L 203 .115 H4 Copy 1 REPORT RELATING TO THE Revenues of the Memphis City Schools Dated April 30, 1910 TO Mr. C. C. Hanson, Chairman COMMITTEE OF BUREAU OF MUNICIPAL RESEARCH OF THE MEMPHIS CITY CLUB Haskins & Sells certified public accountants 30 Broad Street New York Williamson Building Chicago Marquette Building Cleveland 30 Coleman Street Third National Bank Bldg. London, E. C. Farmers Bank Building ST. LOUIS Pittsburgh Cable Address " Hasksells " REPORT RELATING TO THE Revenues of the Memphis City Schools Dated April 30, 1910 TO Mr. C. C. Hanson, Chairman COMMITTEE OF BUREAU OF MUNICIPAL REvSEARCH OF THE MEMPHIS CITY CLUB Haskins & Sells CERTIFIED PUBLIC ACCOUNTANTS 30 Broad Street New York Marquette Building Chicago Third National Bank Bldg. St. Louis 30 Coleman Street London, E. C. Cable Address " Hasksells. Williamson Building Cleveland Farmers Bank Building Pittsburgh u-^"";^ V\^ \X D. OF D. SEP 6 1910 HAS KINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 30 BROAD STREET NEW YORK LONDON, E.C. 30 COLEMAN STREET / CHICAGO ST LOUIS CLEVELAND PITTSBURGH MARQUETTE BUILDING THIRD NATIONAL BANK BUILDING WILLIAMSON BUILDING FARMERS BANK BUILDIN6 CABLE ADDRESS "HASKSELLS" New York, April 30, 1910. Mr. C. C. Hanson, Chairman, Committee of Bureau of Municipal Research of the Memphis City Club, Memphis, Tenn, Dear Sir : In compliance with your request that we confer with Mr. Charles Haase, Chairman of the Finance Committee of the Board of Education of the City of Memphis, and make such examination of school matters as he desired, we beg to state that Mr. Haase requested us to investigate the sources of revenues of the Memphis City Schools, and prepare an estimate of the revenues for the year ending June 30, 191 1. Relating thereto, we submit herewith five exhibits, together with com- ments, as follows : Exhibit "A" Statement of School Revenues Collected (less allowances TO OFFICIALS FOR SERVICES) DURING THE YEAR AND NINE MONTHS ENDED MARCH 31, I9IO, SHOWING SOURCES FROM WHICH DERIVED, AND ESTIMATE OF PROBABLE COLLECTIONS DURING THREE MONTHS ENDING JUN'E 30, I9IO, AND COMPARISON. *'B" Statement of School Revenues Collected (less allowances TO officials for services) during THE NINE MONTHS ENDED March 31, 1910 — by months— showing sources FROM which derived. *'C" Statement of School Revenues Collected (less allowances to officials for services) during the YEAR ENDED June 30, 1909 — BY MONTHS— showing sources from which DERIVED. *'D" Statement of Funds Available for City School Purposes, AND PAYMENTS TO SCHOOL BOARD — FOR THE YEAR AND NINE MONTHS ENDED MARCH 3I, I9IO. *'B" Statement of Real and Personal Property Taxes and Poll Taxes Levied for School Purposes — by years — for FIVE years ended August 31, 1909 — showing proportion collected and not collected. COMMENTS. The revenues for the support of the Memphis City Schools are obtained from three general sources, viz.: State of Tennessee, County of Shei^by, City of Memphis. STATB OF T:eNNKSSEK. State School Fund. The State School Fund was created by Chapter 25, Laws of 1873, State of Tennessee. The law provides that the fund shall consist of $2,512,500, and that the interest thereon shall be at the rate of 6 per cent, per annum. The proceeds are dedicated to the support and maintenance of the public schools of the State. To the original sum may be added the proceeds of all escheated property, of all property accruing to the State by forfeiture, of all lands sold and bought in for taxes, of the personal effects of intestates having no kindred entitled thereto by the law of distribution, and donations made to the State for the support of the public schools unless otherwise directed by the donors. The Comptroller's report of the State of Tennessee for the two years ended December ig, 1908, contains no information relative to the present status of the fund, so that it is not known whether the original grant of $2,512,500 has been augmented by revenues from the sources above referred to. The annual interest at the rate of 6 per cent, on $2,512,500 amounts to $150,750. The interest distributed among the several counties of the State, according to pages 162 to 165 of the Comptroller's report, was as follows : Year 1907 $136,719-93 Year 1908 131,322.88 The difference between the annual interest and the interest distributed is caused by the payment of the expenses of the ofBce of the State Superin- tendent of Schools out of the income from the fund, in accordance with existing law. General Education Fund. This fund was created by Chapter 264, Laws of 1909, Slate of Tennessee, which provides that twenty-live per cent, of the " Gross revenue of the State" shall be paid into the fund, of which sixty-one per cent, is to be apportioned among the counties of the State according to scholastic population, in the same manner that the interest on the State School Fund is apportioned. This law was passed April 29, 1909, and repealed Chapter 537, Laws of 1907, which appropriated annually seventy-five cents for every pupil of lawful school age in the State. Under the new law, the revenue from this source for the year ending June 30, 1910 (no more will be received prior to that date), amounts to $11,097.18 less than for the year ended June, 30, 1909, during which time the old law was in effect. COUNTY OF SHBI/BY. Real and Personal Property Taxes. These taxes are levied by the County officials, and collected by the County Trustee. The assessment should be made as of the tenth day of January of each year, the taxes being due the following October. Heretofore, the greater portion of these taxes has been collected in February and March of the year following that in which they were due. This, for recent years, is shown by the collections appearing in Exhibits "B" and "C." Pick Up Taxes. Pick Up Taxes are Real and Personal Property Taxes collected on property which is not included in the regular Tax Assessment Rolls. The larger portion of the amount collected is for taxes on railroad, telegraph and telephone properties within the County, the valuation of which is fixed by the State officials. These taxes are collected by the County Trustee. Revenue Agent Taxes. These are taxes collected on Real and Personal Property not included in the regular tax assessment rolls. They differ from "Pick Up Taxes" in that their collection is from persons who have endeavored to evade payment, while the collections under the title "Pick Up Taxes," excepting those from railroad, telegraph and telephone companies, are from persons who volun- tarily come forward and pay their taxes. These taxes are likewise collected by the County Trustee. Delinquent Real and Personal Property Taxes. Real and Personal Property Taxes become delinquent the first day of March in the year following that in which the taxes become due, and on the first Monday in May the Real Property is advertised to be sold on or about the first of June. After the property is sold, the papers are transmitted to the Circuit Court Clerk, and the former owner then has two years in which to redeem it. The collection of these taxes is made by the Circuit Court Clerk. Poll Taxes. The assessment of these taxes is made by the County officials and the entire proceeds are allotted to school purposes. The Poll Taxes assessed during the five years from 1905 to 1909, inclusive, and the amounts thereof collected, are shown by Exhibit "E." From this it appears that the assess- ment for the year 1909 is $7,476, or 3,738 polls, less than for the year 1905. These taxes are collected by the County Trustee. Merchants Privilege Taxes. Chapter 479, Laws of 1909, authorizes the assessment of this tax for school purpo.ses on a basis of fifteen cents for each one hundred dollar valuation of the average capital invested in business. To this amount the County adds an assessment for school purposes of thirteen cents for each one hundred dollar valuation, making a total levy of twenty-eight cents. In addition, the State collects a privilege tax of fifteen cents for each one hundred dollar valuation of the average invested capital. Of this the schools receive seven and one-half cents. These taxes are collected by the County Court Clerk. Marriage Licenses. Marriage Licenses are issued by the County Court Clerk and the fee of $2.00 is collected by him. All this revenue is devoted to school purposes. Dog Taxes. This tax is authorized by Chapter 32 of the laws of 1907, which pro- vides for the registration, by the Clerk of the Circuit Court, of all female dogs in the county. The charge for this service is three dollars for each dog registered, of which amount the Clerk of the Court is allowed fifty cents as his fee. In addition, he is authorized to deduct from his collections the cost of books, collars, tags and other necessary expenses. The law provides that any person owning or keeping a female dog three months old, or more, and failing to apply for registration thereof, shall be guilty of a misdemeanor and upon conviction shall be fined not less than five nor more than twenty-five dollars. At the present time this tax is not being enforced. CITY OF MEMPHIS. Real and Personal Property Taxes. The assessment of property is made by the City Assessor. The rate of taxation is fixed by the City Commission, with the exception of that for school purposes, which is fixed by law. The assessment rolls should be compiled at the beginning of the year and delivered to the Board of Equalization by May ist. This Board is allowed thirty days in which to hear complaints, after the expiration of which time the rolls should be turned over to the County Trustee for collection. These taxes are payable to the County Trustee and the greater portion thereof is collected during the months of July and August. Pick up Taxes. Revenue Agent Taxes. These Taxes are of a nature similar to those described in the comments on County Taxes and are collected by the County Trustee. RBV:eNUE FOR THE YEAR IQIO. The foregoing describes all the sources from which the revenues of the School Board of the City of Memphis are derived. State and County Revenues are apportioned between the County and City Schools as collected ; and likewise the School Revenues from the City are available only as collected. Exhibit "A" shows the Revenues collected (less allowances to various officials for services) during the year and nine months ended March 31, 1910, as well as an estimate of probable collections during the three months ending June 30, 19 10. From this exhibit it will be noted that, although the collections of State and County Revenues for the year ending June 30, 1910, will be approximately $9,595.38 more than those for the preceding year, the County will receive $15,108.88 less, and the City $24,704.26 more. This is mainly due to a greater increase in the scholastic population of the City than in that of the County ; all State and County Revenues being divided between the City and County in proportion to their respective scholastic populations. It will be observed from the table below, compiled from the books in the office of the County Trustee, that in the year 1910 the scholastic popula- tion of the City is approximately 66 per cent, of the total of the County as compared with 54 per cent, in the year 1905. , ScHoivASTic Population » 1910 1909 1908 1907 1906 1905 Total of Comity of Shelby 82,537 77.928 71.320 64,518 64,175 56,578 Total of City of Memphis 54.614 48,030 43.701 36,911 36,911 30.630 Proportiou of Total of County 66.17% 61.63% 61.27% 57-2i% 57-52% 54-i4'^o The increased City Revenues for the year ending June 30, 19 10, will be mainly due to the City's tax levy for the year being twenty-five cents on the one hundred dollar valuation, as compared with twenty cents for the prece- ding year. REVENUE FOR THE YEAR 1911. A reliable estimate of revenues to be received by the School Board for the year ending June 30, 191 1, would be difficult of preparation owing to the many conditions affecting their collection. The indications are, however, that the revenue from all sources will be twenty to twenty-five thousand dollars more than during the year ending June 30, 1910. The largest portion of the Board's revenue is derived from Real and Personal Property Taxes, the assessment of which for the year 1910 is now being made, and if the ratio of increase in values of the preceding year, as shown by Exhibit " E," is maintained, the additional revenue at the disposal of the School Board, from this source, should amount to approxi- mately $10,000 to $12,000. SUIT AGAINST THE CITY OF Mi^MPHIS. During the year 1908, the School Board instituted suit against the City of Memphis to compel it to levy a tax of five cents in addition to the twenty cents on the one hundred dollar valuation of Real and Personal Property levied by the City in 1908 for school purposes. The Chancery Court of Shelby County decided the case in favor of the School Board, whereupon it was appealed to the Supreme Court of the State, which Court, on April 5, 1909, affirmed the decision of the lower court. On June 26, 1909, the Chancery Court ordered that this tax of five cents be levied for the benefit of the Public Schools ; that the Council hold such meetings as were required incident to the preparation of the necessarj^ tax books, and that, when ready, the books be turned over to the County Trustee for the collection of the taxes, such taxes to become delinquent May I, 1910. The Court further ordered that the writ of mandamus, as to the levy of the tax and the action taken by the Council, be rt turned on the first Monday of December, 1909. The levy of this additional tax of five cents would render between thirty-five and forty thousand dollars available for school purposes. BOND INT:ERBST and sinking fund INSTALMENTS. In connection with our investigation, we have examined the School Board's estimate of expenditures for the year 19 10, submitted to the City Commission, and find that it includes allotments providing for the payment of Bond Interest amounting to $47,627.50 and Sinking Fund Instalments amounting to $35,542. At the present time the outstanding bonds issued for school purposes are as follows : Issue. Date of Maturity. Rate of Interest. Amount. 1889 1899 1902 1902 1902 1903 1905 1907 1909 1909 (Lenox) July I, 1911 July I, 1919 April I, 1 9 16 April I, 1921 April I, 1926 July I, 1928 July I, 1945 July I, 1937 July I, 1959 Feh. I, 1929 6% 4% 4% 4% 4% 4>^% 4K^% 4% 4^% 5% $25,000 28,500 25,000 25,000 20,000 75,000 125,000 300,000 498,000 50,000 Total $1,171,500 We have examined the laws authorizing the issuance of these bonds, and are of the opinion, in concurrence with that of counsel obtained by you, that the payments of interest thereon and of the required sinking fund instalments to provide for their retirement at maturity, with the exception of those in connection with the issue of the year 18S9, are not proper charges against the revenues of the School Board ; the twenty-five cent tax on each one hundred dollar valuation of real and personal property for school pur- poses being levied for the specific purpose of meeting the current expenses of the schools, exclusive of bond interest and sinking fund payments. We beg to express our appreciation of the uniform courtesy and assist- ance extended to us during the course of our work. Yours truly, HASKINS & SELLS, Certified Public Accoiintaiits. CITY OF statement of School Revenues collected (less allowances to ofi&cials for ing sources from which derived, and Estimate of Probable Collec- Three Months ENDING June 30, 1910, Estimated. State and County Schooi. Revenues : Interest on Slate School Fund State Apportionment, 1908 State Apportionment of General Education Fund., Real and Personal Property Taxes Pick Up Taxes Revenue Agent Taxes Delinquent Real and Personal Property Taxes Poll Taxes Merchants Privilege Taxes and Marriage Licenses. Miscellaneous Total State and County Revenues. County Schools' Proportion. City Schools' Proportion Total. City School Revenues : Real and Personal Property Taxes. Pick Up Taxes Revenue Agent Taxes Total City Revenues Summary of City School Revenues : Proportion of State and County Revenues. City Revenues. Total City School Revenues. 144,626 50 12,720 00 1,500 00 5,000 00 100 00 163,946 50 121,637 04 42,309 46 ^563, 946 50 5,000 00 5,000 00 12,309 46 5,000 00 147,309 46 Exhibit "A. MEMPHIS. services) during the Year and Nine Months ended March 31, 1910, show- tions for Three Months ending June 30, 1910, and Comparison. Nine Months ENDED March 31, 1910. $12,953 86 46,764 36 163,963 04 19.995 18 1,066 55 741 61 21,558 67 14,983 14 86 04 $282,112 45 195,508 186,604 13 32 $282,112 45 $198,695 10 710 06 638 67 $200,043 83 $186,604 200,043 32 83 $386,648 15 Year Ending June 30, 1910. I' 2,953 86 46,764 36 208,589 54 32,715 18 1,066 55 741 6[ 23,058 67 19,983 14 186 04 $346,058 95 $117,145 17 228,913 78 $346,058 95 1203,695 10 710 06 638 67 $205,043 83 $228,913 78 205,043 83 1433-957 61 Year Ended June 30, 1909. $11,965 49 57,86r 54 181,212 39 30,664 54 2,550 49 I-3I3 76 25,078 20 21,143 04 4.674 12 1336,463 57 $132,254 05 204,209 52 1336,463 57 1155,491 29 371 45 883 34 $156,746 08 $204,209 52 156,746 08 1360,955 60 Increase. fe88 37 46,764 36 27,377 15 2,050 64 Decrease. .595 38 J, 704 26 ,595 38 $48,203 8r 338 61 l57,86r 54 1.483 94 572 15 2,019 53 1,159 90 4,488 08 $15,108 ^,297 75 $24,704 26 48,297 75 $73,002 01 $244 67 :Exhibit "A.' CITY OF MEMPHIS. statement of Funds Available for City School Purposes and Payments to School Board, for the Year and Nine Months Bnded March 31, 1910. Funds Avaii^able : Balance due from County Trustee at begin- ning of period Revenues collected, per Exhibit "A" Total Less — Sinking Fund Installments deducted by City Funds available Payments to School Board Balance due from County Trustee at end of period Total Nine Months Ended March 31, 1910. 116,448 45 386,648 15 $403,096 60 25,541 66 ?377o54 94 1334,052 27 43.502 67 7o54 94 Twelve Months Ended June 30, 1909. 512,341 19 360,955 60 |373>296 79 25,541 66 1347,755 13 1331,306 68 16,448 45 755 13 Exhibit "D.' LIBRARY OF CONGRESS 021 507 203 4