MEMPHIS, Tenn. — Shelby County Schools is ending a contract with Porter-Leath to provide Head Start pre-K to 1,520 children, the school district said Thursday.

SCS will bring the remaining pre-K services in house, resulting in up to $3 million in savings, the district said in a release. The district said no disruption to students is expected.

“Porter-Leath requested a substantial increase in funding to provide fewer services to Pre-K students at a higher cost, which could jeopardize the SCS Head Start grant by putting the District out of compliance with federal requirements,” SCS said in a release.

SCS claims they received an email declaring the intent to inform families that the relationship was over.

“Porter-Leath’s CEO sent an email to SCS yesterday, notifying us that they would be sharing information that we couldn’t come to terms an agreement with their families and employees,” said Jerica Phillips, chief of communications for SCS.

Porter-Leath sent us a copy of what appears to be the email in question. Dated Thursday morning, it reads in part: “I presume we are still in negotiations for a new contract”, and “We are still more than happy to negotiate and finalize an agreement.” The email provided to WREG does not mention ending negotiations or the partnership.

Porter-Leath representatives said the school district was ending a nationally renowned early childhood education partnership that had raised school readiness test scores since the partnership was established in 2014.

The group learned its contract was terminated on a conference call with the state of Tennessee Thursday.

“We found out via a state call that Shelby County Schools had, in fact, made the decision to move all services to Shelby County Schools as opposed to Porter-Leath,” said Karen Harrell, senior vice president of early childhood services.

Porter-Leath said while the Head Start grant to SCS has increased by $4.5 million over the last seven years, the nonprofit’s share of that funding under its contract with SCS has decreased $701,000, while serving the same number of children.

Porter-Leath said it responded to SCS’s request for proposal at $19.1 million. The nonprofit said SCS has set its budget for the program at $16.9 million, but that doesn’t reflect the true cost of operation.

“SCS has continually decreased Head Start funding available to Porter-Leath, making continued operations in Porter-Leath centers using Head Start resources impossible without significant cuts that would diminish quality and increase risks to health and safety for children, families, and staff,” the group said in release.

SCS claims compensation for Porter-Leath administration was a divisive topic at the negotiation table. SCS says top Porter-Leath brass wanted compensation that didn’t fit into the requirements of the federal head start grant.

“Shelby County Schools is appalled that Porter-Leath would be asking for additional funding outside the compliance of this grant. We have to do right by taxpayers,” Phillips said.

But when we asked Porter-Leath about those accusations, they claimed the real sticking point was about indirect cost rates.

“Historically, Shelby County Schools has paid us 10%. Head Start allows 15%,” Harrell said. “In the best and final offer, we were offered 3.6%, down from 10%.”

Porter-Leath said it will continue offering preschool services at several locations.

As a result of the partnership ending, about 1,520 children that could’ve been placed in Porter-Leath preschools will instead attend SCS preschools. There are about 5,600 pre-K students in the district, SCS said.

The two sides have varying opinions on how the change could affect students.

“We know that we have the capacity to serve those families,” Phillips said.

But Porter-Leath expressed concern about the transition for the families involved, citing learning loss and development as potential issues.

“It just works better for the community if you have large organizations like Porter-Leath and Shelby County Schools that can work in collaboration,” Harrell said.

It’s unclear how many – if any – Porter-Leath employees will be brought on by the district. But both sides expressed confidence in continuing childcare at a high level.

“We want to assure all families who are interested in pre-K with Shelby County, that there is a place for all eligible children in our program,” Phillips said.

“Our hope is that parents that are in need and looking for high quality childhood services, will come to us for those services,” Harrell said.

This change will begin immediately, so families will need to make their decision about preschools before the fall semester begins.