Memphis schools' opening delayed in budget fight

MEMPHIS, Tenn. - Memphis Mayor A C Wharton said Wednesday that the city won't be able to immediately pay $55 million in budgeted money being demanded by the city's school board, which intensified a long-running funding fight by voting to delay the start of classes this year until it gets the money.

August 8th was set to be the first day of classes for Memphis students, reports "The Early Show" co-anchor Chris Wragge, but not anymore. This has Mary Wiseman worried about her daughter getting into college.

"Yesterday, they said September, now, this morning they said October, when we looked up it's going to be January," Wiseman tells "The Early Show".

Wharton told a news conference that he is working with the Memphis City Schools board and the City Council to resolve the dispute over the $55 million — which is about 7 percent of the board's overall budget of about $800 million. The Memphis City Schools board has demanded the $55 million in a lump sum, saying the funds are necessary to pay for the beginning of this coming school year.

Wharton said the city does not have the money to pay the $55 million all at once because that amount, which comes from projected tax revenue, has not yet entered the city's coffers. The city did pay the board $3 million on Wednesday, but that was money left over from prior school years.

Like school districts all over the country, Memphis gets 50 percent of its funding from the state. This closure could put that money - and the city's students - in jeopardy.

City budget officials have said that much of the funding for schools begins flowing after Sept. 1, and Wharton has promised to eventually give the school system its money. In all, the city of Memphis has designated nearly $88 million for this coming school year.

"I simply want to dispel the image that is being projected that we've got the money tucked away down here somewhere and simply will not pass it on to the school system." Wharton said. "That simply is not the case."

The city says it will make good on its promise to pay up, but that isn't good enough for the board, which says it needs the money now.

"We might not be able to make payroll," school board member Stephanie Gatewood tells CBS News. "We have 16,000 employees in our payroll. Who is going to agree to work for free except for elected board members?"

Wharton acknowledged that the city has about $76 million in reserve, but he said using that money is not a reasonable solution because it would end up hurting the city's credit ratings. He said he was optimistic that a deal could be reached before the scheduled start of classes on Aug. 8.

Wharton says the school board is playing a dangerous game.

"Find some other way to show that you're protesting, that you don't trust us. Run a billboard, run TV ads saying don't trust those folks down there, but let's not pull the children into this," the mayor told CBS News.

The school board voted 8-1 Tuesday night to indefinitely push back that date. The board is upset over a sum of $151 million that it claims the city has failed to pay the school system over four fiscal years.

Members who support delaying the start of the school say it's a move designed to show that it won't tolerate funding delays from the City Council, which has lost a lawsuit over whether it has a legal obligation to fund the school system at all.

"We've been very patient," school board member Freda Williams said. "Without adequate funding, it is irresponsible for us to open schools and run the risk of having to close schools only a month or so later because of a lack of funds."

Williams said the board needs the city's money before getting funding from the state. She said there is support from the board members for the city to pay the $151 million in installments.

"I would like to think that the mayor is honest when he says he would like to get something done, but I am more interested in the results to date," Williams said. "I don't see that genuine effort that has brought the results that we need."

The long-running, fractious dispute over school funding is a microcosm of the potential effects that protracted budget problems could have on U.S. cities. Memphis, for example, approved a budget last month in the face of a $60 million recurring shortfall. That budget included layoffs of hundreds of city workers and pay cuts for police, firefighters and sanitation workers.

"We have so many competing demands that it is a very difficult act to keep all of our enterprises rolling," said Wharton, who is up for re-election in October.

The issue gets more complicated when considering the move last December by the school board to disband and force a merger with the more successful and more efficient Shelby County school system. Voters approved the merger in March, but a federal lawsuit over the legality of the school board's move to disband remains active.

It remains unclear whether teachers and school employees will miss paychecks if the start of the school year is delayed. Local teachers' and school employees' unions have planned rallies in support of their members.