It’s Raining Money, But Not on Schools

Tom Humphrey reports on the most recent budget projections which predict a surplus of between $300-$400 million for the fiscal year ending June 30, 2016.

This money, combined with the $600 million surplus from the fiscal year which ended on June 30, 2015, means the state will have about $1 billion in unanticipated, uncommitted revenue.

On top of that, economists are projecting growth in the $400-$500 million range for the upcoming budget year.

As Humphrey notes, proposals are floating so spend the surplus on road projects or tax cuts or both.

What’s not being mentioned?


Despite a pair of lawsuits contending the state’s school funding formula, the BEP, is inadequate, lawmakers and the Governor are not rushing to suggest significant new investments in Tennessee schools.

This in spite of the fact that after a one year bounce on NAEP results, our state is now holding flat. Maybe that’s because Senate Education Committee Chair Dolores Gresham is suggesting our state aspire toward “mediocrity” while holding a forum on disastrous (and expensive) school voucher schemes.

If the state invested half of the available surplus on the BEP formula, that would be a $500 million injection of funds to local schools. That would be a sure way to hold down local property tax increases while also beefing up the resources school systems have to provide an education. The revenue projections for the 2016-17 fiscal year indicate an investment of this magnitude is sustainable. And, by holding a portion of the surplus in reserve, the state could ensure against any unanticipated shortfalls.

All of that would still leave $200-$300 million available to spend on one-time costs like road projects.

Will Tennessee put its foot on the accelerator and invest in schools so our students have the resources they need to compete with the rest of the country? Will Bill Haslam use the surplus and projected new revenue to truly make Tennessee the fastest improving state in the nation in teacher pay?

The General Assembly will have answers to these questions starting in January.

For more on education politics and policy in Tennessee, follow @TNEdReport

What’s Missing is What Matters

The 2015 incarnation of the BEP Review Committee has concluded its business and issued a report. What’s interesting is that this year’s report is missing something: Hundreds of millions of dollars of recommended improvements that the committee usually makes as a suggestion to the legislature in terms of how to improve funding for the state’s schools.

Instead, the recommendations include finishing out the work on fully-funding teacher insurance — paying for a full twelve months, some vague language about improving teacher salaries, and about $10 million for technology improvements. The total cost of these recommendations is $40 million.

Compare that to last year’s report, which recommended a number of improvements with a cost in excess of $500 million.

The report from last year noted recommendations that included:

Eliminate Cost Differential Factor (CDF)  $(71,182,000)

Fund ELL Teachers 1:20  — COST: $28,709,000

Fund ELL Translators 1:200  COST: $2,866,000

CBER at 100%  $(2,639,000)

Instructional Component at funded at 75% by State  COST: $153,448,000

Insurance at 50%  COST: $26,110,000

BEP 2.0 Fully Implemented  COST: $133,910,000

Other Committee Requests

BEP Salary at $45,447  COST: $266,165,000

BEP Salary at $50,447  COST: $532,324,000

BEP Salary at Southeastern average $50,359  COST: $527,646,000

BEP Salary at State average (FY14) $50,116    COST: $514,703,000

The Committee last year also recommended:

Change funding ratio for psychologists from 1:2,500 to 1:500  $57,518,000

Change funding ratio for elementary counselors from 1:500 to 1:250  $39,409,000

Change funding ratio for secondary counselors from 1:350 to 1:250  $18,079,000

Change funding ratio for all counselors to 1:250  $57,497,000

Change Assistant Principal ratio to SACS standard  $11,739,000

Change 7-12 funding ratios, including CTE, by 3 students  $87,928,000

New BEP Component for Mentors (1:12 new professional positions)  $17,670,000

Professional Development (1% of instructional salaries)  $25,576,000

Change funding ratios for nurses from 1:3,000 to 1:1,500  $12,194,000

Change funding ratios for Technology Coordinators from 1:6,400 to 1:3,200  $4,150,000

Increase Funding for teacher materials and supplies by $100  $6,336,000

Instructional Technology Coordinator (1 per LEA)  $5,268,000

12 Months Insurance  $64,411,000

The 2013 Report made similar recommendations:

Component Change State Cost 12 months’ insurance $60,376,000

Increase funding ratio for psychologists from 1:2,500 to 1:500 $52,799,000

Increase funding ratio for elementary counselors from 1:500 to 1:250 $35,733,000

Increase funding ratio for all counselors to 1:250 $52,909,000

Fully implement BEP 2.0 $146,223,000

Raise Assistant Principal ratio to SACS standard $7,216,000

Reduce 7-12 ratios, including CTE, by 3 students $81,333,000

New BEP Component for Mentors (1:12 new professional positions) $14,333,000

Professional Development (1% of instructional salaries) $22,062,000

Reduce funding ratios for nurses from 1:3,000 to 1:1,500 $9,438,000

Reduce funding ratios for Technology Coordinators from 1:6,400 to 1:3,200 $1,756,000

Increase funding for teacher materials and supplies by $100 $3,655,000

Instructional Technology Coordinator (1 per LEA) $2,960,000

Capital Outlay Restored (done in FY14) – Total state cost of all recommendations $490,793,00

So, in 2013, the BEP Review Committee made recommendations costing nearly $500 million. That was there view on what would be an adequately funded BEP. Then, in 2014, the committee suggested improvements in excess of $500 million.

Now, in 2015, with the state facing lawsuits for inadequately funding its schools, the committee says everything is better and that with just $40 million in improvements, the BEP will be adequate.

It’s worth noting that the state continues to fund teacher salaries at well below actual rates. Adjusting the formula to provide local districts with teacher funding based on actual average salaries would cost more than $500 million. Even getting that number to just $45,000 per teacher would be $266 million.

The committee also has (historically) recognized that local schools need additional assistance in terms of school psychologists, nurses, professional development, counselors, and mentoring of teachers.

Suddenly, this year, the committee has decided these items are not priorities. They don’t even merit a mention in the BEP report, which at just 47 pages is among the shortest reports issued, and fully 1/3 the size of last year’s document.

Maybe if they don’t write down the needs of districts, those needs will go away. Or, maybe the attorneys for the school districts suing won’t find the earlier reports which consistently paint a clear picture of inadequately funded schools while also pointing the way to the steps necessary to improve the BEP formula.

Whatever the case, this year’s report comes up short. Legislators need only  look to the very recent past to find the evidence our state’s schools deserve more than what current funding levels provide.

For more on education politics and policy in Tennessee, follow @TNEdReport


Clay County and the Broken BEP

Citing budget difficulties, Clay County Schools have closed (temporarily) and may not reopen until mid-November.

The Director of Schools, Jerry Strong, notes that the budget issues have been building over the past three years and have finally reached the tipping point. The County Commission doesn’t want to raise property taxes (the county is relatively poor, so a property tax wouldn’t necessarily generate a lot of revenue) and has placed a wheel tax referendum on the March ballot.

It’s interesting to see a school system close due to insufficient funds at the same time school systems across the state are suing due to inadequate funding from the BEP formula.

Moreover, the lack of funds comes at a time when the state is passing down expensive, unfunded mandates like RTI2.

It’s also hard to imagine that a fully-funded BEP 2.0 wouldn’t help address this situation. Under that scenario, Clay County would see some $450,000 in new revenue each year from the state.

While the situation in Clay County may soon see at least a temporary resolution that will get students back to school, it points to a larger reality: The BEP is broken.

It’s time to use the surplus revenue our state has to begin investing in schools in a meaningful, sustainable way.

For more on education politics and policy in Tennessee, follow @TNEdReport



Schools Can Wait, We Need More Tax Breaks

That seems to be the message from state Senator Brian Kelsey of Memphis, who is suggesting using the state’s revenue surplus to eliminate the Hall Tax on investment income.

Kelsey’s plan would eliminate nearly $200 million a year in revenue. This at a time when school systems are suing the state due to grossly inadequate funding.

The push to provide tax breaks to the investor class comes as revenue is soaring above projections, as Rick Locker notes:

The state ended its fiscal year 2014-15 on June 30 with nearly $606 million more revenue overall than was projected and budgeted for the year, including $553 million more revenue in the government’s general fund than was projected. The general fund pays for most of state government’s non-transportation programs.

In addition to putting a call for tax breaks ahead of the need for improved investment in schools, Kelsey has also been a chief proponent of voucher schemes that would take millions of dollars from local school coffers. Not to mention there is scant evidence an expansive voucher plan like Kelsey’s would actually improve student outcomes.

Kelsey is not the only lawmaker whose priorities don’t include investing surplus dollars into public education. Earlier this year, House Speaker Beth Harwell suggested investing the surplus dollars into roads in order to avoid raising the gas tax.

What the General Assembly needs is a plan that would invest a significant portion of the surplus into schools and save the rest for future investment. Building a long-term, sustainable plan for improving the BEP (the state funding formula for schools) is critical, not just to avoid losing a lawsuit but also to support the excellent schools Tennessee families and communities deserve.

MORE on school funding in Tennessee:

Why is TN 40th?

Why Fix the BEP?

Why is he so angry?


For more on education politics and policy in Tennessee, follow @TNEdReport

Just Another School Funding Lawsuit

Bluff City Ed reports that Shelby County Schools will file a lawsuit today claiming the state’s school funding formula (BEP) is inadequate and inequitable.

The Shelby County suit is separate from the suit filed by Hamilton County and six other districts — that suit suggests the state funding formula is inadequate to the tune of $500 million a year.

Why are districts suing? Because the BEP Review Committee — a state group set up (by law) to review the state’s school funding formula each year and report on any deficiencies – has consistently reported that the state is under-funding schools. Interestingly, the BEP Review Committee was set up to alert the legislature of funding disparities in a timely fashion so the state could avoid the kind of lawsuit that originally resulted in the BEP.

Funny thing about that: Tennessee has been sued twice since the original lawsuit and lost both times.

Not so funny thing: The General Assembly still appears to be reluctant to seriously address lack of funding for schools. In fact, some leaders are downright hostile to the idea.

Perhaps one (or several) of these lawsuits will be successful and the General Assembly will be forced to address the serious funding shortfall facing districts across the state. There’s even a way to start investing in schools without raising any taxes.

More on the BEP:

TCAP: Proficiency or Poverty

Money for Roads, but Not for Schools?

Why Fix the BEP?

That’s a Big Class

For more on education politics and policy, follow @TNEdReport

Does TCAP Measure Proficiency or Poverty?

Ken Chilton, a professor at Tennessee State University, has a column in yesterday’s Chattanooga Times-Free Press in which he theorizes that poverty is a much better predictor of student performance on TCAP than teacher performance or other school-based factors.

Moreover, Chilton argues that the current emphasis on testing is misplaced and that frequent changes in standards and tests prevent meaningful long-term trend analysis.

He says:

Despite the proclamations of systemic failure, we don’t have enough longitudinal data to really know what is or is not working. The standards and the tests used to measure success change frequently. Consequently, it’s difficult to compare apples to apples. So, when scores change in one year we tend to mistake one data point for a trend by touting success or placing blame. Yet, most of us don’t know what proficiency means.

And he laments the expectations game played by policymakers and state education leaders:

Educators are under immense pressure to show improvement. Resources, careers and jobs are on the line. But, is it realistic to expect big jumps in proficiency from one academic year to the next, to the next and to the next? No, it’s incredibly unrealistic. And, it sets up a series of public expectations that are crushed year after year.

These unmet expectations contribute to the false perception that public schools are broken and thus are undeserving of additional tax revenues.

As for education reforms that get much attention in our state, Chilton says:

…but the annual TCAP gnashing of the teeth suggests that our expectations are out of whack with reality. None of the education reforms implemented in Tennessee address the underlying root causes that threaten the viability of our public schools — inequality.

Chilton’s analysis and claims regarding inequality and the impact of poverty are supported by (admittedly short-term) analysis of TCAP data from the top- and bottom-performing districts in the state:

An analysis of TCAP performance over time indicates that those school systems with consistently high levels of poverty tend to have consistently low scores on TCAP. Likewise, those systems with the least amount of poverty tend to have consistently higher scores on TCAP.

Additional analysis suggests:

The top 10 districts spend an average of 3 times more than the bottom 10 in terms of investment over the BEP formula. They also have an ACT average that is 5 points higher and a TCAP average that is nearly 20 points higher than the bottom ten.

In short, as Chilton suspects, there is a glaring inequality in terms of the educational opportunities offered Tennessee students. Add to that a growing inadequacy in terms of state investment in schools, and you have a recipe for certain failure.

For more on education politics and policy in Tennessee, follow @TNEdReport



Why Fix the BEP?

I’ve written recently about the growing state revenue collections and the corresponding request (in the form of a lawsuit) from school districts that the BEP (state school funding formula) be adequately funded – to the tune of some $500 million in new money.

But, some might ask: Why even fix the BEP? It’s a complex formula and besides, don’t our schools already have enough money?

The short answer is no. No, Tennessee schools do not have enough money.

I have gone so far as to suggest the BEP is broken and to explain the reasons for its current inadequacy.

Now, more evidence suggesting the need to fix the BEP. Essentially, it’s this: Since 2008, Tennessee’s “effort” in terms of percentage of state revenue devoted to school funding has fallen. I’ll show you a hand graph on that from the Education Law Center:

Source: "Is School Funding Fair?" by the Education Law Center

While an number of states began making improvements after 2011, Tennessee was not among them. Recent investments may have returned Tennessee to pre-recession funding levels, but not by much.

And then, there’s a recent report from Rutgers that suggests that when it comes to school funding, Tennessee gets an “F.”

From the Commercial Appeal:

The annual report card out of Rutgers University that grades states on how they fund public education shows Tennessee at the “bottom of the barrel” in fairness. Besides being one of 16 states earning an F for percentage of state resources allocated to K-12 education, family incomes of children attending its public schools on average are half that of children in private schools or being home-schooled.

“That’s a warning signal,” says David Sciarra, executive director of the Education Law Center.

“It becomes difficult to get the kind of forward-thinking reform in legislation if you have more affluent families not invested in this system,” he said.

The study looks at “fairness” in funding, including whether states allow more resources for districts with high numbers of students in poverty. Tennessee earned a B in the category, but Sciarra says even that is misleading.

“Because spending is so low, it really does not amount to much,” he said.

So, why fix the BEP? Because school funding in Tennessee is both inequitable and inadequate. Of course, making the needed investments would normally be a heavy lift, but with recent rosy revenue news, fixing the BEP (and improving the future for our students and entire state) requires only a little hard work and some political will.

For more on education politics and policy in Tennessee, follow @TNEdReport

500 Here, 500 There

So, the state keeps taking in more revenue — a lot more than it planned — and it’s starting to add up to real money, some $500 million and the year’s not over yet.

Andrea Zelinski has the story:

Nearing the end of state government’s fiscal year, Tennessee has collected nearly one half billion dollars more than expected, according to state officials.

Revenues totaled $974 million for May, when $50.5 million more than expected pouring into state coffers. Overall, the state has collected $495 million more than anticipated in the first 10 months of the budget year, with $452 million overcollected for the general fund, according to the Department of Finance and Administration.

What’s interesting about this story is that the total amount of over-collection represents almost exactly the dollar amount needed to satisfy school systems suing the state for inadequate K-12 funding.

$500 million appears to be the magic number:

Achieving a level of adequate funding as contemplated in the lawsuit would cost an estimated $500 million. Should the motion be granted, all 141 school systems in the state would effectively become a party to the suit — an unprecedented show of strength in what has historically been small school systems suing over equity. This suit differs from the previous “small schools” suits in that it focuses on the inadequacy of the funding formula rather than on any inequities that may exist.

So, we have $500 million in revenue over anticipated collections on the one hand and school systems suing to restore adequacy to the BEP to the tune of $500 million on the other.

Seems like someone (legislators, Governor Haslam, anyone…) ought to be able to work with these numbers and find a positive solution.

For more on education politics and policy in Tennessee, follow @TNEdReport



That’s a Big Class

According to the Chattanooga Times-Free Press:

Every school district in Tennessee could be part of the Hamilton County Department of Education’s lawsuit against the state’s Basic Education Program school funding formula if a judge grants a motion to grant it class-action status.

“While the larger districts have been the ones voicing concerns about the underfunding of education, this underfunding has ramifications literally everywhere,” school district attorney D. Scott Bennett said.

Hamilton County Schools and six nearby school districts — Bradley, Coffee, Grundy, Marion, McMinn and Polk — are plaintiffs in the lawsuit Bennett filed on March 24 in Davidson County Chancery Court.

The suit claims the state has “breached its duty under the Tennessee Constitution to provide a system of free public education for the children of this state.”

Achieving a level of adequate funding as contemplated in the lawsuit would cost an estimated $500 million. Should the motion be granted, all 141 school systems in the state would effectively become a party to the suit — an unprecedented show of strength in what has historically been small school systems suing over equity. This suit differs from the previous “small schools” suits in that it focuses on the inadequacy of the funding formula rather than on any inequities that may exist.

That’s money House Majority Leader Gerald McCormick says the state can’t afford:

“They are suing the taxpayers, that’s who they are suing,” said House Majority Leader Gerald McCormick, R-Chattanooga.

Fully funding the BEP has been estimated to cost $500 million. McCormick said that would have to come out of existing programs, such as funding colleges and universities, because the state constitution mandates K-12 education but not higher education. And Tennesseans don’t want higher taxes, he said.

Of course, McCormick also supported legislative efforts designed to keep local school systems from suing the state for adequate funding.

A look at three revenue issues reveals that McCormick is just plain wrong in his assertion that addressing BEP funding inadequacy would necessitate higher taxes.

First, state revenues are continuing a trend of coming in over projections.  Andrea Zelinski notes:

Year to date nine months into the fiscal year, state revenues are $444 million more than anticipated.

So, if Tennessee invested 100% of these over-collections into K-12 education, we’d come very close to the $500 million needed to adequately fund the BEP and provide more resources to local school systems to educate their students. Of course, it’s wise to save some of that money, but even a 25% investment would mean an additional $111 million a year for our schools. All with no new taxes.

Next, it’s important to protect the existing tax base. Governor Haslam took a small step on this front this year for the first time in his administration. The Revenue Modernization Act is projected to result in $20 million in new revenue by closing loopholes and helping the state collect the taxes it is owed. This is a start, but by way of comparison, the Bredesen Administration collected $500 million in revenue by aggressively protecting the tax code and ensuring that taxes owed were taxes paid. That is, they went after corporate tax avoidance strategies in smart, effective ways, year after year. It’s estimated that between $30 and $50 million a year in revenue can be protected each year by closing loopholes.

Add the mid-range, $40 million, to the low estimate of new revenue coming in over projections available for use and you’re looking at over $150 million in new money each year for schools over and above current funding levels.

Finally, I wrote in 2014 about the state’s planned loss of revenue. More specifically, the state is phasing out the inheritance tax – a move that has limited benefits but has a definite impact on the bottom line in terms of revenue collection. Specifically:

Additional revenue is lost by the gradual phase out of Tennessee’s estate tax, previously impacting estates over $1 million.  The plan is to phase that out entirely by 2016, with an estimated revenue loss of around $30 million this year and around $97 million in 2016-17’s budget. So, that’s roughly $76 million, or close to half of the projected shortfall for the upcoming budget cycle. To his credit, Haslam says he wants to hold off on efforts to repeal the Hall tax on investment income – a tax paid by a small number of wealthy Tennesseans with investment income.  However, he has also said reducing or eliminating the Hall tax is a goal. Phasing out the tax, as proposed in legislation under consideration this year at the General Assembly, would mean a loss of $20 million in the 2015-16 budget year and an ultimate loss in state funds of $160 million a year and in local revenue of $86 million a year.

If the estate tax was returned to its previous level, it would mean some $97 million in available revenue next year. Policymakers could tinker with this formula to ensure some taxes are collected, but the rate is lower and easily collect $50 million a year in revenue.  Adding these three items together and being conservative, Tennessee could easily invest $200 million more a year in its public schools.

That means Gerald McCormick is wrong. Making significant new investments in Tennessee schools DOES NOT require raising taxes or implementing new taxes. It does require political will and a little hard work.


Money Talks

Shelby County Votes to Sue

Why is he (Gerald McCormick) so angry?

Why is TN 40th?

For more on education policy and politics in Tennessee, follow @TNEdReport


Adequate and Equitable

That’s what the Shelby County Schools are seeking from the state — adequate and equitable school funding. As the state currently provides neither, the Shelby County School Board voted Tuesday to hire legal counsel to pursue such funding, an action which may ultimately result in filing a lawsuit against the state, the Commercial Appeal reports.

Recently, Jon Alfuth over at Bluff City Ed suggested that Shelby County should join the 7 other Tennessee districts already suing the state over inadequate school funding.

According to the report, Board members referenced the 2007 funding formula update known as BEP 2.0 and noted that if it were fully and properly funded, Shelby County would receive $103 million in additional funding next year.

Rather than push for full funding of BEP 2.0, Governor Haslam has appointed his own task force asked to redistribute the pie rather than increase its size.

Other than chastising districts for asking for the full and equitable funding they deserve, the General Assembly did little this past session to address the BEP situation.

Three previous lawsuits against the state seeking improved school funding have all been successful and all resulted in significant cash infusions to local school districts.

More on the BEP:

Money Talks

Why is TN 40th?

For more on education politics and policy in Tennessee, follow @TNEdReport