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.

MORE ON THE BEP:

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

Why is he so angry?

Gerald McCormick is pissed.

The House Majority Leader apparently doesn’t like it very much when the school system in the county he represents sues the state alleging inadequate school funding.

So, now he’s going to teach them a lesson. He’s supporting a measure that is nothing more than a blatant attempt to keep school boards from asking for the adequate school funding they need.

Andrea Zelinski has the story:

Legislators are baking into one of several budget bills a ban on local school districts using state money for attorney’s fees, court costs or other expenses to sue the state, state agency or state official.

“I know you don’t want your own dog to bite you, I understand that part of it. But still, it seems a little unfair if you have a just cause against the state and you can’t have the ability to sue them,” said House Minority Leader Craig Fitzhugh, D-Ripley, in a Finance Committee meeting Wednesday night before lawmakers approved the change on a voice vote.

If the state were to prevail in a legal challenge, the legislation would give the state power to recoup its own legal costs by pulling money out the school district’s education funding, also known as the Basic Education Program, BEP, funding formula. The language would also apply to county and municipal governing bodies suing the state, and would pull from its state-shared taxes if the local government lost.

McCormick is on record this legislative session as saying Tennessee’s public schools have adequate funding. And he’s clearly not happy with his home county suing and asking him to work a little harder at his job.

Note that I bolded that words: If the state were to prevail in a legal challenge.

That’s because every time the State of Tennessee has been sued over school funding, the state has lost. So, local boards probably have nothing to worry about.

In fact, funding now is nearing the levels deemed constitutionally inequitable in the Small Schools III lawsuit.

Of course, the current lawsuit by Hamilton County and six other districts is actually claiming funding is inadequate. That’s a fair claim, at least if you read the reports from the state’s own BEP Review Committee.

And, despite McCormick’s claims to the contrary, the state isn’t even funding its mandates. For example, the Response to Intervention and Instruction (RTI2) program is mandated, but there are no state funds to support it.

Here’s why that’s especially troubling:

…those districts with higher concentrations of poverty (and likely to have higher numbers of students needing intervention) also have the least resources available to assist students.  The poorest districts, then, are left further behind as a result of a well-intentioned unfunded state mandate.

The unfunded RTI mandate is clear evidence of inadequacy and also sets the stage for further inequity in Tennessee schools.

Rather than dig deep and find some solutions, Gerald McCormick and his legislative buddies appear willing to attempt to punish school boards. Here’s some advice: If you don’t want to be sued for inadequately and inequitably funding Tennessee schools, get to work finding the resources to support them and a funding formula that distributes those resources fairly.

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

TCAP, Poverty, and Investment in Schools

Recently, I wrote about the Tennessee Comprehensive Assessment of Poverty, or TCAP. In that piece, I talked about how concentrated poverty combined with low investment in schools led to poor educational outcomes. I also mentioned how the broken BEP impacts districts because it is inadequate to meet the needs of Tennessee’s schools.

Now, I want to share the data I used to make those claims.

This data will show % of investment above BEP requirements, 3 year average ACT score (where applicable) and average TCAP scores.

The Top 10

District                % above BEP           3 yr ACT avg.             TCAP avg.

FSSD                   44.94%                     n/a                                63

Rogersville         19.83%                     n/a                                60

Newport             14.51%                      n/a                                62

Maryville            33.8%                      23.8                               65

Oak Ridge          37.23%                    23.1                               58

Williamson       20.5%                       22.9                             67

Greeneville      27.47%                      22.1                             58

Johnson City  26.77%                       22.1                             61

Kingsport        31.85%                       22                               59

Shelby              17.32%                       20.8                           58

AVERAGE    27.42%                    22.4                         61.1

The Top 10 districts in terms of student achievement invested nearly 28% above the BEP requirements and had an ACT average well above the state average.

The Bottom Ten

District          % above BEP          3 yr. ACT avg.              TCAP avg.

Lake                5.07%                       18.1                                 41

Union             4.91%                       17.9                                 45

Madison         14.22%                    17.9                                 46

Campbell       3.4%                        17.7                                  44

Haywood       6.48%                     17.5                                  41

Hardeman    11.58%                    17                                      46

Hancock       4.49%                     16.6                                   44

Memphis      19.15%                   16.4                                    38

Fayette         9.83%                    16.3                                     42

Humboldt   13.5%                     16.2                                    43

AVERAGE 9.26%                 17.16                                43

The bottom ten districts in terms of student performance invest less than 10% above the BEP formula and have an ACT average well below the state average.

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.

Interestingly, even the bottom 10 districts spend just over 9% more than the BEP formula on average. That’s a sure sign that districts can’t run on the funds and funding levels established by the current BEP. The BEP is simply inadequate to meet Tennessee’s educational needs.

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

Huffman Chairs Pie-Slicing Task Force

Education Commissioner Kevin Huffman is chairing Governor Haslam’s Task Force on the Basic Education Plan.  Haslam appointed the task force after districts began complaining that the current structure of the BEP is unfair.  In doing so, he essentially ignored the work of the standing BEP Review Committee, which annually reviews and recommends changes to the BEP formula.

After the committee’s initial meeting, Huffman said, according to the Chattanooga Times-Free Press:

“The purpose of the task force is not to say Tennessee needs to spend hundreds of millions of dollars more of money that we may or may not have,” Education Commissioner Kevin Huffman, said following the meeting. “The purpose of it to look at are the right components included as part of the formula, and given a fixed pie, how would you distribute that pie based on capacity.”

So, Huffman is in charge of a committee that’s tasked with deciding how to divide up an already inadequate pie.

If he’s serious about the work, he’d do well to go back to the reforms proposed under Governor Bredesen with the help of then-state Senator Jamie Woodson. Those reforms, dubbed BEP 2.0 changed BEP allocations and also added some new funding allocations.

The cost of fully funding BEP 2.0 would be around $150 million.

Finding that money may mean making difficult choices.  Just north of us, in Kentucky, Governor Steve Beshear has proposed a budget making tough choices in order to fund education.  While many departments see budget cuts in his proposal, K-12 education sees budget increases.

While Governor Haslam and his legislative partners seem intent on eliminating the Hall Income Tax and reducing revenue, education suffers.  And if that agenda is what they believe is absolutely essential to Tennessee’s future, surely some cuts in other areas can be found in order to boost investment in public education.

Of course, proposing a budget that cuts most departments but increases funding for public schools requires leadership and tough choices.

Instead, it seems we have a committee focused on redistributing the slices of a shrinking pie.

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

 

Time to Fix the BEP?

The Metro Nashville School Board this week suggested that the state revise and improve its funding formula for schools, known as the BEP.

A resolution drafted by board member Amy Frogge and passed unanimously by the MNPS board indicates that the current formula does not allow districts to properly implement rigorous news standards and provide improved salaries for teachers.

If legislators and Governor Haslam want to take a look at improving the BEP, they need only take a look at the BEP 2.0 formula developed under Governor Phil Bredesen with significant input from then-state Senator Jamie Woodson, who now heads SCORE.

Of course, current Metro board member Will Pinkston was a key Bredesen staffer when the BEP 2.0 formula was developed, so he’s quite familiar with how it would improve the funding situation not just for MNPS but for most districts in the state.

Fully funding BEP 2.0 may take incremental steps and perhaps could be complete in two to three years with some focus and budget prioritization from the General Assembly and the Governor.

If the current formula is not re-examined and improved, it seems likely that districts large and small will continue to complain of mandates coming from the state without adequate funding for their implementation.

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