended approach for any other areas requiring alignment to the Transition Office for approval March 2013: The Initiative Leader develops the more detailed design of student services offering offerings and staffing needs to present to the Transition Office for approval July 2013: The Initiative Leader ensures all documentation and training is updated for school staff to be able to execute on the student services offering F. Operations Custodial (See Appendix D for detailed plan and timeline) Below is a high-level timeline to govern the outsourcing of custodial services in time for Day 1 of the merged district. Key milestones include: Late September 2012: Issue RFP for custodial services January 2013 SCBE meeting: Present vendor selection for vote February 2013: Finalize vendor contract Mid-April 2013: Vendor completes interviews and extends offers to current employees Late May 2013: Vendor begins summer deep cleaning of schools Utilities (See Appendix D for detailed plan and timeline) The district's new demand management policy should have several components, including personnelbased usage policies and school incentives for good energy usage programs as well as engagement in high return-on-investment facilities changes. In the "Energy Efficiency Programs for K-12 Schools" guide, the Environmental Protection Agency suggests five types of projects that have a high ROI and combine for an effective, phased approach to upgrading the energy efficiency of existing buildings. See appendix for details on each of these project-types. Maintenance The TPC Logistics Committee recommended a model of maintenance for the new district that mirrors the current model, so no additional migration processes beyond those mentioned in the introduction are necessary. However, if the new district begins offering select maintenance services on a fee-forservice basis to charter or ASD schools, the maintenance department should grow the capability to structure their services around a menu of basic and specialty maintenance services that have transparent pricing for each service. Transportation (See Appendix D for detailed plan and timeline) Below is a high-level timeline to govern the outsourcing of transportation services in time for Day 1 of the merged district. Key milestones include: Late September 2012: Issue RFP for transportation services, announce sale of bus fleet End of November 2012: Select transportation routing IT system 200

January 2013 board meeting: Present selection of preferred vendor(s) for vote; if competitive RFP does not yield a lower per-student Special Education cost than currently achieved in SCS, develop plans to support Special Education transportation in-house End of February 2013: Finalize vendor contract End of May 2013: Vendor completes interviews & extends offers to current employees Beginning of August 2013: Vendor begins providing transportation services to district

Additionally, after the vendor is selected, information systems for student transportation should be selected and include the following functionalities: mapping and planning, routing, real-time GPS tracking, and special-event transportation management. Purchasing (See Appendix D for detailed plan and timeline) To achieve the maximal savings in Purchasing, the district will need to implement three major changes in the new department: e-Procurement system implementation: The district will issue a comprehensive RFP to ensure system implementation is extended to all schools and departments involved in major purchasing Enhanced organizational design: The district will review and reorganize the Purchasing department, in order to align staff with key capabilities P-card program implementation: The district will issue a RFP for a P-card vendor and conduct administrator/user training, and draft program guidelines and policies Information Technology (See Appendix D for detailed plan and timeline) Core systems migration Below are the high-level prioritized categories for core systems migration. See appendix for the suggested sequence. Day 1: Major projects (Data warehouse, HR/Payroll/Finance, Student Information system) Day 1: Intermediate projects (Network RFP, Network implementation, IT Lifecycle management, Risk management, Nutrition systems, Parent notification system, Safety/Security, Transportation, Asset management, Procurement suite) Day 1: "Flip the switch" (Email, IT Security, Maintenance work orders) Year 1: Post-merger priority (Library automation, Student email, Document imaging)

The Joint IT Governance Board (made up of senior leaders from both districts) will be the default steering committee to guide the implementation of all core systems. APECS Implementation Below is the high-level sequence for APECS (HR/Payroll/Finance systems) migration. See appendix for detailed timeline. June August 2012: Approval and Planning August October 2012: Process mapping and design August 2012 July 2013: System set-up December 2012 July 2013: Testing and training May 2012 August 2013: Trials and changeover Ongoing, post-launch: Continuous improvement In order to ensure a successful Day 1 launch, district must achieve critical success factors including: Expedited approval and financing: Board and County Commission must "fast track" project 201

Strong organizational support: Cross functional and cross district steering committee and working team Adherence to implementation principles: Adopt SCS processes where possible for initial system launch (e.g. state chart of accounts, budgeting process)

Safety & security (See Appendix D for details) The TPC believes that it is important to have a strong security staffing and governance plan in place that guides the interaction among school staff, local law enforcement, and district security staff. Based on this, the TPC recommends the Superintendents, district security departments, and the Sheriff's Office work together to assess the security needs of the schools and determine a staffing and governance model that will best serve the students of Shelby County Schools. We recommend the governance plan be completed in time to allow for adequate planning and preparation for the selected governance structure to be implemented by Day1 of the merger.

Nutrition Migration to a central kitchen model for the new district requires changes and possible upgrades in three distinct areas: Information management systems: Recommend utilizing the system currently in place in MCS: Horizon OneSource front-of-the-house software system and the Horizon-integrated proprietary back-of-the-house inventory management system. Additionally, the district will need to build a bridge between the back-office system and the APECS financial system. Operations model: The district nutrition leadership should review and revise the personnel needs at the schools and central kitchen in the new district. Facilities and equipment: Conversion of facilities and equipment will require minimal activity as there is sufficient storage and preparation space within the central facility to support expanded volume. Since no more than three months of operating revenue can be carried over on the special revenue food services fund by state law, we recommend that surplus funds be reinvested in areas such as improving the quality of food for students, renovating infrastructure and investing in better equipment in school kitchens, and investing in health and nutrition education for students.

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APPENDIX

203

See following Appendix Documents: Appendix A contains the full Assessment Report on student demographics, needs, and academic performance Appendix B contains the compiled list of Measures of Success from the Educational Services recommendations Appendix C is a separate file due to its size, and contains the templates developed by staff for a wide array of educational programs and student services. These templates are not final recommendations of the TPC, but instead serve as a starting point for the district in understanding the key similarities and differences in the districts' current programs Appendix D contains more detailed migration plan steps regarding the operations recommendations Appendix E contains a compiled list of the numbered recommendations from this report

204

The material contained in this document is designed for the use of the Transition Planning Commission (TPC) and is based on the work and input of The Boston Consulting Group (BCG) and/or TPC members, Committee members, and other stakeholders. BCG has used public and/or confidential data and assumptions provided to BCG by the TPC or other stakeholders which BCG has not independently verified. Changes in the underlying data or operating assumptions will clearly impact the analyses and conclusions. Third-parties may not, and it is unreasonable for any third-party to, rely on these materials for any purpose whatsoever outside of their intended purpose in informing the merger of Memphis City Schools and Shelby County Schools.

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Appendix A
This contains the report of the TPC Assessment Committee. The report includes an analysis of current state of student needs and academic performance across both districts.

A1

Transition Planning Commission

Revised report of the TPC Assessment Committee

Student baseline data

April 19, 2012

A2

Transition Planning Commission

Context and definitions

Most analyses report on the merged district treating all students and schools within MCS and SCS as one Student demographics and data reflect student counts enrolled in the districts as of the 40th day of school in the 2011-12 school year Student test scores (TCAP Achievement Test, TVAAS, ACT) reflect 2010-11 end-of-year results Definitions: Economically disadvantaged: Students who qualify for the federal free or reduced lunch program English language learners: Students whose first language is not English Ethnicity: State of Tennessee disaggregates data across 5 ethnicities African American, Asian / Pacific Islander, Hispanic, Native American / Alaskan, White Students with disabilities: At state level, includes both students with special needs as well as gifted students
A3

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A4

Transition Planning Commission

Shelby County
Municipalities Schools
NE Memphis NW SE SW Unincorporated Arlington Bartlett Collierville Germantown Lakeland Millington Unincorporated Arlington Bartlett Collierville Germantown Lakeland Millington
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Millington

Lakeland

Bartlett

Arlington

Memphis Germantown

Collierville

A5

Transition Planning Commission

Shelby County: Understanding the regions

2011-12 enrollment data, 40th day of school

Unincorporated

Memphis City Schools Memphis NW Memphis SW Memphis NE Memphis SE

Shelby County Schools Germantown Collierville Millington 5

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Schools Elementary Middle High Student enrollment (PK3 12) % economically disadvantaged % Students with disabilities1 (estimated) % English Language Learners

47 29 8 8

57 30 11 16

54 29 14 11

55 30 14 11

14 7 4 2

4 2 1 1

11 6 4 1 8,909 36% 13% 6%

8 5 2 1 7,839 14% 12% 10%

8 4 2 2 8,595 17% 11% 11%

Lakeland 1 1 --851 9% 12% 8%

Arlington

Bartlett

3 1 1 3,525 68% 15% 8%

30,260 21,635 33,305 22,265 11,406 5,030 74% 12% 13% 86% 12% 2% 87% 12% 9% 92% 13% 1% 58% 10% 9% 15% 11% 5%

A6 Note: 1. State-reported disability data includes students who qualify as "gifted." Numbers here attempt to estimate student with disabilities, excluding gifted, but will need refinement. Source: MCS and SCS district data; BCG analysis

Transition Planning Commission

Current Shelby County Schools enrollment by municipality

2011-12 enrollment data, from October 2011 Enrollment on prior slide has minor differences in student counts due to different date of pull

Place of residence
School location Arlington Bartlett Collierville Germantown Lakeland Millington Unincorp. Shelby Total Total 5,028 8,805 7,780 8,579 831 3,421 11,326 45,770 Arlington 2,787 9 1 3 8 1 18 2,827 Bartlett 485 6,178 5 19 19 7 1,124 7,837 Collierville 2 3 7,229 1,067 --13 8,314 GermanUnincorp. Outside town Lakeland Millington Shelby Memphis Shelby 1 4 33 4,547 ---4,585 1,111 240 6 2 788 -57 2,204 4 2 ---1,437 121 1,564 559 2,253 456 2,799 10 1,942 9,976 17,995 62 112 40 142 5 27 14 402 17 4
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

10 0 1 7 3 42

Students who live in and attend municipality schools: ~26k Students who live in municipalities, but don't attend muni schools: ~1.3k Students who do not live in municipalities, but attend muni schools: ~8.5K
A7

Source: SCS district data; BCG analysis

Transition Planning Commission

Student enrollment and transfers

2011-12 enrollment data, 40th day of school

% of students attending schools of each type

100 6 16 80
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

4 13

Optional program Non-optional program outside of zone

60 95 40 78 83 Zoned school

20

0 MCS SCS All students

A8

Source: MCS and SCS district data; BCG analysis

Transition Planning Commission

Summary findings: geographic distribution of students

School locations closely map to student density, but there are some exceptions Across Memphis' 4 regions and the municipality borders, the student population and demographics vary In 6 areas, more than 50% of the students are economically disadvantaged, and in 2 areas more than 10% of the children are English Language Learners There are high concentrations of economically disadvantaged students in all quadrants of the city, and in some areas in the county A large number of students attend school outside of their place of residence 17,995 students who would attend the merged school district live in Unincorporated Shelby County and 8,500 of those attend school in one of the 6 municipalities

A9

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A10

Transition Planning Commission

Memphis/Shelby enrollment over past 5 years

TN State Report Card data Total student enrollment, PK3-12
160,000 -2% 156,650 155,000 -2% 153,851 0% -1%
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

151,113 150,000

150,935 149,047

0 2006-07 2007-08 2008-09 2009-10 2010-11

A11

Source: MCS and SCS district data; TN DOE Report Card; BCG analysis

Transition Planning Commission

Students by grade level and economic disadvantage (I)

2011-12 enrollment data, 40th day of school TN State Report Card data

Student enrollment by grade, 2011-12

Total students
15,000 150,000

Economically disadvantaged
Total students

104,995 10,000 100,000

107,897

104,680
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

89,629 5,000 50,000

90,333

86,967

Memphis

15,366 0 Pre Pre K 3 4 1 2 3 4 5 6 7 8 9 10 11 12 0 2008-09 % of total student population Merged Memphis Shelby 69% 86% 33%

17,564 2009-10 71% 87% 37%

17,713 2010-11 70% 85% 38%

A12

Shelby

Source: MCS and SCS district data; TN DOE Report Card; BCG analysis

Transition Planning Commission

Students by grade level and economic disadvantage (II)

2011-12 enrollment data, 40th day of school % of total enrollment
100 14 25 80 47 26 27 27 28 30 30 31 32 34 37 40 41 Non-economically disadvantaged

60
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

40 53 20

86 75 74 73 73 72 70 70 69 68 66 63 60 59 Economically disadvantaged

0 Pre 3 Pre 4 K 1 2 3 4 5 6 7 8 9 10 11 12

Grade level

A13

Source: MCS and SCS district data; TN DOE Report Card; BCG analysis

Transition Planning Commission

Students with need for additional services

2011-12 enrollment data, 40th day of school # of students
20,000 18,844 12% of all students

15,000 11,318 7% of all students

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

10,000

5,000

3,764 2.5% of all students

3,243 2% of all students

0 Students with disabilities (estimate)1 Limited English Proficient Homeless2 Gifted

Notes: 1. State-reported disability data includes students who qualify as "gifted." Numbers here attempt to estimate student with disabilities, excluding gifted, but will need refinement. 2. A14 Homeless counted at end of year: data shown for 2010-11 school year. Source: MCS and SCS district data; BCG analysis

Transition Planning Commission

Student mobility
2010-11 school year data

2010-11 student mobility

% of total student population
15

Definition
In order to reach a common definition, the two districts calculated mobility as:

11.3% 10

Students who enroll in a school for the first time on or after the 10th day of the year Students who transfer between schools one or more times within a school year
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

+
5

0 Total

A15

Source: MCS and SCS district data; BCG analysis

Transition Planning Commission

Attendance rate by school

2010-11 school year data

Attendance rate %
100

95

State and district average: 95%

90

85

80

Each line represents a school

A16

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Graduation rate by school

2010-11 school year data Graduation rate %
100

State average: 86%

80

District average: 78%

60
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

40

20

Each line represents a school Schools with more than 75% students economically disadvantaged Schools with less than 75% students economically disadvantaged

44% of students who do not graduate come from 30% of schools

Note: District average may not appear to be at median point on school graph because the district average is weighted to account for number of students. Source: MCS and SCS district data; TN State Report Card; BCG analysis
A17

Transition Planning Commission

Students over age for grade

2011-12 enrollment data, 40th day of school

Students over age for grade

% of students
25 21.7% 20 1.8% Over age by 2 or more years 80 100

High school promotion

Based on 9th grade entry year % of current students
7 1 7 1 4 1 4 3

15

60 92 40 92 94 91

10 6.8% 0.6% 5 6.2% 0 All students

19.9%

Over age by 1 year Includes students who may be over age for nonacademic reasons

20

0 Students with special needs 9th

0 10th 2 or more years behind 1 year behind

1 11th On track Ahead 1 or more years

3 12th

1 year 2+ years

753 8055

374 4085

Note 1. Over age for grade defined as students who start the school year or 2 or more years older than the typical student Source: MCS and SCS district data; BCG analysis

A18

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Student suspensions and expulsions

2010-11 school year data # of incidents
50,000 45,201 40,000

30,000 21,689 20,000 19,394

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

10,000 4,497 0 In-school suspensions Out-of-school suspensions Expulsions 4,509 25 MCS SCS

Incidents per 1,000 students

197 431

411 100

41 1
A19

Source: SCS district data; BCG analysis Note: MCS expulsion numbers updated after 7/19/12 meeting with MCS Pupil Services staff

Transition Planning Commission

Summary findings: Student demographics and needs

Enrollment has been declining at an average of 1% per year for the past 5 years The proportion of students who are economically disadvantaged has remained stable 12% of students have special needs, and 7% are English Language Learners More than 10% of MCS students (SCS data pending) enroll in school after the first 20 days or transfer between schools 1 or more times per year Mobility, attendance, and graduation rates vary widely across schools
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

8% of current 9th graders are repeating the grade The two districts issued more than 40,000 in-schools suspensions, nearly 50,000 out-of-school suspensions, and more than 4,000 expulsions combined in the 2010-11 school year It may beneficial to identify occurrences in the city and county during 2006 and 2009 that led to enrollment declines There is a high retention rate at the 9th grade level Across the two districts: There were more than 40,000 in-school suspensions, more than 50,000 out-ofschool suspensions, and almost 4,000 expulsions in 2010-11

A20

Transition Planning Commission

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A21

Transition Planning Commission

Pre-K participation among low-income students

2011-12 enrollment data, 40th day of school Economically disadvantaged student enrollment
10,000 9,094 8,626 8,000

6,000

4,000

Students enrolled

2,000 364 0 Pre-Kindergarten (Age 3)

4,095

Pre-Kindergarten (Age 4)

Kindergarten

1st grade

Note: Shelby County Head Start enrollment estimated from 2008-09 enrollment published in their annual report (2085) Source: MCS and SCS district data; TN State Report Card; Shelby County Head Start 2009 Annual Report; BCG analysis

A22

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Rough estimate of Shelby County Head Start enrollment

6,095 2,000

Summary finding: School readiness

A significant number of lower-income childrenlikely 2,500 to 3,000 per yearare not participating in Pre-K programs

A23

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A24

Transition Planning Commission

TCAP Achievement Test proficiency

2010-11 TCAP results % students proficient or advanced by grade and subject
100

80

60
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

40

20

Grade level
3 4 5 6 7 8

0 Reading Math Science Social Studies

TN state average

A25

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

Extent of the TCAP proficiency gap between higher-income and lower-income students
2010-11 TCAP results % points difference in proficiency between students who are economically disadvantaged and those who are not
40

How to read this chart:

20

On the 3rd grade reading TCAP: 66% of higher-income students were proficient or advanced 22% of lower-income students were proficient or advanced 22-66 = -44 point gap
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

-20

Grade level
-40 -44 -60 Reading Math Science Social Studies 3 4 5 6 7 8

TN state average difference in proficiency

A26

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

3rd grade Reading TCAP Achievement Test proficiency across schools

2010-11 TCAP results % of students proficient or advanced
100

80

60
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

State average: 44%

40

District average: 34%

20

Each line represents a school

A27

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

4th grade Math TCAP Achievement Test proficiency across schools

2010-11 TCAP results % of students proficient or advanced
100

80

60
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

40

State average: 39% District average: 30%

20

Each line represents a school

A28

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

Definition: Value-added growth measure

Overview of TVAAS
How do you measure growth? The Tennessee Value-Added Assessment System (TVAAS) measures growth in a student's academic achievement over a year, compared to his/her projected growth How do you project growth? Value-added data uses multiple years of student achievement data to develop a growth pattern With this pattern, we can project where a student would be at the end of the school year if his/her growth pattern continues

Benefits of TVAAS
By using individual student longitudinal data, each student serves as his or her own control thereby eliminating the confounding impact of demographic variables, such as economic status or racial/ethnic group
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

TVAAS gives the option for looking at growth and growth patterns, rather than static performance of groups of students Unlike typical achievement reports, which may reveal below average performance, TVAAS reports growth over time, thereby allowing school leaders to see where growth is occurring even though overall achievement rates remain below benchmark performance

A29

Source: http://www.tn.gov/education/assessment/doc/TVAAS_Fact_Sheet.pdf

Transition Planning Commission

Value-added measure of academic growth

2010-11 TVAAS results Estimated mean Normal Curve Equivalent gain
10

Higher growth than the state average

0 Lower growth than the state average -5 Reading Math Science Social Studies

Grade level
4 5 6 7 8

A30

Source: MCS and SCS district data; TN State Report Card; BCG analysis

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

4th grade reading: Comparison of TCAP and TVAAS, by school

2010-11 TVAAS results

TCAP: % of students proficient or advanced, by school

%
100

TVAAS: Estimated mean NCE gain, by school

Estimated mean NCE gain
20

Correlation: (0.91)
80 10 60 0 40 -10 20

Correlation: 0.01
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

0 0 20 40 60 80 100

-20 0 20 40 60 80 100

% Economically Disadvantaged
Note: Each plotted point represents an MCS or SCS Elementary School Source: MCS and SCS district data; TN DOE Report Card; BCG analysis

% Economically Disadvantaged
A31

Transition Planning Commission

Summary findings: Student academic performance

The merged district falls short of the state average for proficiency across all grades and subjects tested by the TCAP A significant gap exists in proficiency between higher-income and low-income students In 3rd grade Reading and 4th grade Math, schools exhibit a wide range of performance
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

The value-added growth measure shows that the merged district made strong progress in Math across grade levels in 2010-11, and was close to average for the majority of other grades/subjects The value-added growth measure is important to consider given its ability to measure improvement and change over time, as opposed to a snapshot of proficiency

A32

Transition Planning Commission

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A33

Transition Planning Commission

College and career readiness: coursework

2011-12 enrollment data, 40th day of school

Career and technical education

College preparation
# of High School students enrolled in one or more courses in each category
25,000 20,503 (45% of all HS students)
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

# of High School seniors from 2010-11 school year

1,500

1,000

Data only includes Shelby County

20,000

15,000 566 17% of 2011 HS graduates 500 5,000

10,000 3,942 (9% of all HS students) 729 (2% of all HS students) 202 (<1% of all HS students)

0 Completers

0 Honors

Requires
Source: MCS and SCS district data; BCG analysis

Advanced Placement

Dual International Enrollment Baccalaureate

A34

Transition Planning Commission

College readiness: ACT scores

2010-11 testing data

Average ACT scores

Average ACT scores
30 80 24 21 20 18 16 22 18 16 18 17 15 21 18 15 18 16 40 10 20 60

Distribution of ACT scores

% of students
100 10 15 32 25 33 33 8 2 20 ACT college-ready benchmark 21 collegeready 16-20 TN Hope Access Grant Minimum

21
TN Hope Scholarship minimum

16
41 30 17 17 5 Non-economically disadvantaged Economically disadvantaged 13-15 <13

12 0 Composite Math Verbal Reading Science All students 0

13
Minimum score for admittance to many 2-year colleges in Tennessee

College readiness standard All students Economically disadvantaged From ACT: The benchmarks represent the level of achievement required for students to have a 50% chance of obtaining a B or higher or about a 75% chance of obtaining a C or higher in corresponding credit-bearing first-year college courses.

A35

Source: College readiness benchmarks pulled from ACT publication: http://www.act.org/research/policymakers/pdf/benchmarks.pdf

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Summary findings: College and career readiness

A large number of students participate in honors courses (45%) Only about 1 in 10 high school students participates in the most rigorous high school courses (Advanced Placement9%, dual enrollment2%, International Baccalaureate less than 1%) Only 10% of all students meet the ACT college-ready definition, and only 2% of lowincome students do

A36

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

Contents

Geographic distribution of students and schools across county Student demographics and needs School readiness Student academic performance College and career readiness Teachers
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

A37

Transition Planning Commission

TVASS score distributions across teachers

3-year stable TVASS scores From 2008-09 through 2010-11 school year % of teachers
100 25 80 11 60 28 40 12 20 24 0 State average MCS SCS 37 28 1 12 12 2 24 26 3
Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

19 8

23

Most effective

11

Least effective

Note: 3-year stable TVASS scores Source: MCS, SCS, and state data

A38

Transition Planning Commission

Teacher observation scores to date, new evaluation tool

2011-12 evaluation scores to date % of teachers
100 8 20 80 20 15 30 5

Most effective

37 60 47 40 38 20 20 5 Research projected distribution 7 9 1 MCS 33 27 3 2 0 0 0 SCS 4 1 40

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

39

Least effective

State average

A39

Source: MCS, SCS, and state data

Transition Planning Commission

Summary findings: Teachers

With the new evaluation system in place only this year, it may be too soon to draw implications from interim results

A40

Transition Planning Commission

Copyright 2012 by The Boston Consulting Group, Inc. All rights reserved.

This provides a summary of the measures of success across all priority areas. For more detail, review the respective section for each priority

Appendix B

B1

Every child ready for school 100% of 4-year-olds have access to a high-quality preschool experience (including but not limited to district-run Pre-K) TBD% of Kindergarteners meet the Kindergarten readiness indicators (approximately 47% now across merged district) Every child ready for success in college and career TBD% Kindergarten ready 60% 3rd Grade reading proficiency 50% 7th Grade math proficiency TBD% of 9th graders "on-track" 25% college-ready (ACT definition) and 60% scoring a 21 or better 90% graduation rate 60% post-secondary college enrollment TBD% post-secondary completion Rigorous implementation of standards 100% of teachers and principals surveyed agree that they are prepared to successfully teach Common Core State Standards, and are supported by an aligned set of curriculum, technology, and benchmark assessments 100% of students and parents are aware of Common Core State Standards and how they are different from historical expectations Quality and accessible educational choices 100% of students have access to a high-quality school, recognizing that all schools may not be high-quality at the start of the merger, but ensuring all students have access to transfer into a higher-quality school than their zoned school if they prefer Unique options (e.g. advanced academics, STEM, foreign language programs, arts offerings) are equitably distributed across the district, and the process for enrolling in them is clear and fair Engaged parents and families 100% of schools have a formal parent organization (e.g. Parent Teacher Association, Parent Teacher Student Association, Parent Teacher Organization) [TBD]% of parents surveyed each year indicate that they are: o Welcomed at their child's school o Know how to navigate resources within the school and school district o Feel that teachers and the principal in their school are responsive to their concerns o Have a voice in influencing what happens at their child's school o Happy with their child's current school, and that this is the school of preference for their child Supportive community members and partners Greater Shelby County has an aligned and rigorous set of goals and commitments for P-20 education, which enjoy broad and deep support from a range of stakeholder organizations Principals surveyed are aware of and regularly partner with community organizations to connect students and families with services and programs Community partners surveyed feel welcomed in the district and encouraged to provide support that is aligned with the community's collective goals for education Shelby County citizens polled believe that public schools are (a) improving and (b) wellsupported by the community

B2

Community collaborative develops a report card to assess these measures of success, and shares results annually

Tailored interventions and supports TBD% attendance rate TBD% reduction in out-of-school suspensions and expulsions TBD% increase in academic achievement for students with disabilities across 7 key academic milestones Effective teachers Meaningful distribution of overall evaluation scores and distribution of each component of the evaluation (e.g. observation, TVAAS, stakeholder perceptions survey) Positive correlation of each evaluation component with TVAAS scores Extent to which teachers are satisfied: With their observation rubric With their observation feedback Extent to which teachers agree: I was evaluated fairly I was evaluated rigorously That the post-conference is a valuable opportunity to get constructive guidance and feedback I could use to improve instruction The evaluation process has helped me become more effective with my students Teachers at my school share a common vision of what effective teaching looks like The expectations for effective teaching are clearly defined at my school My school is committed to improving my instructional practice Extent to which evaluators agree: I feel confident in my ability to evaluate teachers fairly I feel confident in my ability to evaluate teachers rigorously I feel confident in my ability to provide teachers with information and strategies to improve their instruction The teacher evaluation is used as the basis for professional development, decisions about who teaches, and compensation. Meaningful distribution of overall evaluation scores and distribution of each component of the evaluation (e.g. observation, TVAAS, stakeholder perceptions survey) 100% of professional development can be linked to individual, team, school or system wide performance needs All teachers have common planning time to meet in PLCs at least once a week during the regular day Extent to which teachers agree that each of the following forms of professional development help them become effective in the classroom: Formal structured programs Team-based One-on-one attention Independent study

B3

Percent of placements are by mutual consent. Mutual consent means the ability to hire the best fit applicant from any pool of teachers, whether internal or external, a surplussed teacher or a transfer candidate, at any time during the year. o Target: 100% of placements by mutual consent. A meaningful distribution of teacher evaluation scores The number of teachers receiving persistent 1s (3 or more years) on the TVAAS is <10%. The average evaluation scores of: o New teachers after first year o Resigning teachers o Retiring teachers o Transferring teachers o Teachers dismissed for performance through dismissal process o Teachers laid off by surplus policy o Teachers in Striving School Zone vs. not Number of schools with: o 0 Evaluation Level 4 or 5 teachers o 1-2 Evaluation Level 4 or 5 teachers o 3-5 Evaluation Level 4 or 5 teachers o 6-9 Evaluation Level 4 or 5 teachers o 10+ Evaluation Level 4 or 5 teachers Retention of teachers by performance level overall and by school Turnover in the first three years of employment by new teacher training program and performance. Targets: o Bottom 20% of new teachers are not renewed in their first three years o 85% retention of new teachers rated at least meets expectations Exit survey to determine reasons teachers elect to leave their current positions or the system

Teacher selection: o Increase the quality of the applicant pool Percent of applicants receiving top rating at each stage in the selection process Target of 60% of vacancies filled with applicants receiving top rating (currently 46%) Ratio of vacancies to applicants by each position type overall and at high priority schools Positive correlation between scoring in applicant pool and performance on the teacher evaluation Number increase / decrease in sourcing from more effective / less effective new teacher training programs Principal satisfaction with applicant pool Percent of principals that agree that staffing office increased ability to staff schools with teachers who have the potential to make significant gains in student achievement Percent of principals that agree that teachers hired this year have the potential to be more effective than the teachers who resigned, retired, or transferred out of their schools in the last year Applicant satisfaction with application process o Hire more teachers earlier in the year, when applicant quality is higher Percent of vacancies identified by key dates in the hiring process Target of 60% of vacancies identified and filled by May 1 Target of 80% of vacancies identified and filled by June 1 Target of 90% of vacancies identified and filled by July 1 Target of 100% of vacancies identified and filled by first day of school Days for applicants to get through each stage in the selection process

B4

Percent of risk-weighted early vacancies identified and filled by early contracts. For the most common open teaching positions, it is possible to project the number of hires based on historical vacancies. For some portion of this projected number, the district can safely hire ahead of knowing the actual vacancies. This is called giving an early contract on a risk-weighted basis. Acceptance and declination rate of offers to vacancies by position and type, overall and for high priority schools Teachers and principals both agree to work together by true mutual consent Zero forced or direct placements Zero limitations on who a principal can hire (other than an HR compliance screen)a principal may hire internal or external candidates, transfer or surplus candidates at his or her discretion, at any time during the year. Zero limitations on where a teacher can teacha teacher may choose to teach at any school at which a principal offers him or her a position.

Teacher dismissal: Teacher responses to the following questions, by school: One of my colleagues was wrongly retained. One of my colleagues was unfairly dismissed. Number of teachers in district receiving persistent 1s (3 or more consecutive years) on overall evaluation is zero Number of teachers in district receiving persistent 1s (3 or more consecutive years) on TVAAS (in order to ensure that teacher evaluation tool is successfully identifying the lowest performers) Teacher surplus: There are zero direct or forced placements. There are never external hiring freezes. There is no bumping. The percent of surplussed teachers eligible for rehire that agree that The district has given me adequate support in seeking a new position. The percent of surplussed teachers eligible for rehire that find new mutual consent positions within six months. Voluntary transfer: Number of voluntary transfers into and out of each school and for high priority schools The percent of teachers who transfer to schools of lower, the same, or higher poverty level. The percent of teachers who transfer to schools with lower, the same, or higher school-level TVAAS scores. The percent of teachers receiving voluntary transfers that agree that The transfer process helped me find a position that is a good fit. The number of teachers who transfer that are below meets expectations is zero. 100% of vacancies are posted electronically and accessible to both internal (voluntary transfer) and external (new hire) candidates at all times (never limits on internal or external candidates). Turnover of teachers by overall evaluation level and by TVAAS level Overall In critical shortage fields In high priority schools Extent to which exiting teachers agree that compensation was a reason for leaving the district, broken out by evaluation level (from exit survey)

B5

Extent to which applicant teachers agree that compensation was a reason for applying to teach in the district (from applicant survey) hers who transfer to schools with lower, the same, or higher school-level TVAAS scores. The percent of teachers receiving voluntary transfers that agree that The transfer process helped me find a position that is a good fit. The number of teachers who transfer that are below meets expectations is zero. 100% of vacancies are posted electronically and accessible to both internal (voluntary transfer) and external (new hire) candidates at all times (never limits on internal or external candidates). Turnover of teachers by overall evaluation level and by TVAAS level Overall In critical shortage fields In high priority schools Extent to which exiting teachers agree that compensation was a reason for leaving the district, broken out by evaluation level (from exit survey) Extent to which applicant teachers agree that compensation was a reason for applying to teach in the district (from applicant survey) Effective instructional leaders Meaningful distribution of overall evaluation scores and distribution of each component of the evaluation (e.g. observation, TVAAS, stakeholder perceptions survey) Positive correlation of each component with TVAAS scores Extent to which principals are satisfied: With their observation rubric With their observation feedback Extent to which principals agree: I was evaluated fairly I was evaluated rigorously The evaluation process has helped provide me with information and strategies to become more effective Extent to which evaluators agree: I feel confident in my ability to evaluate principals fairly I feel confident in my ability to evaluate principals rigorously I feel confident in my ability to provide principals with information and strategies to improve their effectiveness The 360-degree feedback instrument part of the principal evaluation includes measures of teacher satisfaction with their: Working conditions Support received from the principal Relationship with the principal The principal evaluation is used as the basis for professional development, decisions about who is a principal, and compensation. Distribution of overall evaluation scores and distribution of each component of the evaluation (e.g. observation, TVAAS, VAL-ED survey)

B6

100% of professional development can be linked to individual, team, school or system wide performance needs Extent to which principals agree that each of the following forms of professional development help them become effective in the classroom: Formal structured programs Team-based One-on-one attention Independent study Principal selection: Ratio of applicants to vacancies overall and at high priority schools Number increase / decrease in sourcing from more effective / less effective principal training programs Offer acceptance and declination rates Principal dismissal: Number of principals in district receiving persistent 1s (3 or more consecutive years) on overall evaluation is zero Number of principals in district receiving persistent 1s (3 or more consecutive years) on TVAAS (in order to ensure that teacher evaluation tool is successfully identifying the lowest performers) Culture and climate of high expectations Attendance during first month of school is tracked and managed and improves at least 10% each year until it is the same as attendance during the rest of the year Whether instruments are in place to measure accountability in both directions for every pair of relationships (e.g., teacher-principal and principal-teacher; teacher-student and studentteacher, district-principal and principal-district, etc.) A Student Congress is created and meets with district staff at least four times annually o Each secondary school has a representative to the Student Congress o Whether a program is developed for elementary school students Average overall evaluation and TVAAS scores of those dismissed, those choosing to leave, and those retained

B7

Appendix D: Migration Plan Detail for Operations and Schools Footprint This section provides additional detail to support the implementation of the logistics recommendations. This is not a comprehensive implementation plan, but identifies some important factors in ensuring a successful implementation, including lessons drawn from other districts. Two migration areas that are common to all operational areas are the merging of the central offices (which will follow the guidelines established by the HR committee) and the consolidation of various sets of operational processes (within departments, across departments, and with schools). To avoid unnecessary re-training of staff, our recommendation would be to select the best of the current set of processes from each district to adopt for the new district. However, in select areas the merger can also serve as an opportunity to implement a completely new process that is better than either of those currently used. Schools footprint The process of evaluating the district's physical footprint and closing schools to improve regional capacity utilization is complex, but can be broken down into two phases: 1) the analysis and closure plan development and 2) the implementation of school closures. This section also includes a recommended timeline that would enable identification and closure of facilities by June 2013. The TPC is also recommending that an analysis be conducted annually to determine if additional school closures are appropriate. To do this, the new Planning and Performance Management Office should formulate a cross-functional review committee who will be responsible for conducting and interpreting the annual analysis (detailed below), putting forth recommendations to the Superintendent and School Board, and coordinating implementation. Analysis and Closure Plan Development During this first phase, the Shelby County School Board will determine the specific schools recommended for closure prior to the start of the FY13 school year, and the district will host public forums to collect community feedback. A review of regional utilization against target utilization provides a high-level sense of the degree of closures needed. The TPC plan targets utilization of 8590% in under-utilized areas. Northwest and Southwest Memphis have ~58% average utilization in FY12 and the recommendation for at least 20 school closures would increase that average utilization in the Western Memphis region to about 86%. Below is a recommended analytic approach for the identification of a feasible set of schools for closure: Step 1 - Data aggregation: The following school-level data should be collected for all schools in MCS and SCS: o School name and location: source from district personnel and district websites o Grades served: source from TN Department of Education school report card o Student enrollment data: source from district personnel and from TNDOE, representing 40th day enrollment for current year and Average Daily Membership in four previous years, where available o School capacity and utilization: source programmatic capacity from district personnel o Facility condition index (FCI) and deferred maintenance: source from district personnel, FCI currently available for MCS only o Standardized test scores from TCAP and ACT and NCLB status: source from TNDOE school report card, collect historic scores if available Step 2 Identify utilization threshold: Consider all schools with under 80% utilization as possible closure or receiver schools (see Step 5 for details on school prioritization)

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Step 3 Clustering: Create clusters of low-utilization schools in close geographic proximity. In creating clusters, try to preserve school feeder patterns, although consolidation opportunities across feeder patterns may be feasible if schools are within reasonable distance. Step 4 Cluster capacity: Compare total cluster enrollment and total cluster capacity to determine excess capacity within each cluster. If one or more schools within the cluster could be closed while maintaining sufficient seats for all students, a closure is feasible. Projected enrollment beyond 100% utilization for the receiving school could be considered a viable option in a few instances because building capacity can be increased incrementally by modifying programmatic usage, and overall enrollment in most of the schools under consideration has been steadily decreasing Step 5 Closure selection filters: If it was determined that sufficient capacity existed within the cluster to close one or more schools, the set of feasible schools should be assessed based on academic performance and building condition. Schools with higher Math and Reading TCAP scores, better NCLB statuses, and lower FCI should be preferred as receiving schools Step 6 Special considerations: Where known, special circumstances such as ASD target status, new buildings, or recently consolidated schools should also be taken into consideration; schools with fewer special circumstances should be preferred for closure

Communications Once the analysis is completed, the Board should provide the community with an opportunity for feedback and input before finalizing its recommendations on the slate of schools for closure. Proactive and transparent communications are essential to a successful school closure process. Communication activities can start with the creation of a Frequently Asked Questions document to help explain the closure decisions and process. Unique communications plans should also be prepared for each stakeholder group (i.e., school staff, parents, students, and community), including planned and publicized forums for community feedback. Best practice in districts that have conducted large-scale school closures, such as Boston and Washington D.C., suggests that two types of feedback forums are useful: large community forums intended for the broader public and small school-based forums targeting the possible closing and receiving school communities. To avoid rumors and inaccurate information, communications must be straightforward, even when delivering bad news such as the likelihood of job losses or the possibility of vacant school buildings. Communications for all closures during this phase can be managed centrally by the district office, creating a single point of contact throughout the process, although all involved parties will have communications responsibilities (e.g., principal will need to address staff and parent questions). Once the closure process enters the implementation phase, the communications lead at the district should work closely with the school transition teams to ensure clear and consistent messaging. Implementation of closures Once final closure decisions have been voted on by the board, the closure process enters the implementation phase. Based on lessons learned in other districts such as Cleveland, Boston, and Chicago, the implementation phase has four critical components: Administrative/executive responsibilities The selection or identification of the principal for the new, merged school and the transfer of teachers and other school staff should be managed by the central or regional office for all school closures. Early communications and attention to detail can make the process much smoother and easier for all involved. Communications Communications responsibilities continue throughout the implementation phase, ensuring that parents are receiving proactive and clear information from all branches of

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the implementation team. Two ways the district can ensure parents feel informed are through a school closures website with general and school-specific information on the closure process and a hotline that parents can call throughout the year and into the summer. Based on the experience of other districts, communications are particularly important in the spring, as endof-year celebrations mark the closure of the school and parents must be informed of summer school opportunities and fall enrollment at another facility. Logistics The physical aspect of closing down the school should be managed by a staff person within the central office who is serving in this role for 3-4 school closures (based on observed practices). Current district staff in the Operations Office could be used to fulfill this part-time role. This role is responsible for conducting an initial walk-through of the building to create the operations closure plan, coordinating the movement of records, IT equipment, and other transferable assets, and managing the decommission of the building. School Support We recommend the school support function be led by a central office staff member who is serving in this role for 2-3 school closures. Current district staff in the Planning and Performance Management Office or other related departments could be used to fulfill this part-time role. The school support lead is responsible for convening a school transition team, coordinating the creation of a school closure plan, and serving as primary liaison to both school principals. The transition team can be comprised of the school support and logistics leads, the future Principal, representatives from both school administrations (can be principals or assistant principals), teachers from each school, parents from each school, and students from each school (if high school). The transition team's primary responsibility is to maintain school morale and ensure smooth transition process, including creating and executing the school closure plan.

Additional school closure best practices from other districts The School Board should vote on school closures as a slate, not as individual decisions The central office team responsible for the school closure process should conduct post-mortem discussions to identify lessons learned from the FY12 closures A strong school-level transition team is critical to the success of the closure & the integration of the students and staff into the new school community Principals of both the closing school and receiving school are very important in the transition process. All implementation leads should be in regular communication with school leadership. The district should provide additional support to principals throughout the process (e.g., mentor principal from another school to help think through challenges, HR support for challenging staff members) Extra time should be built in to plan safety and security for high school closures Timeline The SCSB FY12 closure timeline allowed for community engagement and decision-making to run from mid-November 2011 to the end of March 2012. While this allowed time for the mandated community forums, other districts such as Boston Public Schools have had similar levels of engagement on shorter timelines. Boston Public Schools conducted large and small community feedback sessions for two months, from September through November, ensuring that the final decision on closures was made by the end of November. Below is a high-level recommended timeline for identifying and closing schools prior to the Day 1 for the merged district in the fall of FY13.

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School closure timeline

Analysis & Closure Plan Development

Implementation 2013
Dec Jan Feb Mar Apr May Jun

2012 Activity
Post-mortem sessions on FY12 closures Conduct analysis to identify closures opportunities Communications: closure identification process Develop FAQ on school closures Board announces recommended school closures Host large and small community feedback forums Board votes on school closure slate Administrative / executive responsibilities Identify principal of receiving school for FY14 Meet with staff to discuss reassignment process Finalize staffing for receiving school Communications: implementation process Initiate school closure hotline and website Send letter to parents at closing school Communicate new enrollment/summer school details to parents School support Establish Transition Team Draft and implement School Closure Plan Logistics Conduct walk-through of closing school Create and implement Operations Plan for closure

May

Jun

Jul

Aug

Sep

Oct

Nov

Decision process focus

Implementation process focus

First day of school

Winter break

Last day of school

Custodial Below is a recommended timeline to issue a competitive Request for Proposal (RFP) for custodial services and get an outsourced vendor selected and transitioned in time for Day 1 of the merged district. Key milestones include: Late September 2012: Issue RFP for custodial services January 2013 School Board meeting: Present vendor selection for vote February 2013: Finalize vendor contract Mid-April 2013: Vendor completes interviews and extends offers to current employees Late May 2013: Vendor begins summer deep cleaning of schools

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Custodial services timeline

2012 Activity
Select vendor for outsourcing
Define vendor qualifications and service specifications Issue formal RFP Host vendor info sessions, tour, Q&A Evaluate vendor responses Hold finalist presentations Identify preferred vendor Present to SCSB for vote Develop term sheet (including Service Level Agreement requirements) Negotiate / finalize contract Establish Key Performance Indicators, include in SLA Develop transition plan for vendor and building engineers Develop security strategy for schools with new vendor Restructure and retrain management team Vendor interviews and hires current district custodians Reassign building manager to two schools and retrain as appropriate Host job fair for district custodians not hired by vendor Inventory and transition equipment Create policies & procedures document for schools on working with new vendor Host vendor info session for school administration

2013
Dec Jan Feb Mar Apr May Jun Jul Aug

Sep

Oct

Nov

Negotiate vendor contract

Plan transition

Communications strategy Planning buffer period

Transition portfolio to vendor

Finalize logistics of transfer to new vendor Vendor begins summer deep cleaning of schools Review initial performance with vendor, modify services if necessary Implement regular quality review Institute feedback system with principals

Winter Break

Spring Break

Last Day of School First Day of School

Utilities High return-on-investment (ROI) project types The district's new demand management policy should have several components, including personnelbased usage policies and school incentives for good energy usage programs as well as engagement in high return-on-investment facilities changes. In the "Energy Efficiency Programs for K-12 Schools" guide, the Environmental Protection Agency suggests five types of projects that have a high ROI and combine for an effective, phased approach to upgrading the energy efficiency of existing buildings: Retro-commissioning or re-commissioning: this type of project reviews an established building to ensure it is "designed, constructed, tested, and capable of being operated and maintained according to the building needs." 1 Potential savings from ensuing low-cost technical modifications range between $0.11 and $0.72 per square foot. 2 Energy-efficient lighting: In addition to regular light-bulb replacement, the district intermittently upgrades or replacements lighting systems. Lighting can account for up to 40% of a buildings total energy use, so prioritizing energy efficiency during lighting replacement projects can dramatically reduce energy consumption while improving lighting quality and reducing unwanted heat production. Supplemental load reductions: "Supplemental loads" are non-direct factors that influence the effectiveness of a heating or cooling system in a building (e.g., computers, lighting, and the environmental influence from windows). Projects such as installing window films, adding insulation or reflective roof coating, or installing EnergyStar office equipment counteract supplemental load factors and can have a major impact on a building's energy consumption.

"Energy Efficiency Programs in K-12 Schools." United States Environmental Protection Agency, 2011. Mills, Friedman, Powell, Bourassa, Claridge, Haasl, Piette. The Cost-Effectiveness of Commercial-Buildings Commissioning. December 15, 2004.
1 2

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Fan system upgrades: Technical measures, such as realigning fan system equipment with the size and needs of the building or converting to a variable-air-volume system, can significantly reduce energy costs. HVAC: Heating and cooling systems are the largest energy consumers in a school building and HVAC-related projects are scheduled throughout the district each year. Integrating strategies such as measuring load to right-size the system equipment and upgrading pumps and cooling tower fans to be run by variable-speed drives can have a major impact on energy efficiency.

Maintenance The TPC Logistics Committee recommended a model of maintenance for the new district that mirrors the current model, so no additional migration processes beyond those mentioned in the introduction are necessary. However, if the new district begins offering select maintenance services on a fee-forservice basis to charter or ASD schools, the maintenance department should grow the capability to structure their services around a menu of basic and specialty maintenance services that have transparent pricing for each service.

Transportation Below is a recommended timeline to issue a competitive RFP for transportation and select and transition to the preferred vendor in time for Day 1 of the merged district. This timeline assumes that the new vendor will likely not be providing transportation services for any programs offered by the district during the summer, but will start services at the beginning of the 2013-2014 school year. However, we recommend the transition for summer school services be managed carefully and this might necessitate the vendor to pick-up some services earlier than the start of the full school year. Key milestones include: Late September 2012: Issue RFP for transportation services, announce sale of bus fleet End of November 2012: Transportation management team selects IT systems January 2013 board meeting: Present selection of preferred vendor(s) for vote End of February 2013: Finalize vendor contract End of May 2013: Vendor completes interviews & extends offers to current employees Beginning of August: Vendor begins providing transportation services to district Information systems for student transportation should include the following functionalities: mapping and planning, routing, real-time GPS tracking, and special-event transportation management. We advise that the transportation management team of the new district select a system or set of systems that will meet these needs at the lowest cost, considering the need for data migration (i.e., adding students or vehicles to the system), administrative upgrades, and training. Priority should be placed on systems that overlap or integrate well with other information systems in the district, such as enrollment planning and demographics.

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Transportation migration timeline

2012 Activity Select vendor Define vendor qualifications and service specifications Issue formal RFP, announce sale of bus fleet Host vendor info sessions, Q&A period Evaluate vendor responses Hold finalist presentations Identify preferred vendor(s) Present to SCSB for vote Negotiate contract Develop term sheet (including SLA reqs) Negotiate / finalize contract Plan transition District leadership determines transportation IT systems Develop transition plan Create KPI dashboard, include in SLA Restructure and retrain in-house team Vendor interviews current district drivers Host job fair for district drivers not hired by vendor Inventory bus fleet and finalize sale Communications strategy Create policies & procedures document for school administrators to work with vendor Host info sessions for school administration Send info about new bell times and vendor to parents Transition portfolio Academic & Operations leadership finalize bell schedule Establish routes for coming year Finalize logistics of transfer to vendor Vendor and district conduct practice bus runs Vendor begins providing bus service Institute feedback system with principals and parents to ensure vendor performance Winter Break Transition Planning Commission Spring Break Last Day of School First Day of School 2
Sep Oct Nov Dec Jan Feb Mar Apr

2013
May Jun Jul Aug

Purchasing

To achieve the maximal savings in Purchasing, the district will need to implement three major changes in the new department: e-Procurement system implementation: The new e-Procurement system will replace several manual processes and small systems in place today. We recommend a comprehensive RFP to ensure system implementation extends to all schools and departments involved in major purchasing, training for all users at onset, and an annual review of adoption and re-training as necessary Enhanced organizational design: The review and reorganization of the Purchasing department to align staff with key capabilities is critical to achieving the estimated $6 11M category savings. Changes include refocusing category managers / buyers from transactional activities to strategic sourcing in goods/services/capital, ensuring analysts have right capabilities and review transaction-level data in P-card program and e-Procurement system, and redeploying some clerical personnel to special projects based on e-Procurement system efficiencies. P-card program implementation: Keys to success for implementing a P-card program include conducting a competitive RFP for a vendor who can provide sufficient transaction level detail (i.e., unit of measure, order date, price) and administrator/user training, drafting program guidelines to clearly outline policies and procedures that include abuse safeguards, ensuring linkage to e-Procurement system for comprehensive district spend visibility.

Information Technology Core systems migration timeline

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Below is the recommended sequence for core systems migration in the merged district. The purpose of the timeline is not to dictate the exact schedule or process by which the merged district will implement core systems, but rather to give senior district leadership and other key stakeholders (e.g. the School Board) a summary-level view of priorities and timing. Migration priorities broken into four categories: Day 1: Major projects Day 1: Intermediate projects Day 1: "Flip the switch" Year 1: Post-merger priority
Draft For discussion only

IT migration: proposed timeline for core system implementation

2012 Core Systems
Day 1: Major projects Data Warehouse HR/Payroll/Finance: APECS Student Information System Day 1: Intermediate projects Network RFP Network Implementation IT Lifecycle Management Risk management Nutrition systems Parent notification system Safety and Security Transportation Asset Management Procurement Suite Day 1: "Flip the switch" Email IT Security Maintenance work orders Year 1: Post-merger priority Library automation Student email Document imaging

2013

2014

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

RFP MCS implementation SCS integration Implementation

Conversion

Implementation / training

Winter Break

Spring Break

Last Day of School

First Day of School

Transition Planning Commission

Additional notes regarding core systems integration: The Joint IT Governance Board (made up of senior leaders from both districts) will be the default steering committee to guide the implementation of all core systems Multiple projects (including Data warehouse and Student Information System) are already in the process of being implemented by joint-district working teams Some core systems have dependencies on the implementation of other core systems or the execution of other aspects of the logistics plan (e.g. the transportation routing system should not be chosen until a transportation vendor is chosen through the RFP process). APECS Implementation Below is the recommended high-level work plan for APECS migration. Recommendation is to proceed in five phases: Approval and Planning Process mapping and design

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System set-up Testing and training Trials and changeover

Draft For discussion only

APECs migration: proposed timeline for approval and implementation

2012 Core Systems
Approval and Planning Board planning/approval Financial approval process RFP for planning support Project planning Process mapping and design Current state process mapping Future state process design System set-up Data conversion System configuration Testing and training User procedures designed User manuals created User training Trials and changeover Trial 1 Trial 2 System cutover Continual improvement Process improvement and redesign (as needed)
Winter Break Spring Break

2013

2014

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Board approval Project funded Partner selected

6/3 8/18 Critical enhancements identified 8/19 10/20

8/19 7/20

Initial training complete 12/16 - 7/20 Trial 1 complete Trial 2 complete System Cutover 5/12 - 8/10 On-going

Transition Planning Commission

Last Day First Day of School of School

In order to ensure a successful Day 1 launch, district must achieve critical success factors including: Expedited approval and financing: Board and County Commission must "fast track" project Strong organizational support: Cross functional and cross district steering committee and working team Adherence to implementation principles: Adopt SCS processes where possible for initial system launch (e.g. state chart of accounts, budgeting process) Safety & security Logistics Committee discussions concluded that it is important to have a strong staffing and governance plan in place that guides the interaction between school staff, local law enforcement, and district security staff. Based on this, our recommendation is that the Superintendents, the district security departments, and the Sheriff's Office work together to assess the security needs of the schools and determine the best path forward for a staffing and governance model that will best serve the students of Shelby County Schools. We recommend the governance plan be completed in time to allow for adequate planning and preparation for the selected governance structure to be implemented. As an example of governance practice, in 2009, Knox County Schools entered into a public Memorandum of Understanding with the Knoxville Police Department and Knox County Sheriff, both of whom provide security personnel to the schools. The goal of this MOU was to establish a positive working relationship in a cooperative effort to maintain a safe and secure environment on school
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campuses. The MOU clearly lays out the responsibilities of each party and the guidelines for their interactions. With regards to resource allocation, the current model assigns law enforcement officers and security officers to schools based on need (e.g., high schools and middle schools tend to have more dedicated support, elementary schools tend to have more shared support). In the collaborative effort between the district security and Sheriff's department, we recommend they identify and take into account the needs of the merged district in reviewing these allocations, including recommended school closures. Nutrition Migration to a central kitchen model for the new district requires changes and possible upgrades in three distinct areas: Information management systems: Merging the food services management systems, the IT systems used by school cafeterias and the MCS central kitchen, will be critical to Day 1 success. Based on the go-forward recommendation to convert to the central kitchen model, we recommend utilizing the system currently in place in MCS: Horizon OneSource front-of-thehouse software system and the Horizon-integrated proprietary back-of-the-house inventory management system. The full Horizon system is capable of automating the processes to track inventory from the receipt of raw materials to when the manufactured food is delivered to schools. The back-of-the-house system has already been created, and is primarily awaiting approval from the Board to install prior to Day 1. Once the back-office system is installed, the remaining steps include installing point-of-sales software in SCS cafeterias, training staff at schools, and building the bridge of the back-office system to feed the APECS financial system. The costs of migration, which will be covered by surplus funds, include the purchase of additional software licenses and software migration in SCS cafeterias, but no new hardware will be needed Operations model: The district nutrition leadership should review and revise the personnel needs at the schools and central kitchen in the new district. While the overall personnel needs are not expected to change significantly, there may be some shifts between current SCS school cafeteria staff and the central kitchen. The central kitchen can also expand to a third food preparation shift to support the expanded volume. Additionally, MCS and SCS food sales policies will need to be aligned part of the migration. Facilities and equipment: Conversion of facilities and equipment will require minimal activity as there is sufficient storage and preparation space within the central facility to support expanded volume. Current projections also include the purchase of four additional refrigerated trucks and some food preparation equipment, which will be paid for by special funds in school nutrition budget. Since no more than three months of operating revenue can be carried over on the special revenue food services fund by State law, we recommend that surplus funds be reinvested in areas such as improving the quality of food for students, renovating infrastructure and investing in better equipment in school kitchens, and investing in health and nutrition education for students.

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This appendix contains a list of the 172 recommendations that make up the Transition Plan, for easy reference. This document should not be used without the full Transition Plan for context. The full plan contains important detail, rationale and financial implications for each recommendation.

Appendix E

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EDUCATION PLAN: Educational Services

The TPC recognizes that the items specifically identified in these recommendations do not represent the full scope of work for a school district and that, for many of these items, greater specificity will be required during implementation to accomplish the Plans goals. As part of the work of the Educational Services Committee, the staffs of the existing districts have developed detailed documentation of the current state and initial recommendations for merged SCS. This work has contributed significantly to the TPCs recommendations below. In addition, the TPC recommends: 1. Utilizing the recommendations presented by the staffs on specific educational topics (reproduced in Appendix C) as a starting point for making more detailed decisions through the implementation process in a way that is consistent with the educational priorities and recommendations outlined within this Plan. Priority 1: Every child ready for school 2. Shelby County as a community ensures universal access to Pre-Kindergarten for all four-yearolds in Shelby County, provided by a mix of district-run classrooms, Head Start, and private care centers a. The district leads the way in ensuring universal access, by adding 2,500 spaces (125 classrooms) to its Pre-K program over the next five years. This represents enough slots so that all children (including students with special needs and students from all economic backgrounds) not currently participating in a formal Pre-K 4 program have the opportunity to participate. b. In this expansion, the district aims to expand Pre-K 4 classrooms in partnership with organizations that can provide wrap-around support services c. The long-term run-rate cost of this initiative to the district is $15Mwhich the TPC recommends phasing in over five years. This would add 500 spots (or 25 classrooms) per year, adding an incremental $3M to the budget each year, starting in FY14. See the summary of all investments in the Financial Model chapterError! Bookmark not defined.. 3. In addition to expanding access to Pre-Kindergarten for four-year-olds, the TPC recommends that the community of Pre-K 4 providersincluding the district, Head Start, and private care centersfocus on quality achieved through: a. Use of a single research-based Kindergarten readiness indicator to ensure accountability across all programs, and to establish a baseline from which to set district-wide goals for improvement b. Partnership among the district, Head Start, and private care centers to ensure all Pre-K 4 programs in Shelby County are high quality, using appropriate research-based interventions and preparing students for success in Kindergarten c. Considering the expansion of effective teaching work in grades K12 to district-run Pre-K 4, supporting the recruitment, staffing, evaluation, and professional development of Pre-K 4 teachers d. Ensuring the district has interventions that address the needs of students who come to Kindergarten without the benefit of Pre-K 4 educational services 4. The TPC also recognizes the critical importance of child development during the ages 04. The TPC recommends that the district support community partners, governmental organizations, health care providers, and service providers (e.g. public libraries, Books from Birth, Urban Child Institute, Tennessee's Early Intervention Services, Support and Training for Exceptional Parents) that provide services and resources to families with children in this age range. Specifically: a. Serve as an information source about 04 year-old programs and services to parents and families

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b. Collaborate with the Tennessee Early Childhood Training Alliance to co-develop course trainings and professional development for certificated personnel c. Build a data system that enables integration of data from both the Tennessee Department of Education and the Tennessee Department of Human Services so that data and information relevant to students early development is captured and used to provide better support and interventions d. Continue to assess students health at the point they enter the school district for the first time 5. Because of the critical importance of partnership among the district, community organizations, government, public institutions, the faith community, and business leaders in this effort, the TPC recommends that a collaborative of these organizations serves as the communitys advocate for Shelby Countys early childhood initiative. More detail on this collaborative can be found in the Priority 6: Supportive Community Members and Partners section of this chapter (recommendation 26). Priority 2: Every student ready for success in college and career 6. The TPC recommends empowering a community collaborative (see more detail in recommendation 26) to own the tracking of measures of success outlined above and that: a. District leaders partner with this community collaborative to build broad stakeholder ownership of these goals b. The district and community collaborative partner in the annual review and communication of progress regarding these goals 7. Additionally, the district should build specific support structures to ensure that students are fully prepared for college and career success, including: a. Providing the counselor-to-student ratio to enable counselors to spend more time on college preparation, planning, applications, and financial aid. This recommendation increases the number of counselors in MCS by approximately 25%, with an estimated cost of about $4M. See the summary of all investments in the Financial Model chapter. b. Investing in opportunities for students to participate in ACT and SAT preparation courses and to take the test(s) multiple times. The cost for this initiative is estimated at $650,000 which includes funding for test-preparation courses at the school site and district coverage of testing fees for students wishing to retest. See the summary of all investments in the Financial Model chapter. c. Ensuring counseling services align with national standards for academics, social/emotional development, and career domains 8. Career and Technical Education (CTE) should be made more relevant to today's job demands. The TPC recommends that the district: a. Prioritize current and projected job clusters and courses that build knowledge and skills in the most in-demand, well-paid jobs in the local community b. Increase the number of courses that qualify students for professional certification before they graduate from high school c. Create a business advisory board, including local chambers of commerce, to advise the district in course development, no later than the end of 2013 d. Forge partnerships that provide more opportunities for student apprenticeships 9. As STEM (science, technology, engineering, and math) skills continue to become more important for success in college and careers, the TPC recommends that the district build a STEM thread through the curriculum: a. Pursuing a rigorous set of math and science course offerings throughout the K12 continuum

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b. Ensuring all schools build STEM experiences, activities, and an integrated crossdepartmental approach c. Investing in professional development for teachers in STEM areas, raising awareness of the need for students to be proficient in reading and math in order to be successful in challenging STEM courses at the high school and college level 10. In order to know whether the districts efforts are leading to success for students, the TPC recommends that the district expand its longitudinal data to capture data on student postsecondary enrollment, remedial coursework in college, college graduation (within four and six years), technical certification, and workforce participation, as these pieces of information are available 11. Because the fine arts provide students with multiple avenues and opportunities for attaining success in college and career, the TPC recommends ensuring all children have access to a full complement of sequential fine arts instruction across arts disciplines and throughout their academic career by: a. Ensuring arts offering and instructional time is prioritized and protected b. Supporting collaboration with professional artists, arts agencies, and organizations to expand arts exposure throughout the district c. Utilizing arts integration as a fundamental aspect of K12 curricular programming and professional development offerings 12. The TPC strongly values the importance of service learning and experiential learning. In order to ensure all students experience the benefits of these activities, the TPC recommends the district institute a service learning requirement as part of its graduation requirements Priority 3: Rigorous implementation of standards 13. In order to ensure successful implementation of CCSS, professional development is critical. To ensure teachers and instructional staff have the professional development they need, the TPC recommends that the district take a two-pronged approach: a. Make CCSS a top priority within the district's professional development plan to support teachers and instructional staff in developing the knowledge and skills to successfully teach the new standards by utilizing a train-the-trainer model. This model costs an estimated $500,000 over the first two years of CCSS implementation, to be paid as stipends for summer teacher training. See the summary of all investments in the Financial Model chapter. b. Charge principals with the responsibility for CCSS professional development for the teachers in their buildings, and ensure teachers are using strategies that are effective and culturally relevant for the students in their schools 14. The districts instructional plan should include a comprehensive assessment strategy to assess the needs of each student, including: a. Developing consistent district-wide benchmark assessments (23 times/year) that are aligned with CCSS to track progress throughout the year b. Ensuring that the district has the technology capacity required to support the state assessments move online in 201415 15. The district will explore and review extended school day and extended school year as an option to support students 16. The district will develop a community communications strategy, coordinated among the district, the community collaborative, and parent organizations (e.g. PTA, PTSA, PTO), for

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educating and investing parents in the benefit of higher standards and what higher standards mean for their children. See more in Priority 5: Engaged Parents and Families. Priority 4: Quality and accessible educational choices 17. The TPC recommends that the district create, in partnership with teachers, principals, parents, students, and community partners, a common definition of high-quality school referenced in the measures of success above 18. The TPC recognizes and values the importance of community schools and believes that the ultimate goal should be for each school in the district to offer a variety of rigorous, collegepreparatory courses. However, many schools do not currently meet this bar. In order to achieve this goal, the TPC recommends that the district: a. Establish a rigorous set of core courses to be offered across all schools at a given grade level (including math, reading, science, social sciences, art, music, physical education) b. Double the number of students participating in AP courses over the next five years, double the number of students participating in dual enrollment courses at the campuses of institutions of higher education over the next five years, and increase IB and/or dual credit offerings in high school. Ensure every student in the district is aware of and has the opportunity to participate in any course in the district, using virtual or distance learning where needed. The cost associated with the dramatic increase in AP participation is estimated at $750,000 in the first year, and an additional $750,000 each year for the following four years. This estimate includes the cost of additional teachers given smaller class sizes and teacher training. The cost of the expansion of dual enrollment courses will be supported by the partnering institutions of higher education and grant funding (e.g. Hope Scholarship), at no incremental cost to the district. See the summary of all investments in the Financial Model chapter. c. Build capabilities for virtual learning throughout the district to expand access to advanced and unique courses for all students d. Create a centralized listing of all course offerings, by school, so that all students will be informed about all courses offered in the district 19. In addition to high-quality community schools, the TPC recognizes and values the importance of choice for students and families who desire something unique or different than what their neighborhood school offers. To that end, the TPC recommends that the district: a. Provide unique offerings throughout the district that are available and accessible to all students who want to pursue particular interests in the arts, world languages, debate, and vocational areas. Grow these programs over time based on demand and quality b. Maintain and continue to improve schools with a particular emphasisincluding Optional Programs, IB programs, and other specialized programs c. Build STEM programs and experiences throughout the K12 curriculum, as well as building platform/hub STEM schools 20. In order to manage the variety of school types and choice options, the district and all charter schools in Shelby County need a clear and fair application, enrollment, and transfer process for the 201314 school year. The TPC recommends that the district: a. Create a centralized application, enrollment, and transfer system, with a randomized lottery to ensure fairness when demand exceeds capacity. The lottery, while not a replacement for the ultimate goal of growing the number of high-quality school options for all students, creates equal opportunities for all students who are interested in a program or school and replaces the current first-come, first-served policy. See more detail in the Education Plan: Administrative Organization chapter (recommendation 102)

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b. Consider both academic performance and the equitable availability of high quality educational options in any future decisions to create, expand, and/or close schools or programs 21. The TPC recognizes the importance of preserving other programs within the district where TPC has not made specific recommendations about the future state. In the areas of athletics, fine arts education, world languages, extended learning opportunities (including driver's education and JROTC), and other educational choices currently offered by the district, the TPC recommends that the district: a. Resolve differences in the way the two districts approach their programs in a way that maintains critical services and is cost-neutral b. Follow the timeline and process detailed in the Migration Plan chapter of the Transition Plan c. Builds off of the recommendations made by staff, included in Appendix C Priority 5: Engaged parents and families 22. The TPC believes that the district and all school leaders and teachers should: a. Approach parent engagement proactively by welcoming parents into the school system and encouraging early and frequent communication between parents and teachers, principals and district leaders. b. Build a culture that reinforces school leaders and parents as partners, not adversaries, and also ensures that the district focuses on addressing underlying issues raised by parents, as opposed to focusing on managing parent complaints. 23. In order to achieve this aspiration, parent engagement is best focused at the school level. The TPC recommends that principals, in partnership with the district: a. Ensure each school has a formal parent organization (e.g. PTA, PTSA, PTO) that is visible to all parents of children attending the school, has a voice in school decisions, has an elected representative on the district-wide parent assembly, and collaborates with parent organizations at other schools. b. Utilize the school-based parent organization in Title I schools to inform decisions related to site-based Title I spending, and include teachers and community members in the decisionmaking process. c. Are held accountable for their effectiveness in communicating with and engaging parents, and are evaluated on the effectiveness of parental engagement at their school. 24. The districts senior leadership and central office also have an important role to play in parent engagement by: a. Engaging parents authentically in decision making through a district-wide parent assembly which draws one member from each school and meets with the Superintendent at least twice per year to offer input on district policies and practices. This engagement is also achieved through the Parent and Community Liaison position staffed in each region. See the Education Plan: Administrative Organization, chapter (recommendation 92) for more detail. b. Developing meaningful professional development for principals and teachers on strategies and approaches for improving parent engagement. c. Ensuring district communication processes and IT systems (e.g. district website, calendar, and parent portal) communicate needed information to parents in a clear, accessible, and timely fashion. 25. The TPC recommends that the districts community engagement office partner with colleges, universities, other adult education providers, and community organizations to develop

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opportunities for parent education concerning how parents may best support their childs academic success. Priority 6: Supportive community members and partners 26. The TPC recommends that the district empower a broad-based community collaborative to support the academic success and well-being of Shelby County's children by: a. Partnering with the district and institutions of higher education to develop an aligned set of college readiness and college success goals and to identify strategies that the district and other organizations in the community may use to meet these goals b. Developing a broad constituency, exemplified by membership that includes education, community, faith, business, philanthropic, and government leaders c. Supporting advocacy and public awareness related to the Countys educational goals, including reporting annually on the return on investment of the communitys investment in education d. In the near term, advocating for the implementation of the Transition Plan 27. In addition to the community collaborative, the TPC recognizes the importance of a single entity to match businesses and other donors with needs within the school system. Currently each district has its own foundationthe Memphis City Schools Foundation and the Shelby County Schools Education Foundation. The TPC recommends the existence of a single independent foundation wholly focused on supporting merged SCSs educational goals and partnering with other foundations that contribute to education in Shelby County 28. Additionally, the district is responsible for creating a culture among district staff and school leaders that values partnership with community organizations, partners, and volunteers. The TPC recommends the district: a. Maintain and expand formalized processes for sharing data with community partners who provide support and services to students, such as MCSs current data sharing memorandum of understanding b. Form partnerships and have regular dialogue with the seven municipal governments and county government in Shelby County (addressing topics including violence prevention and early childhood education) c. Ensure that the district has a strong community engagement leader among the senior district team who is the clear point of entry for community organization service providers and educational and cultural organizations, and who works in partnership with the Parent and Community Liaisons in each regional office. See Education Plan: Administrative Organization chapter (recommendations 91 and 92) d. Build communication processes to ensure principals and teachers are completely aware of services and programs for children and families that are provided by community organizations Priority 7: Tailored interventions and support To succeed, the TPC recommends the district, school leaders, and teachers focus interventions in six key areas: 29. Academics: Both districts currently have benchmark assessments and tiered intervention strategies. Going forward, the TPC recommends that the district: a. Evaluate the impact of those strategies annually, and revise to ensure the highest-impact interventions are being used most frequently for each student b. For students who need additional support, develop a special support system and partner with community organizations to provide extended learning time and enrichment (extended school day and summer programming). In Innovation Zone schools, the school day will be extended by an hour to provide more instructional time, spent on focused

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interventions in core instructional areas in math and literacy. The district's Innovation Zone grant covers this cost, and has been written into the state-approved grant application that was developed jointly by MCS and SCS. c. Offer extra and focused support at and/or in advance of transition years (5th to 6th grade, 8th to 9th grade) to ensure students are not falling behind. 30. Attendance: The TPC recommends that the district: a. Focus on the reduction of absenteeism (unexcused absences of five days or more per year) b. Ensure teachers and school leaders, with the support of clerical staff, actively monitor attendance and engage parents, community organizations, and social services to keep students in school c. Use all available levers (e.g. Temporary Assistance for Needy Families school attendance requirement) to invest students and families in the importance of attendance 31. Behavior: The TPC recommends that the district: a. Focus student behavior-related investments on preventative measures that emphasize clear expectations and progressive discipline. b. Engage students in programs that lead to behavior modification c. Support teachers and principals in this effort, by making preventative behavioral interventions a priority in the district's professional development agenda at all grade levels, beginning in elementary school. d. Ensure schools are staffed and supported with the school counselors, social workers, and psychologists who can identify root causes of student behavior and provide more focused support. In order to achieve this recommendation, the TPC recommends an increase in the number of counselors in current MCS schools to bring them in line to the SCS ratiosat a cost of about $4M per year. There is not a recommendation to increase the number of social workers and psychologists. The district will need to set these staffing ratios in a costneutral way. See the summary of all investments in the Financial Model chapter. See all other school staffing recommendations in the Personnel Model chapter. e. Empower principals and support them to be the decision-makers on suspensions and expulsions. Review the district student discipline policies and procedures to ensure that principals are empowered and supported in their decisions, while preserving students' due process rights f. Ensure that every elementary and middle school has the support of an in-school suspension aide to reduce the need for out-of-school suspensions and, thus, keep students in school. This does not have a cost impact, as the districts currently employ enough inschool suspension aides to accomplish this. g. Review disciplinary policies and procedures and ensure that the language in those policies fosters appropriate intervention strategies prior to and after suspensions and expulsions h. Maintain and deepen current safety programming and pupil services, and continue to seek government grants to fund proactive behavior programming, as included in recommendations 128 and 129 of the Safety and Security recommendations 32. Graduation: The TPC recommends that the district: a. Use an early indicator dashboard so that teachers, principals, and district leaders can better support students who are likely to drop out of school b. Employ focused interventions for students who are likely to drop out, including mentoring, counseling, and extended instructional time 33. Special needs: The TPC recommends that the district: a. Ensure that all students working toward a regular diploma have teachers with content expertise, with inclusive placement as the preference b. Develop and implement a district-wide strategy to reduce the amount of time special education teachers spend on clerical workincluding adding Special Education clerical

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assistants. The cost of this recommendation is $2.5M. See the summary of all investments in the Financial Model chapter. See all other school staffing recommendations in the Personnel Model chapter. c. Develop a professional development program for school leaders and teachers to enhance their knowledge of both the law regarding special needs students and best practice strategies that can be used to address those needs d. Provide services to teachers and school leaders to enhance their skills in the area of identification and placement of students who need special services 34. Health: The TPC recommends that the district: a. Ensure all students have access to a nurse, although not every school will be able to employ a full-time nurse. See all other school staffing recommendations in the Personnel Model chapter. b. Continue school-based clinics where they currently exist c. Maintain the licensed Mental Health Center, and expand access to the entire district 35. The TPC recognizes the importance of preserving other programs within the district where TPC has not made specific recommendations about the future state. For gifted programming, programs for English language learners, alternative education, extended learning opportunities, summer programming, and other educational choices currently offered by the district, the TPC recommends that the district: a. Resolve differences in the way the two districts approach their programs in a way that maintains critical services and is cost-neutral b. Follow the timeline and process detailed in the Migration Plan chapter of the Transition Plan c. Builds off of the recommendations made by staff, included in Appendix C Priority 8: Effective teachers In the area of teacher evaluation: 36. In the area of observation, the TPC recommends: a. The district adopt a single framework for effective teachingobservation rubricfrom the merger date forward. This is imperative not only to ensure a common language among all district staff, but for basic fairness since professional development, compensation, and dismissal are linked to the evaluation. b. MCS and SCS work together to select an observation rubric by December 2012. This observation rubric must include a clear and differentiated definition of each level of teaching. Criteria for selecting the observation rubric include: i. Correlation between rubric and student growth data both local and national, with particular attention to local data (Guiding principle: The academic success and well-being of our students come first) ii. Cost of implementation (Guiding principle: We must save where we can to fund what we need) iii. Teacher and evaluator ownership (Guiding principles: Educators and staff are our most important resource; We are all in this together) c. The length and frequency of observations reflect research on best practices. The number and length of observations should be differentiated based on apprentice status and performance. On an informal basis, the district should seek to increase observations even further. d. The district regularly certify evaluators as reliable raters by: i. Holding monthly norming sessions to prevent rating drift away from standardized definitions ii. Holding principals accountable for quality of teacher observations in their own evaluations

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iii. Monitoring the effectiveness of various classes of evaluators (e.g. principals, PIT crew, administrators) and seek to increase the use of evaluators who have proven to accurately and reliably rate teacher performance. 37. In the area of stakeholder perceptions, the TPC recommends: a. The district administer the student perceptions Tripod instrument two times per year and share results with teachers and evaluators in a timely manner to allow mid-course refinements. The TPC based this recommendation on the demonstrated validity of the instrument in national and local research. i. Further, the TPC recommends that SCS pilot the Tripod survey with a fullscale rollout, but with no stakes for district in 201213; SCS should seek state funding, but if funding is not available, Tripod should be paid out of the TEI grant. ii. Merged SCS will use at 5% from 201314 onward, vs. 0% in 2011-12. 38. In the area of teacher content knowledge, the TPC recommends that the district: a. Exclude teacher content knowledge from its evaluation model due to the lack of valid and reliable measures for teacher content knowledge b. Include teacher content knowledge as part of its professional development for teachers c. Continue to look for acceptable measures of teacher content knowledge to include in the evaluation model as part of its future work 39. In the area of TVAAS data, the TPC recommends that the district: a. Continue to use TVAAS data per state law b. Work with the state to enable teacher verification of TVAAS data (i.e. roster of student scores returned to each teacher with notice of which students are included in the teachers score) c. In the summer of 2012, jointly convene teacher working groups to improve the available menu for non-tested subjects 40. In the area of other student achievement metrics, the TPC recommends that: a. Teachers choose the other student achievement metric and principals approve such selection b. The district set the bar for performance, differentiated by school (e.g. state school AMOs) c. In the summer of 2012, the districts jointly convene teacher working groups to improve the available menu for non-tested subjects 41. Each year, the TPC recommends that the district seek opportunities to improve its teacher evaluation model, including through the components it uses and their respective weights. In the area of Teacher support and professional development: 42. The TPC recommends that the district develop an annual strategy for professional development based on an assessment of its needs. a. The strategy should consider each of the four types of professional development formal structured programs (e.g. induction), team-based (e.g. PLCs), one-on-one attention (including coaching and peer observation), and independent study. In constructing the strategy, the district should make use of needs identified by teacher evaluation and student achievement data, as well as research and emerging best practices, and should seek opportunities to give teachers professional development that is job-embedded, focused on student learning, and linked to specific development opportunities identified by the teachers evaluation. b. The strategy should also seek to provide an array of learning platforms for the delivery of professional development. Further, it should consider whether and how the

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approach to professional development should vary based on the overall performance of the school. Professional development that does not meet needs identified in the strategy should be discontinued. Such strategy should be revised annually based on student achievement and teacher efficacy data, as well as on educational priorities (e.g. implementation of Common Core). The revised strategy should then be reviewed with a committee of key stakeholders. 43. The TPC recommends that Professional Learning Communities (PLCs) be the districts primary approach to team-based professional development for teachers by: a. Educators working together to review and respond to student data, answering the following critical questions: - What do we want students to learn? - How will we know if they have learned? - What will we do if they dont learn? - What will we do if they already know it? b. Scheduling classes such that there is common planning time at least once a week within a teachers regularly scheduled workday. Such planning time focuses on analyzing and responding to student data to answer the critical questions, creating and scoring common formative assessments, making intervention decisions that answer the critical questions, etc. Such planning time is not to be spent dealing with calendar, consequences, or content issues. Strategies to close achievement gaps must be among the issues that teachers address when analyzing and responding to student data. c. Ensuring that the school has a culture and climate of high expectations that is conducive to the effective functioning of PLCs, where teachers feel comfortable collaborating and students are engaged in their learning. 44. It is important that students and schools have the resources they need. Given this, the TPC recommends that teachers have adequate materials and supplies in order to be effective In the area of teacher selection, the TPC recommends: 45. The district take the following actions to increase the quality of its applicant pool: a. All applicants go through the same selection process at the district level and have the same access to open positions, regardless of whether they are internal or external candidates. All vacancies continue to be posted electronically. b. The district track key indicators in the hiring process (e.g. number of vacancies by position, ratio of applicants to vacancies by position, source of candidate, time elapsed at each stage of hiring process, etc.) that allow strategic management in real-time and continuous improvement year over year c. The district work with principals and school selection committees to develop selection models appropriate to their schools d. The district put differential effort into identifying and attracting candidates that are good fits for teaching in high-priority schools e. The district utilize a closed loop selection model by rating each of its hires and comparing their applicant ratings to their evaluation scores. The district should act on this data by, for example, adjusting its selection model to match those qualities that appear to matter to teacher performance in the classroom. Additionally, the district should track the number and quality of graduates hired via each pathway and meeting semi-annually with organizations to provide feedback on their graduates. This feedback will also be shared with the state. Over time, this should increase the overall quality of new hires. 46. The district take the following actions to hire more teachers earlier in the year when applicant pool quality is higher:

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a. Incentivize early notification of retirement and resignation by allowing an exemption from end of year professional development for those who meet an early notification deadline b. For the most common teaching positions, project the number of people that will need to be hired based on historical vacancies. For some portion of this projected number, the district should be able to safely hire ahead of knowing the actual number of vacancies. For this portion, the district will offer early contracts to top applicants c. Fill all vacancies on a rolling basis d. Choose not to complete an HR compliance screen on a candidate unless the district expects to hire the candidate 47. The district take the following actions to ensure that all teachers and principals agree to work together (see also recommendation 52 which describes the legislative change required to fully implement this recommendation) a. All hiring be conducted by mutual consent b. No forced or direct placements of teachers c. No external hiring freezes or other limitations placed on whom a principal can choose to hire d. All of the above shall be in effect even if there are surplus teachers 48. The district hold principals accountable for their selection decisions. As part of their evaluation, principals are held responsible for hiring teachers who rate highly on the schools selection model or who have demonstrated effectiveness. In the area of dismissal, the TPC recommends: 49. A dismissal recommendation may be brought by policy, by the district, or by the teachers principal 50. The district set a dismissal policy that strives to balance fairness to teachers, who need an opportunity to improve if they are close to meeting expectations, with fairness to students, who need an opportunity to learn, and with fairness to principals, who need a way to dismiss teachers who are not meeting expectations that is not overly burdensome. By this dismissal policy: a. Teachers rated significantly below expectations will be dismissed, regardless of tenure. Tenured teachers will be eligible for an appeal and a hearing. b. If there is no surplus for their school, teachers rated below expectations will be provided intensive supports the next year. They will have that year to improve to meeting expectations or higher, or they will be dismissed. Per TCA tenure law, all teachers who do not at least meet expectations for two consecutive years and received tenure after July 1, 2011 will lose tenure and the right to an appeal and a hearing. Previously tenured teachers will have the right to an appeal and a hearing. If layoffs are needed at their school, teachers who are below expectations will be dismissed as needed according to surplus procedure. c. A dismissal decision may be appealed by the district or by the teachers principal, or by the teacher, if tenured. In the area of surplus, the TPC recommends: 51. The district no longer guarantee jobs to surplussed teachers. Instead, the TPC recommends that when there is a surplus of teachers at a school, within the license area and scheduling constraints: a. The district terminate any teachers rated significantly below expectations b. If teachers are still in surplus, the district terminate teachers rated below expectations c. If teachers are still in surplus, the district terminate non-tenured teachers who at least meet expectations. The district gives support to teachers in finding a new position within

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the district, but teachers are not guaranteed a job. Such support would include but not be limited to resume workshops, opportunities for interview practice, and making sure principals with open positions are aware of these candidates with records of sustained effectiveness. Further, teachers who exceed expectations or significantly exceed expectations are extended early contracts by the district where supported on a riskweighted basis. d. If teachers are still in surplus, the district place tenured teachers who at least meet expectations on a list for reemployment in the first vacancy for which the teacher is qualified by training and experience to fill pursuant to TCA 49-5-511. e. Within a given performance level, the district use the following criteria to terminate (those not at least meeting expectations or lay off (those at least meeting expectations): i. Score within a given performance level (e.g. 2.1 vs. 2.4) ii. Average of last three years of evaluation scores iii. Extracurricular participation and other additional roles iv. Certification in a critical need area (e.g. special education, math, science, bilingual) v. Seniority 52. The district lobby the Tennessee legislature to amend TCA 49-5-511 which requires districts to place tenured teachers on a preferred re-employment list if they lose their jobs due to a reduction in force. The TCA should make no requirement regarding the continued employment of teachers, tenured or otherwise, who have lost their jobs due to reduction in force. In the area of voluntary transfer, the TPC recommends: 53. All teachers rated meet expectations or higher be eligible for voluntary transfer, subject to finding a mutual consent position 54. Teachers rated below meets expectations not be eligible for transfer 55. The district place no limitations on how frequently a teacher who at least meets expectations may transfer. The district should revisit this policy on an annual basis to ensure that it results in an equitable distribution of teachers, including: a. Analyzing teacher turnover by school to identify schools where teachers who at least meet expectations are those seeking to leave, with particular attention to high poverty and low performing schools (school-level TVAAS of 1 or 2) b. Conducting an exit interview of all teachers leaving their positions to determine the reasons they are leaving c. Analyzing exit interview data for schools with turnover of teachers who at least meet expectations d. Developing and implementing remedies that address the reasons teachers scoring meet expectations are exiting schools 56. Principals interview candidates at their discretion, with no obligation to interview internal or external candidates 57. All vacancies continue to be posted electronically and be accessible to both internal and external candidates. In the area of teacher compensation, the TPC recommends: 58. Effective teachers be identified, recognized and honored both financially and through other means

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59. Teacher compensation be redesigned to better attract and retain effective teachers, including attracting teachers to and retaining teachers in hard-to-staff positions, including high priority schools and critical shortage areas (e.g. math, science, world languages). Teachers with demonstrated and sustained effectiveness should be eligible for salary increases and career advancement. The teacher career framework should clearly articulate the associated performance requirements for such increases. 60. The district not base teacher compensation on degree attainment, which shows no correlation with student outcomes, either in local data or national research. The district should, likewise, not tie teacher compensation to professional development undertaken. 61. Teacher compensation reform be fiscally sustainable. No increases in total average compensation should be entered into without provision for the ongoing increase in expenditure. 62. The compensation reform process engage teachers, administrators, and other stakeholders. This engagement may be accomplished through focus groups and a targeted survey to establish a teacher value proposition that meets the aspirations of recommendations 1 and 2 of this section, and the financial constraints outlined in recommendation 4 of this section. 63. The district annually analyze the effects of teacher compensation and adjust go-forward compensation policies based on that analysis. In order to fund teacher compensation, the TPC recommends: 64. Teachers who have attained advanced degrees prior to the merger will continue to be paid for these advanced degrees in accordance with the pre-existing salary schedule and the requirement of Norris-Todd to not diminish the salary schedule of teachers. Teachers who have begun an advanced degree prior to August 2012 and finish the degree by August 2014 will be paid for these advanced degrees in accordance with the salary schedule. Teachers will not be paid for any other degrees attained after the merger date. 65. New teachers employed after the merger date will not receive additional compensation for degree attainment but will have the opportunity to receive additional compensation based on whether they teach in a high priority school, teach a hard to staff subject, or have demonstrated sustained effectiveness. 66. The district apply to use COLA funds for the purpose of differentiating compensation and in accordance with the flexibility the state plans to offer for this purpose. 67. Much of the financial responsibility for implementing the recommendations for effective teachers falls within the scope of the Bill and Melinda Gates Foundation Teacher Effectiveness Initiative grant to MCS. The TPC strongly supports the work of the TEI and its expansion to include Shelby County Schools. Further, the TPC recommends allocating $2.5M in 2014-15 and $2.6M in 2015-16 to support this work. See the summary of all investments in the Financial Model chapter. In the area of Priority 8a: Principal evaluation, the TPC recommends: 68. The districts work together to develop a principal evaluation model that meets state guidelines but better meets district needs, including: a. Developing a more robust rubric for principal observation to enhance TILS (Tennessee Instructional Leadership Standards) that includes school culture and climate, employee morale, and parental involvement but preserves current elements, including meeting

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nationally accepted standards and responsibility for professional development for teachers b. Developing a robust methodology for holding principals accountable for the quality of their teacher observations, including the quality of their feedback and suggested supports to teachers c. Developing a measure of the human capital decisions that principals make (e.g. selection, retention, dismissal) to add to the evaluation model d. Where relevant, aligning the principal evaluation with the teacher evaluation Priority 9: Effective instructional leaders (principals and assistant principals) In the area of Priority 8b: Principal professional development and support, the TPC recommends: 69. The district develop an annual strategy for professional development based on an assessment of the districts needs. The strategy should make consideration of each of the four types of professional developmentformal structured programs, team-based, one-on-one attention (including coaching and peer observation), and independent study. In constructing the strategy, the district should make use of needs identified by principal evaluation and student achievement data and seek opportunities to give principals professional development that is job-embedded and linked to specific development opportunities identified by the principals evaluation. It should make special consideration of the various responsibilities of the principal and how to balance them in order to achieve organizational effectiveness. The district should also seek to provide an array of learning platforms for the delivery of professional development. Further, it should consider whether and how the approach to professional development should vary based on the overall performance of the school. Professional development that does not meet needs identified in the strategy should be discontinued. Such strategy should be revised annually based on student achievement and principal efficacy data as well as on educational priorities. The revised strategy should then be reviewed with a committee of key stakeholders. 70. Each principal have an individual growth plan that is linked to his or her principal evaluation 71. Small group collaboratives be the districts primary approach to team-based professional development for principals. Time must be scheduled for principals to meet in their collaboratives at least once a month. Such time shall be focused on sharing successes and seeking assistance in addressing problems in implementing district initiatives. Where possible and when necessary, such conversation should be rooted in data and inquiry. Such planning time shall not be used for dealing with calendar, consequences, or content issues. In the area of Priority 8c: Decisions about who is a principal, the TPC recommends: 72. The district take the following actions to improve principal selection: a. Put differential effort into identifying and attracting candidates that are good fits for principal positions in high priority schools. b. Track the number and quality of graduates hired via each pathway and meet semiannually with the largest of them to provide feedback on their graduates. This feedback will also be shared with the State. 73. The district take the following actions to improve dismissal: a. Dismiss principals rated significantly below expectations b. Provide principals rated below expectations with intensive supports the next year. Those principals have that year to improve to meeting expectations or higher or will be dismissed. In the area of Priority 8d: Principal compensation, the TPC recommends:

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74. The district recognize and honor effective principals both financially and through other means 75. The district redesign principal compensation to better attract, reward, and retain effective principals, including attracting and retaining principals to high priority schools. Principals with demonstrated and sustained effectiveness are eligible for salary increases and career advancement. 76. Principal compensation reform be fiscally sustainable. No increases in total average compensation will be entered into without provision for the ongoing increase in expenditure 77. The compensation reform process engage principals and other stakeholders through focus groups and a targeted survey to establish the principal value proposition for merged SCS that meets the aspiration of recommendations 1 and 2 of this section and the financial constraints outlined in 4 of this section 78. The district analyze the effects of principal compensation and make adjustments to compensation policies based on learning Priority 10: Culture and climate of high expectations 79. The district employ reciprocal accountability throughout all levels of the district. For example, teachers hold students accountable for learning (e.g. through attendance and grades) and students hold teachers accountable for teaching (e.g. through a twice annual student perceptions survey that is part of the teacher evaluation). Likewise, the district holds principals and teachers accountable for performance (e.g. through performance evaluations with multiple measures, including student achievement and culture and climate of high expectations), and principals and teachers hold the district accountable for providing appropriate service levels (e.g. through a service provider satisfaction survey). The Board and Superintendent are also held accountable for performance. The Board and Superintendent release their progress toward meeting their goals at least twice annually. Additionally, for both the Board and the Superintendent, stakeholder feedbackboth from employees and from the communitybe collected and shared at least twice annually. In order to implement reciprocal accountability, the district continues to use or implement relevant instruments for collecting performance information between every reciprocal pair, for example, creating a survey on quality of service delivery of central office divisions since one does not currently exist. The district regularly use data from such instruments to inform instructional and administrative decisions and to set goals for continuous improvement. 80. Instruction start on the first day of school, and continue until the last day of school. The district and its community partners expect and communicate that it is not acceptable for students to show up when they are ready, and likewise it is not acceptable for instruction to end prior to the conclusion of the year. 81. The district create a Student Congress to represent the students of the district. Each middle and high school select a representative to the Congress in a well-publicized election. The student representative also serves on the student council for his or her school. Student representatives are responsible for effectively collecting, synthesizing, and prioritizing their peers input, as well as communicating back to their peers and their schools council the work of the Congress. District representatives give serious consideration to students input, meeting with them at least four times annually. Additionally, the district works to create a

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developmentally appropriate way to collect input from, train, and develop elementary school students to take responsibility for their voice in improving their learning. 82. The district celebrate and reward highly effective individuals and teams and dismiss individuals who are not able to meet expectations after receiving coaching and support

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EDUCATION PLAN: Administrative Organization

Organizational structure 83. The Multiple Achievement Paths model builds upon best and promising practices from the current districts and elsewhere, and it is tailored to the unique needs and context of Shelby County. The goal of this structure is to give each school, regardless of its status or location, the support and autonomy that will best enable it to deliver on the districts educational priorities. Multiple Achievement Paths Model

The TPC recommends that the organizational model have several key characteristics: 84. All schools within the district are held to common high performance standards 85. Most community and optional schools are managed in regions. 1 These schools receive autonomies from central leadership as a management practice. Some autonomies are granted to all schools, and others are awarded to a subset of schools. 86. The district works in close partnership with the ASD, which operates or contracts with operators for eligible low-performing schools. 87. ASD-eligible schools not in the ASD may become part of the Innovation Zone, which is managed by the district separately from the regions. These schools may be direct-run, or the district may choose to contract with outside operators. 88. The district authorizes schools that organize to become charter schools (new or conversion), as provided for in Tennessee Code Annotated. The district oversees a rigorous charter school application process, which ensures both educational quality and equitable access for students.

Starting point is six regions: the four current MCS regions plus SCS divided into two regions. Number and alignment of regions is subject to change based on number and locations of schools moving out of the regional structure (including ASD, municipal, and/or charter)
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89. The district provides high-quality, cost-effective support services. In addition to serving all district-operated schools, the district builds the capability whereby it may enter into service agreements with charter, ASD, and (should they exist) municipal schools in order to maximize economies of scale. See Operations Plan chapter for further explanation of shared services model. The Multiple Achievement Paths model does not include a change in the districts high-level governance. The SCBE continues to provide policy governance and oversight directly to the Superintendent and administration. The Board continues to oversee the management of districtoperated schools and holds decision-making authority (subject to applicable law) to govern the granting of charters to charter schools authorized by the district. The model also envisions that the ASD continues to be overseen by the State of Tennessee as provided by law. Central office design The design of a school districts central office should reflect the districts greatest priorities and how the district intends to ensure every student has the instruction and support he or she needs to be successful. The central office also should address the unique local context. 90. In this light, and in the context of the Multiple Achievement Paths model, the central office in the merged SCS district must fill six roles in order to perform exceptionally well: a. Take all necessary action to ensure that an increasing number of students have access to effective schools and teachers. This requires strategic action at both the individual employee and school levels. At the individual level, the central office will prioritize the district's efforts to recruit, retain, and develop effective teachers and leaders (see Education Plan: Educational Services recommendations). At the school level, the district should seek to create and expand high performing or high potential schools (district operated or charter schools), and should look to seed them strategically in areas of the district where they are most needed. Additionally, the district will intervene by bringing schools into the Innovation Zone or by closing schools when those schools are not providing students with high quality opportunities. b. Support high-quality instruction in district-operated schools. The academic and student support functions of the regional offices and central office should exist to serve the needs of district-operated schools. The district will maintain a central focus on quality instruction, both by ensuring that schools are staffed with effective teachers and leaders and by providing support to teachers, principals, and staff to help them develop their skills over time. The district will manage the administrative burdens it places on schools and should aim to keep decision-making as close to students as possible (see subsection below: School autonomies and responsibilities). c. Work in close partnership with charter schools and the ASD. Within the Multiple Achievement Paths model, the TPC expects that fulfilling the first function above increasing the number of students who have access to effective schools and teachers requires the district to work closely with the ASD and charter schools. This partnership requires that the district, the ASD, and charter schools exchange services, share best practices, develop fair funding arrangements and policies, and coordinate communications with families and the community. d. Measure performance. Another central office role within the Multiple Achievement Paths model is to promote and provide common metrics, platforms, and processes for measuring performance at the individual employee and school level. At the school level, the district should ensure that common metrics are used to measure the performance of districtoperated, charter, and ASD schools, and that metrics include both status and growth measures to account for schools' different starting points. At the individual level, the district should continue its progress in improving teacher and principal evaluation (see Education Plan: Educational Services recommendations).

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e. Provide high-quality operational and support services. For the sake of efficiency, scale, and preserving principal time to focus on instructional leadership, the central office is in the best position to provide operational services to schools. In the Multiple Achievement Paths model, the district seeks to provide high-quality, cost-effective services to district-operated and, for a fee, non-district-operated schools (including charter, ASD, and municipal district schools, should they exist). f. Ensure compliance, fiscal responsibility, and equity. The central office has a responsibility to ensure compliance with laws, regulations, and policies, to ensure that funds are spent wisely, and to ensure all students and families are treated fairly. More than any specific organizational chart, the TPC recommends that the district office be organized to support these critical roles. The TPC recognizes that the merged SCS district's Superintendent should have discretion to design the district central office in a way that fits his or her management approach. Accordingly, the TPC is comfortable with reasonable variations from the model described in this section provided that the adopted design supports the roles above and includes and embraces the distinctive functions below. Note, however, that all financial assumptions in the TPC report are based on the model described in this section, and any changes to this model may have a differential cost impact. 91. The TPC recommends that the Superintendent have 810 direct reports. The proposed organizational chart for the Superintendent and his or her direct reports is pictured below. The next chart illustrates the functions that sit in each department in more detail. Recommended Organizational Chart

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Detailed Recommended Organizational Chart

There are many critical functions that a school district central office performs. This section aims not to describe all of them, but rather to describe functions in the TPC's design that are less common among central offices and/or represent a distinct choice among multiple options: 92. The TPC recommends that the merged district create Regional Offices as below: Recommended Regional Office Design

The regional office design is focused on two critical roles. The primary role of the regional office is to foster and develop greater instructional leadership among principals. In addition, the regional office has an important role in supporting parent, family, and community engagement. This design intentionally excludes some other functions sometimes found in regional offices, including professional development and school operations. See further description of recommendations on professional development for teachers and for principals. See further description of recommendations on shared services, which include school operations. The regional offices report to the Chief Academic Officer in order to ensure that the academic expertise in the central office is deployed in direct support of the schools. Although this means that Regional Superintendents do not report directly to the Superintendent, they should nonetheless be a part of the Superintendent's cabinet and core leadership team.

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Regional office staff members each play a role in supporting the purpose of the office: The primary role of both the Regional Superintendent and Director of Instructional Support is to provide ongoing support to principals in honing their instructional leadership through planning, goal-setting, professional development, and advising principals on staffing decisions. In addition, these staff members evaluate principals and play a significant role in principal selection and dismissal decisions. 2 Assuming regions vary in size between 26 and 46 schools, each Regional Superintendent and Director of Instructional Support will manage 13-23 principals. The Parent and Community Liaison, with the support and guidance of the Regional Superintendent, interacts with parents and support schools in their collaboration with parents and community organizations. This role also helps the Regional Superintendent and Director of Instructional Support to keep their primary focus on instructional leadership. The Administrative Assistant provides administrative support to the other staff members in the office, and will serve as a first-line responder to questions, comments, and concerns from parents and community members. Finally, as an extension of the regions core roles, the Regional Superintendent ensures that the regional office supports the effective transitions of students between schools (e.g. elementary to middle school, middle school to high school) and helps to facilitate and promote strong communications within the district. Regional Superintendents and Directors of Instructional Support are critical to the success of this regional model, and finding the right people for these positions is critical to its success. Over time, as the district builds its pool of school- and region-level instructional leaders, the district may want to consider adding additional Directors of Instructional Support in order to decrease the number of schools supported by each Regional Superintendent and Director. Geographically-aligned regions additionally allow for entire feeder patterns and smaller municipalities to be managed as a whole to foster collaboration between schools within the community. While the TPC has not drawn specific boundaries for the new regions, the TPC recommends six regions with the following three features: Dividing the district into six regions. As a starting point, this division can be accomplished by using the current four MCS regions and dividing the current SCS into two regions. Keeping entire municipalities (excluding Memphis) in the same region and keeping entire feeder patterns intact Equalizing the size of the regions to include approximately the same number of schools in each The TPC recognizes that as the number of district-operated schools changes, the size and number of regions may necessarily vary. The TPC recommends the SCBE revisit the time and number of regions in advance of the 201314 school year. The TPC estimated that the cost of the regional office recommendation is cost-neutral. This is because the size of the regional office in this recommendation is smaller than what currently exists in MCS, and so adding two regions redistributes the same number of staff cost across more regions.

The definition of instructional leadership used throughout the Transition Plan follows: Working intensively and continuously with teachers to examine evidence of the quality of their teaching and to use that evidence to improve how they teach. Interviews with other districts and a review of academic literature highlighted the importance of the regional superintendent working with principals closely to develop these skills. Honig, Meredith. District Central Office Leadership as Teaching: How Central Office Administrators Support Principals' Development as Instructional Leaders. Educational Administration Quarterly. April 2012.
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93. The TPC recommends that the merged district create an Office of Innovation as below: Recommended Office of Innovation Design

The purpose of the Office of Innovation is to ensure that the district is able to provide more highquality school options for more children, through traditional and non-traditional Achievement Pathsincluding charter schools, Innovation Zone schools, and community schools. To that end, the Office of Innovation will ensure that all types of schools have the access to innovative approaches that are effective. The Office of Innovation encompasses several roles, each represented by a report to the Chief Innovation Officer: Regional Superintendent of the Innovation Zone: Manage the turnaround of low-performing schools with Innovation Zone status. This group will start with six schools in 201213 and could grow to 35 schools by 201516. Director of Charter Schools: Support the authorization of charter schools and monitor their performance over time Director of District Innovation: Ensure school-level innovations are shared district-wide, so that all schools can benefit from the best practices of other schools Director of Operations: Support Innovation Zone, charter, and ASD school operations; work in collaboration with the Chief Services Officer to develop a flexible services model to accommodate schools that have the option of purchasing district services (and over time, schools that have the option of opting out of district services) Given this office is different from what either MCS or SCS have today, the TPC estimated the incremental cost to staff this office is $1M, which will be funded by grant-funding. 94. The TPC recommends that the merged district create an Office of Planning and Performance Management The purpose of the Planning and Performance Management Office is to have a consolidated, districtwide view into performance, enrollment, and student needs across the districtand across all school types. This Office supports the district, Superintendent, and SCBE in strategically managing the creation of new schools, school closings, and the transition of schools from one path to another. To support the purpose of this office, the TPC recommends that the following functions sit within the Planning and Performance Management Office (function descriptions are illustrative, not exhaustive): Planning: Understanding trends in demographics and student needs, and developing strategies to meet those needs. Working closely with Finance to understand how available resources can be allocated to meet different needs. One critical planning role is studying the access all

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students have to high-quality school options. The Office should develop plans to increase the number of quality school options available to students who currently have fewer quality options. Performance management: Developing and tracking common metrics across all schools of all types, and determining appropriate differentiated responses. Coordinating with human capital function to align school and central office performance management with performance management practices at the individual employee level. Research and evaluation: Conducting strategic research and program evaluation to help the district evolve and refine its practices over time Enrollment and student data: Managing and coordinating the forecasting, tracking, and reporting of enrollment and other student data Special projects: Leading strategic projects that require cross-department collaboration Transition management (sunset this function approximately two years after merger): Coordinating implementation of the merger transition, including tracking progress against milestones, overseeing coordination processes, holding owners accountable for transition activities. See more detail in the Migration Plan chapter.

Given this office is different from what either MCS or SCS have today, the TPC estimated the incremental cost to staff this office is $1M. 95. The TPC recommends the merged district create a Human Capital Office, as below: The Human Capital Office is an intentional departure from the traditional human resources function found in most school districts. First, it reports directly to the Superintendent, elevating the importance of this office and its critical role in student achievement. Second, and more importantly, it is designed to emphasize a strategic, fully-integrated approach to human capital within the district. Its key roles include: leading the implementation of teacher, principal, and staff evaluations; partnering with the Academic Office to provide targeted professional development aligned with standards and needs identified by employee evaluations; supporting school leaders in making critical human capital decisions (e.g. hiring, dismissal); running a strategic selection and staffing process; managing transfer, layoff, and dismissal processes; setting compensation packages; administering benefits; and managing employee grievances. This office would lead the district's continued work in the areas of effective teaching and leadership. See more detail in the Education Plan: Educational Services chapter. 96. The TPC recommends that the merged district create a Services Office: The purpose of the Services Office is to manage the district's operational services by providing highquality cost-effective services across different school types (including district-operated, charter, and ASD schools). In the Multiple Achievement Paths model, the Services Office will seek to variablize costs and create transparent pricing to facilitate the transition to a model where a number of its customers are non-district-operated schools. This will be critical over time as more schools transition into the ASD and the number of charter school grows. See more detail in Operations Plan chapter recommendations on the shared services model. School autonomies and responsibilities The concept of school-level autonomy is central to the Multiple Achievement Paths model. While charter schools operate with contractual autonomy, the TPC believes autonomy is an important concept in other schools as well. The TPC recognizes that different levels of autonomy will be appropriate in different schools and, accordingly, puts forward four recommendations: 97. The district design the central office and its operational services in a way that is flexible to provide fee-based services to autonomous, non-district-operated schools (including charter, ASD, and municipal district schools, should they exist). In general, it is to the district's advantage from a financial and planning perspective to offer services to other operators.

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98. The district should embrace a range of approaches (and potentially, outside operators) in its Innovation Zone schools. These schools, which have been identified among the lowest performing 5% of schools in the state, have unique needs which should be addressed through innovative approaches. As such, Innovation Zone schools should have highly-talented leaders and leadership teams who are granted autonomy particularly in areas related to instruction. Although many details regarding Innovation Zone schools are in the process of being determined, some details are known. The Innovation Zone schools will, for example, operate with extended learning time and, likely, with other instructional approaches that are different from other district-run schools. 99. For community and optional district-run schools that operate within the regional structure, the TPC recommends a differentiated approach to autonomy. This will start with what is referred to in the exhibit below as Extended instructional responsibilities, which will be granted to principals and schools that demonstrate success or put forward strong proposals for how the additional flexibility will lead to improved student achievement. It is important that proven leaders with strong plans be given autonomy; autonomy should not be reserved for schools that already have strong performance. Initially, district operated schools will not have autonomy to opt-out of district-provided services in the Operations category, though over time, district leadership may choose to extend autonomy in this area to principals and schools who have the demonstrated expertise and interest to make those decisions for their school. 100. The TPC believes that principals should be responsible for instruction and human capital within their building. Given that, the TPC recommends that all responsibilities in the School-site instructional category, which includes decisions about who fills teaching and support roles in the school, be granted to all principals (see Education Plan: Educational Services chapter for recommendations on principals). District and school responsibilities

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Autonomies and responsibilities across operators

Student assignment Student assignment includes both the assignment of students to schools based on where they live as well as the option that students have to transfer into a school of their choice. The TPC strongly values stability, student/family choice, and equity in student assignment, and makes the following recommendations: 101. Preserve current student attendance zone assignments through at least the 201415 school year. This would not apply: a. In locations where schools are closed (e.g. due to low enrollment) b. In locations where new schools are opened (one planned for 201314 school year in Southeast Memphis) c. To changes approved by the SCBE prior to the district merger d. In areas impacted by the creation of municipal school districts, if such districts are formed 102. Maintain and expand current transfer types to the entire district starting in the 201314 school year. a. Prioritize (child of) employee transfers, optional program transfers, final year transfers (following the current MCS definition), sibling transfers, and academic transfers (following the current SCS definition) on a space-available basis b. As a second priority, allow transfers for any reason on a space-available basis c. The Superintendent may continue to allow additional transfers (e.g. safety transfers) on a case-by-case basis 103. Institute a lottery system for situations where the number of transfer requests exceeds the available spots in a given school/program. 104. Over time, include charter and ASD schools (in addition to district-operated schools) in a centralized enrollment system that is developed and managed in partnership with ASD and charter school leaders.

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Schools footprint The Transition Plan includes at least four different sets of recommendations that impact the schools footprint: the number, size, location, focus, and attendance policies of schools in Shelby County: Multiple paths: Embrace multiple types of schools (multiple paths) that help students achieve at high levels, and hold all schools to common high performance standards Strong community schools: Value strong community schools, and guarantee students a spot at their zoned school Quality and equitable choices: Preserve and expand school choice. Some schools and programs draw from the entire district, and all schools accept student transfers on a space-available basis. Transfers and enrollment are be managed centrally, and the district utilizes a lottery when demand exceeds spots available Efficiency that enables support: Reduce the number of below-capacity schools, in order to ensure that all schools have the resources they need to lead their students to success

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OPERATIONS PLAN
Custodial General Fund Migrate to the SCS model of outsourced custodial services through a proven service provider with experience in K12 school districts. 105. Initiate a competitive Request for Proposal (RFP) process to select a custodial contractor and incorporate language in RFP that encourages the contractor to preferentially hire current district employees for new roles 106. Fully outsource custodial services and supply/equipment purchasing a. Create clear quality measures and a system of performance evaluation for the contractor that includes gathering feedback from facilities management, principals and other district staff b. Ensure that the contractor preferentially hires current district employees Note: The TPC does not have an inherent preference for outsourcing, but recommends outsourcing this service because there is no evidence the district can achieve the same level of cost savings in-house 107. Maintain an in-house operations management staff presence at the school level that is shared between schools and reports to both facilities management and the school principal. This will result in one building manager for every two schools. Move grounds maintenance responsibility to centralized maintenance staff in SCS (this reduces the scope of the role of the plant manager). This is the current model in MCS Both MCS and SCS will have a significant number of employees eligible for retirement before the merger date. The TPC recommends advising employees of their rights under their current employment prior to the merger, and the details of their retirement eligibility and benefits after the merger. As provided by Norris-Todd, accrued pension benefits are expected to remain. Utilities General Fund In both districts, continue current model of sourcing power and electricity through MLGW, and implement the following incremental recommendations: 108. Pursue a Board-approved demand management policy to reduce school level energy usage, and provide financial incentives and penalties to schools based on level of compliance a. Policy enforced through inspections that carry financial incentives for schools that meet outlined standards b. Policy focuses on reducing plug load based on classroom-level appliances (e.g. microwaves, foot warmers) left plugged in over the course of the year 109. Dedicate at least one staff member for the entire district to energy management to help enforce school-level energy policies, and pursue other energy efficiency opportunities such as grants for energy efficiency investments Special Revenues Fund 110. Pursue grants to support energy efficient investments

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Maintenance General Fund 111. Continue the deploy as needed service model used by both districts today, and implement the following incremental recommendations. Push major purchases of maintenance equipment and supplies through the procurement department (savings potential estimated in procurement sub-committee) Capital Fund 112. As capital funds become available, prioritize the following capital maintenance projects: a. Capital improvement needs b. Deferred maintenance c. IT projects that can be capitalized Capacity Utilization 113. To address under-utilization, analysis indicates an opportunity for at least 20 school closures prior to the start of the 2013-14 school year. This would raise the utilization in the current Northwest and Southwest regions of MCS from ~58% to ~86%. The TPC recommends: a. At least 6 schools in the current Northwest region of MCS (suggested split of three elementary, one middle, and two high schools) b. At least 14 schools in the current Southwest region of MCS (suggested split of seven elementary, five middle, and two high schools) 114. To address overcrowding at schools in eastern Memphis, the TPC recommends: a. Enrollment shifts in and near Cordova for both elementary and middle school students b. New school construction (as slated in a new elementary school in the current Southeast MCS region c. Use of capacity utilization as one input among others in location planning with charter schools Transportation General Fund Adopt MCS model of outsourcing transportation services to a proven service provider with experience in K12 school districts, and adopt the SCS model of three bell times to maximize utility of the bus fleet. = 115. Initiate a competitive RFP process to select a transportation contractor and incorporate language in RFP that encourages the contractor to preferentially hire current district employees for new roles Note: The TPC does not have an inherent preference for outsourcing, and recommends outsourcing this service because there is no evidence the district can achieve the same level of cost savings in-house (with the exception of special education transportation). 116. Sell the current SCS fleet 117. Maintain an in-house staff comprised of management, routing capability, and administrative support 118. Adopt the SCS model of three bell times Purchasing 119. The TPC recommends the district pursue strategic sourcing & vendor consolidation

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Priority spend categories for strategic sourcing were identified by evaluating the addressability of the largest spend categories. These areas are shown in the next chart and include: repeat construction/capital maintenance, IT hardware, maintenance supplies and equipment, classroom supplies, instructional services, professional development, and print services. The identified addressable spend totals $104M which breaks-down across all three fund types: $40M in the general fund, $17M in special funds, and $47M in the capital fund. In particular, SCS and MCS have a unique opportunity through the merger to conduct a formal contract-compare. The goal is to ensure that the new district receives the best prices, terms, and conditions in major spend areas when compared to previously negotiated contracts by MCS or SCS by taking advantage of the newly increased purchasing volume. Additionally, a targeted look at the number of vendors utilized in each category will likely yield savings. For example, within MCS alone, more than 500 vendors provide IT hardware, while more than 400 vendors provide classroom supplies. Vendor consolidation offers opportunities for price negotiation, decreased shipping costs, and savings on administrative functions. In the general fund, estimated savings on a base of $40M is $6-8M which would come from achieving 15-20% in efficiencies. The estimated percentage savings are based on procurement best practices from other school districts and the private sector and estimates from Memphis and Shelby County district staff. Sourcing actions for priority areas Repeat construction: Vendor consolidation, standardizing specifications and designs, and scaling demand for repeat constructions (e.g. HVAC repair, re-roofing). Best practice is also to evaluate different efficiency levers for material, labor, and overhead IT hardware: Supplier consolidation (over 500 vendors today), standardizing specifications, and bundling volume across both districts Classroom supplies, instructional services, professional services: Pooling demand on schoollevel purchases, performing a more detailed assessment of school-level buying need Print services are currently provided in a fragmented way throughout the districts. Some printing and printer purchasing is done centrally, while other small printers are purchased at the school or classroom level. The districts have identified that there is potential for savings in this area through more optimized management of print services (e.g. more central printing, fewer classroom printers) Maintenance supplies: Pooling demand and optimizing stock levels

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Strategic Sourcing Against Priority Categories

120. Improving spend visibility through technology and/or p-cards MCS has over 190,000 annual transactions under $500 (totaling $18.5M in spend), and SCS has over 11,000 annual transactions under $500 (totaling $2M in spend). Since most of these purchases do not require advanced purchase orders, merged SCS will invest in procure-to-pay technology and procurement cards (p-cards) to give comprehensive visibility to this and other dispersed spend, as well as to enable the strategic sourcing levers mentioned above. Such investment is expected to reduce transactional overhead costs. While MCS has some technological capabilities, they are not integrated and thus are difficult to use effectively. An investment in a fully-integrated e-procurement system, such as Ariba or Basware (industry leaders in procurement software that is capable of integrating with existing financial systems), is a critical step towards enabling strategic sourcing activities. Industry-leading systems provide visibility into transaction history which allows for more detailed spend analytics, encourages district personnel to buy from a catalog of pre-negotiated options, and enables the establishment of work rules to determine which expenditures go straight to suppliers and which expenditures get flagged for strategic buyer review. In addition to an e-procurement system, the use of p-cards may be a good way to gain further visibility into the over 200,000 transactions under $500 that occur today. In order to achieve this visibility, the district will specify the need for the transaction-level data to mirror as closely as possible purchaseorder data (e.g. unit of measure, order date, price) with the p-card vendor. This will enable the Purchasing Committee to conduct more comprehensive analytics. P-cards have been implemented in several other large urban districts. In these districts, controls such as sign-off at various seniority levels and disciplinary action for failure to follow p-card policies have been put in place to address concerns about potential abuses in p-card usage. Information Technology General Fund 121. Core Systems a. Adopt the go-forward models outlined in the table below. b. Reduce level of core systems support as investments in less support-intensive systems (e.g. APECS) come to maturity.

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Core System Email

Proposed Future State Exchange (staff), Google docs (students)

One-time impact

On-going impact - $47,000 (MCS annual general fund payment for gaggle) Cost neutral (some savings potential when at scale) TBD Potential savings after competitive bid

Additional Considerations Ramp up period required to launch and support Google docs

IT Security

Anti-Virus Sophos, Authentication Active Directory

+ $65,000 (already invested)

Network

Competitive RFP N/A process for joint vendor; subsidize through e-rate N/A

Maintenance Work- SchoolDude Orders Student Information System / Student systems Chancery (pending changes to PowerSchools' capabilities)

Cost neutral (some Transfer to MCS savings potential support structure when at scale) (separate help desk) Cost neutral (some PowerSchool savings potential currently not when at scale) designed to serve large school districts

TBD depending on transfer of PowerSchool licenses to Chancery

Data warehouse

OtisEd

+ $1.6M (already + $2.1M (already On-going cost approved by approved by school estimate is likely school board) board) high given estimate is 25 data coaches that split their time amongst projects As needed VOIP will likely require less support at scale

Phone

Connect current systems and slowly upgrade SCS to VOIP

Document Imaging Pre-work to establish + $24M (based Potential for document strategy, on potential $600K+ in savings joint RFP for new license fees, from transitioning system, and dedicated consulting fees, away from current FTE to manage system temp work) MCS system when in place IT Lifecycle Competitive RFP for a +$11.5M +$60100K Management product with help (maintenance fees), (including help ticket, power however long-term tickets) management, savings expected in inventory, and virtual level of IT support IT capabilities (similar required and to Numara Footprint utilities based on Suite) power management Parent Notification Move SCS to Parent Systems Link N/A N/A Cost and quality comparable but MCS Parent Link currently has double the users so there will be lower training needs About $400 differential in fees per school-site Costs will depend on level of investment in new system

Library Automation Medical Claim Management

N/A Choose between existing systems in year Low (TBD) 2 of merger

Under $100K savings / cost increase Low (TBD)

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Core System Proposed Future State One-time impact On-going impact Student Continue w/ Discovery N/A Cost neutral (some Assessment System formative assessments savings potential barring change in policy when at scale) from academic team Risk Management Develop in-house risk N/A N/A management program to serve the needs of both districts Teacher Assessment Technology needs to be TBD determined after decision is made on goforward model TBD

Additional Considerations

Based on HR recommendation but since both systems currently have the same model, the costs of merging are not expected to be high Implementing central kitchen model expected to carry IT investment of under $500K (funded out of nutrition budget) Costs will depend on level of additional investment in new system Since both systems currently have a routing system, this is expected to be cost neutral

Nutrition

Horizon One-Source Covered out of Covered out of (front of house) surplus (Special surplus (Special revenues) revenues) In-house written (back of house)

Safety and Security To be determined Low (TBD) during implementation

Low (TBD)

Transportation

To be determined Low (TBD) during implementation

Low (TBD)

HR/Finance/Payroll Migrate to APECS barring setback in process mapping exercise Asset Management TBD

$12-15M Long-term savings including license in level of core fees, migration, system support and consulting required services TBD This system was identified later in analysis and recommendation work is in-progress

The APECS migration that is recommended for an integrated HR/Payroll/ Finance system is one that requires a substantial investment. The estimated $12M15M capital investment needed is estimated based on conversations with the vendor and is comparable to what other districts are spending on mid-level ERP systems. The business case for investing in APECS as a single HR/Payroll/Finance system includes: Reducing system complexitythere are currently over 30 mainframe-based systems in MCS that serve the functionality of what APECS does for SCS. A fragmented systems architecture leads to the need for an increased level of support Reducing the required level of service supportthere are approximately 14 staff members in MCS who support the mainframe systems, but it is believed that only half that number would be needed with a transition to APECS. Only three staff members support APECs for SCS today

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Enabling employee self serviceAPECS is an easy-to-use system that enables employees to view and analyze data in an efficient manner; the complexity of the MCS mainframe restricts self service Enabling more efficient cross-functional analysiswith a single backbone, analytics that cross HR and Finance are more efficiently completed on APECS than a mainframe system that often requires manual coordination of data from different systems

The TPC strongly recommends an investment in the migration towards APECs for the reasons mentioned. The TPC also emphasizes the criticality of this investment for Day 1 and that the migration process must begin well in advance. Without an integrated HR and Finance system for Day 1, the district will risk: Inability to accurately pay staff Absence of a central repository from which to assign school staff Absence of common data metrics and reporting capabilities from which to inform important decisions (e.g. assessing cash flow problems prior to the County distribution of local revenue in January, assessing whether the right level of revenue is passing through to charter schools, determining whether all critical central office positions are filled in merged SCS) Inability to conduct a joint audit without significant manual coordination Lack of a single dashboard view of where students are enrolled, which is even more important given the Multiple Achievement Paths organizational structure Requirement of significant administrative and IT staff time to bridge data gaps between multiple systems 122. IT Support Model. Move to a less resource-intensive help desk model enabled by investments in IT life-cycle management technology. Migrate the position of dedicated school-based IT resources (currently present in SCS) to a centralized, deploy-as-needed help desk model. Make investments in IT life-cycle management technology to better enable remote/virtual IT support. Reduce total IT support personnel as remote/virtual IT capability comes to scale 123. Instructional Support Model. Adopt decentralized (school-based) instructional support model with small virtual professional development team. Scale-up the position of dedicated schoolbased instructional technology resources (currently present in SCS) at an average of 1:3 schools. Deploy based on school size. Scale down virtual instructional technology team (current present in MCS) to a smaller team responsible for capturing professional development performed by dedicated resources and posting those videos on a website available for teachers. Together, recommendations for IT support and instructional technology should be budget neutral. Special Revenues Fund 124. Apply for joint e-rate reimbursements for all possible systems and applications. Safety and security Maintain current blended security model of district-funded security officers and local law enforcement: 125. Continue to employ security officers and law enforcement officers in merged SCS in similar proportion to their presence across both individual districts today. 126. Keep the total officer-to-student ratio relatively unchanged, subject to revisions following a joint needs assessment by the district security staff, the Sheriff's office and the Superintendents. This is recommended as the first step in the implementation process.

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127. Continue to operate security technology (e.g. access management, security cameras) in house to maintain confidentiality of student information. 128. Maintain and deepen current safety programming and pupil services as part of the student services department. Special Revenues Fund 129. Continue to seek government grants to fund proactive Safety & Security programming (e.g. Safe and Drug Free Schools). Nutrition Special Revenues Fund 130. Adopt the central kitchen model (current MCS model) across the merged district: a. Continue efforts to incorporate fresh and local foods into meals. b. Use budget surplus to upgrade central kitchen to improve quality and efficiency. c. Continue programs to expand school breakfast and dinner programs. d. Consider opportunities to expand offerings to other school operators as long as these efforts generate revenue that can be reinvested in the food services department or the general fund of the merged school district. Shared services In structuring a shared service function, the TPC recommends the following design principles: 131. High-quality service a. Customer service: Based on interviews with the ASD and local charter schools, customer service from a vendor is often more important than price. The merged district will explicitly focus its attention on customer service processes and policies in order to successfully implement shared services. This may include customer service training, rewriting process maps for incoming school inquiries, and/or new mechanisms for customer communications, such as having a customer hotline. b. Accountability: In addition to ensuring customer satisfaction, the district will ensure highquality service provision. Accountability for exceptional service quality begins with basic internal quality control mechanisms and metrics, but additionally should include regular feedback (surveys or meetings) from customers. This feedback should then be used to modify services in a cycle of continuous improvement. c. Customer advisory council: The TPC recommends creating an advisory council, including representatives from the district and the other operators who are potential customers. The goals of this council initially would be to identify the best near-term service offering opportunities, to provide support for establishing customer service and accountability metrics, and to determine when and how contracts can be terminated by either party bearing in mind the associated consequences. In the long-term, this council would foster collaboration between operators in the district to benefit all children. 132. Transparent, fully-loaded prices and financial controls a. Fully loaded prices: Prices for all services will comprise of the cost of materials and labor for the direct service and the overhead costs to deliver the service. The District will need to inventory all administrative costs associated with providing particular services, divide those cost by all students who receive the service (district and non-district), and then charge this total to all external customers on a per student basis. Any service that is selected for a shared capability should be cost neutral or better at minimum; if there is risk of financial loss, the district should not build it as a shared service capability. b. Transparency on cost of last minute decisions: The district will set a strict schedule for schools and operators to opt-in to a given year's services. This will allow for the district to have an accurate volume estimate when establishing vendor contracts or changing internal

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resource allocation. If an operator cancels its contract after the deadline, any expenses that are incurred because of the change should be the responsibility of the customer. c. Separate fund for shared services: The district may want to consider establishing a separate fund for shared services which would house all overhead costs related to shared services. This would not only make it easier to be transparent on overhead costs to other operators, but also encourage this function to be financially self-sustaining 133. Flexibility to meet schools needs Flexibility was another key characteristic mentioned by the ASD and charter schools in selecting their preferred service vendors. In some instances this flexibility may come with an added cost to the customer. For example, the ASD and charter schools have expressed interest in purchasing transportation services from the district, but they are likely to have different bell times than districtoperated schools. If separate vehicles are required to provide this differential service, the District could still consider providing this flexible option with an additional cost. In the near-term, the TPC recommends that the district keep its menu of service offerings simple in order to give the district sufficient time to achieve stability and steady-state operations upon merging. However, as the district improves its understanding of the needs of other operators, it should contemplate how to strategically offer different service packages (that are priced accordingly) to meet varying needs. 134. Organizational capabilities a. The TPC recommends that in the first three years of the merged district, strategic planning and cross-functional support for shared services could be provided through a dedicated leader under the Chief Services Office and a liaison role in the Office of Innovation. The recommendation to house the lead role in the Chief Services Office is based on interviews that suggest that the strongest near-term appetite from the ASD and charter schools to partner with the district is in operational services (e.g. transportation, custodial, nutrition). b. During this time, the leadership team of each department providing shared services will need to expand its vision, planning, and execution to include service provision to multiple operators. This represents a significant shift in the districts' operations mindsets, therefore the TPC recommends that the strategic leader first focus on communicating shared services management best practices to the district and focus on helping to identify and develop the district's skills and capabilities in customer service, pricing, and accountability to quality standards. In the longer term, as more departments begin to offer shared services (see description of gradual roll-out below) and more operators buy the services, it may be appropriate to expand the district's strategic and operational capabilities in this area. c. Because shared services is a new operations mindset for most departments in the district, it will take experience and focused leadership to implement successfully. The TPC recommends a phased roll-out over the first few years of the merged district, with services offered in FY2014 primarily those that are currently prepared to service multiple operators. Services that are currently or planned to be outsourced, and thus have greater flexibility in terms of service volume, are also good starting points. The specific shared services for FY2014 will need to be determined with enough lead time to enable contracts to be set-up for the right volume levels. The ASD and charter schools have expressed interest in a broad range of services, and thus in the long term, the district can expand offerings to a full spectrum of operations and academic services. Below is an illustrative roll-out:

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d. For merged SCS to achieve stability, the TPC recommends no opt-out option for districtoperated schools in the first several years. In the long-term, in line with the Multiple Achievement Paths model, the district may choose to selectively offer opt-out opportunities for district-operated schools. We recommend carefully monitoring operator interest in particular services and holding internal departments and outsourced vendors accountable for service quality and price to guarantee that an opt-out program would not mean a sudden flight of schools and decrease in service volume (thus impacting cost for remaining schools).

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PERSONNEL MODEL
In the area of central office staffing, the TPC recommends the district: 135. Set a target of $14.3M in savings from central office staffing. This is approximately 26% of the current spending on general fund central office personnel. As a proportion of all central office staff including special-fund positions the reductions recommended in the Plan represent an approximate 19% reduction in current central office spending. See the summary of all efficiencies in the Financial Model chapter. 136. Ensure that all central office employees receive an annual evaluation that includes multiple measures, including feedback from their supervisors, customer satisfaction data, and performance against key metrics. In the area of school staffing, the TPC recommends: 137. Implementing school closures consistent with those outlined in the Operations Plan chapter in order for school staffing both to serve children better and to make more efficient use of funds. 138. Investing in the following areas: a. Increasing the number of school counselors by adopting a policy similar to the current SCS policy, but driven by ratios based on enrollment. This increase will add 25% more counselor positions to elementary schools in both districts and 25% more counselor positions to high schools in MCS. This recommendation adds about 60 school counselor positions across the merged district, at a cost of $4M. See the summary of all investments in the Financial Model chapter. b. Increasing the number of assistant principals by adopting a policy similar to the current SCS policy, but with elementary schools under 500 students sharing an assistant principal. This recommendation adds about 18 assistant principal positions across the merged district, at a cost of $2M. See the summary of all investments in the Financial Model chapter. c. Increasing the number of special education clerks by allocating one special education clerk to schools with 150 or more special education students, 0.5 special education clerks to those with 25150, and 0.2 special education clerks to those with fewer than 25 special education students. This recommendation will require schools with a smaller number of special education students to share a clerk. This recommendation adds about 70 special education clerk positions across the merged district, at a cost of $2.5M. See the summary of all investments in the Financial Model chapter. 139. Reallocating existing staff in a cost neutral way to serve different functions in the following areas: a. Ensuring every middle and high school has an in-school suspension aide. In the shortterm, elementary school in-school suspension aides may have to be shifted to middle and high school in order to implement this policy. b. Ensuring that every school has three hours of dedicated clerical staff time each day to take accurate attendance by prioritizing and protecting use of clerical staff time for this purpose. 140. Setting school staffing ratios in a cost neutral way in the following areas: a. K12 teachers b. Instructional specialists and coaches c. English as a Second Language teachers d. Elective teachers e. Vocational teachers

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141. Continuing similar approaches in the following areas: a. Special education teachers b. Special education assistants c. Psychologists d. Occupational and physical therapists 142. Seeking cost savings in the following area: Staffing librarians in line with the minimum guidelines of the Southern Association of Colleges and Schools. Schools with fewer than 250 schools will be allocated 0.5 librarians (meaning two schools share a librarian), and schools with more than 250 students will be allocated one librarian. This recommendation eliminates about 40 librarian positions across the district, for a cost savings of $3M. See the summary of all efficiencies in the Financial Model chapter. 143. In the staffing of school programs and the provision of services, principals will be sensitive to the needs of under-achieving students 144. In the area of compensation, the TPC recommends meeting the legal requirements of Norris-Todd with respect to salary schedules by: a. Not lowering the salary schedule of any individual who is in the same job position after the merger as he or she was prior; b. Establishing new salary schedules not lower than the highest individual component salary (as of 2012-13) for all job positions in the third year after the merger. c. Not increasing the salary schedules of employees who are paid on the lower component salary schedule until the third year after the merger. The cost of implementing this recommendation, including associated increases in FICA and retirement, is approximately $18M per year, starting in the third year after the merger. This estimate is conservative, as it accounts for resulting increases in FICA and retirement contributions and does not include the material possibility that some portion of this leveling may be accomplished through cost of living adjustments made after the merger date. See the summary of all investments in the Financial Model chapter. The TPC has made additional recommendations with respect to the compensation of teachers and instructional leaders that are covered in the Education Plan: Educational Services chapter (beginning with recommendation 59). In the area of health insurance, the TPC recommends that the district: 145. Re-negotiate with the health insurance administrator and/or seek bids for new administration of the plan 146. Work with its administrator to design a plan offering that: a. Meets the state requirement of offering a plan equal or superior in value to the state plan; b. Meets the state requirement for cost-sharing (at least 35% paid by the district) to be eligible for full BEP funding; c. Includes a low-cost, high-deductible plan; and, d. Does not offer any plans at a discount to their actuarial value 147. Drop stop-loss insurance if further analysis of the claim costs of the merged district show this to be prudent 148. Manage the districts effective share of health insurance costs to the lower of the prevailing district shares at the time of the merger or 63%, the current SCS district share

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149. Provide spouse coverage only for those spouses who are not eligible for their own health insurance. Spouses eligible for their own coverage will be expected to provide their own health insurance 150. Conduct a dependent audit every four years to ensure that only those eligible for district health insurance are receiving it 151. Not have an individual mandate for health insurance for employees to be eligible for Accident on the Job coverage 152. Not subsidize Medigap for classified employees on a go-forward basis 153. Finalize plan details, including covered and excluded items, before the merger date 154. Continue to offer dental and vision at a full pass through to employees 155. Offer all employees the option of participating in a flexible savings account 156. Encourage all employees to fill out a health risk assessment to use to target interventions by giving a discount to those who do and assessing a penalty to those who do not In the area of retiree health insurance, the TPC recommends: 157. The same provisions that apply to current employee health insurance are extended to retirees.

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FINANCIAL MODEL
To manage costs associated with significant enrollment shifts, the district will implement the following set of policy considerations and management practices: 158. Enable attendance zone conversions to allow new operators to participate in full or partial conversions of existing attendance zones. This would necessitate extending the ASD policy of allowing the conversion of attendance zones to all new operators. See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter. 159. Incentivize new operators to utilize existing facilities and participate in full or partial school conversions where possible through financial incentives. The district could provide free rent to incentivize new operators to choose to utilize district space (versus finding their own facilities) and implement a differentiated contribution to incentivize new operators to fully or partially convert existing attendance zones (versus enrolling based on a lottery system). The district can also encourage shared services in order to provide scale advantage to both district and non-district operated schools. This would apply to splitting facilities costs (e.g. utilities, custodial, maintenance), but could also extend to sharing roles across two schools within one building (e.g. librarian, nurse, therapist). 160. Require all new operators to pay for full cost of services received (e.g. utilities, transportation) including directly related overhead. A fee-for-service model will include the cost of directly related overhead charged on a pro rata basis (e.g. per pupil, per square foot). 161. Commit to aggressive cost management of staffing levels and school footprint. This requires active management to maintain constant or near-constant staff-to-student ratios as enrollment declines or shifts, aggressive sharing of school staff (between grades, subjects, buildings), annual review of school and enrollment footprint to look for consolidation opportunities, and aggressive management of the size of the central office. Efforts will be made to make the center less vulnerable to volume shifts by shifting some roles to serve groups of schools. This type of approach is used in Denver Public Schools. 162. Institute strict planning guidelines that require non-district operators to submit target enrollment and service up-take within a pre-defined timeline to allow for proper planning and budgeting. The district could consider charging a penalty for incorrect or late estimates. 163. In order to identify additional efficiencies in the near and longer-term, the TPC recommends the establishment of a district-led cross-functional working committee supported by the Transition Office. The working committee will consist of the Superintendent and Chief Academic Officer, individuals from key departments (primarily Finance, HR, and Operations), and representatives from the County and the business community. The working committee will identify any specific additional initiatives in FY2014 and subsequent years to help address the deficit. Recommendations coming from this committee will be a direct input into each year's budget cycle. 164. An Operational Effectiveness Council will be established to provide ongoing guidance on improving operations of the merged district on an on-going basis. This Council should be established by December of 2013. In order to close the $57M fiscal gap remaining after all TPC recommended investments and efficiencies have been incorporated, the TPC recommends that the district pursue the following four actions in parallel:

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165. The Shelby County Board of Education will vigorously pursue additional sources of City and local sources of funds and in-kind support not in the district's control including: a. City repayment of FY2009 judgment: $55M net amount due from legal ruling regarding FY2009 maintenance of effort payment, to be strategically allocated (e.g. approximately $11M per year over five years). The SCBE will aggressively pursue legal action to resolve the dispute and collect the amount owed prior to FY2014. See a consolidated list of actions requiring legal action in the Migration Plan chapter. b. City investment in education priorities: A contribution of $11M toward the TPCs recommended educational priorities is less than 17% of the annual pre-merger maintenance of effort payments. The City has formed a committee to specifically explore the Citys role in education and will be strongly encouraged to invest in the identified priorities. c. City provision of in-kind services: Estimated at $4M in cost savings in FY2014 if the City continues to provide in-kind donation of water and security. The Board will encourage Memphis Light, Gas, and Water and the Memphis Police Department to continue their inkind support post-merger. d. Contributions from other operators: Estimated at $3M in additional revenue in FY2014 from a differentiated contribution ranging from 0% to 7% from all other operators in the district (see section on Cost Management of Enrollment Shifts above for details). The Board will lobby the State for the legislative changes necessary to implement this initiative, which includes allowing charter school attendance zones (precedent exists with the ASD) and enforceable contribution requirements (similar to other large urban school districts, e.g. Chicago, New York City). 166. The SCBE will seek additional funding from the State. There are reforms passed in the State BEP 2.0 formula that are pending funding for full implementation. Some of these reforms, including an increase in the State share for instructional components in the formula from 70% to 75%, could yield as much as $30M in incremental revenue. Additionally, the State may provide transitional funding for consolidation (similar to what was suggested in TCA 49-2-1262). See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter. 167. The SCBE will set a $15M target for additional district efficiencies that do not increase student-teacher ratios or otherwise impact the classroom. The district-led cross-functional working committee will create the specific plan to meet the $15M efficiency target. This plan must be completed in the fall of 2012 as an input into the FY2013 budget preparation process. Illustrative efficiencies that could be explored by the committee include: removal of any vacant positions, efficiencies in part-time staff, standardizing titles, consolidating warehouse space, selling surplus property (one-time impact) 168. The SCBE will request increased local funding from the County either through a reallocation of funds from within the County budget and/or through implementing a tax increase The TPC firmly recommends the path described in the exhibit below to address the budget deficit and emphasizes that the SCBE must exhaust all available resources from the City, the State, and the County to fully fund the Transition Plan recommendations prior to considering any contingency measures.

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Path to Address Budget Gap

169. The TPC recommends that all operators (e.g. district, charter schools, ASD) receive state and local funds in the same timeframe, whether on the current staggered district payment schedule or on a revised payment schedule that more closely matches how charter schools currently receive funds. See a consolidated list of actions requiring legislative or state action in the Migration Plan chapter. 170. The TPC recommends developing a single set of accounting policies and practices postmerger, including: Cash and equivalents MCS currently maintains an amount of current cash and equivalents sufficient to meet accounts payable and accrued liabilities obligations, whereas SCS is dependent on future receipts and investments to meet such obligations Investments MCS manages its own investments, whereas SCS operates under an investment agreement with the County Trustee Due from other governments grant reimbursement lag times in both districts range from 10 days to 45 days depending on the efficiency of processing grant applications Capital assets although both districts use the straight-line method of depreciation, policies related to useful life may differ across similar asset categories, as may practices related to inventorying, cataloguing, and selling idle assets Accounts payable MCS currently does not accrue payables for the utilities and payroll currently received in-kind from the City of Memphis (e.g. water from MLGW, security from Memphis Police Department); if these in-kind services are discontinued, the merged SCS will need to accrue the appropriate payables Long-term liabilities primarily consist of Other Post-Employment Benefits (see next section) 171. The TPC recommends that merged SCS use the pay-as-you-go method. The pay-as-you-go method, used by most state governments as well as other large urban school districts, is

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recommended primarily because of the districts lack of funding and fund balance and because it allows for greater contributions towards annual OPEB expenditures. 172. The TPC further recommends that a policy be implemented for equitably allocating OPEB costs across multiple operators in the district. Specifically, it is recommended that each operator be responsible for the OPEB liability related to their employees. The district will continue paying all of the costs of benefits of existing retirees. Active employees who switch between operators (e.g. transfer to ASD) during the merger will voluntarily exit district employment, be hired as a new employee of the other operator, and thus, be treated as the responsibility of their employer upon retirement from the system.

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