Cash Rains Down on Tennessee While Schools Left to Starve

State set for surplus in excess of $2 billion

While Gov. Bill Lee “dreams” of being able to pay starting teachers $50,000 eventually and while the state’s schools languish in the bottom 10 in the nation in overall funding, the state continues to rake in extra cash.

Lots and lots of extra cash.

The numbers this year show a surplus exceeding $2 billion.

Tennessee also had a surplus of more than $2 billion LAST YEAR.

In fact, we keep having extra revenue and policymakers keep NOT investing it in schools.

What should we do with the money?

House Speaker Cameron Sexton thinks we should use our surplus to replace $2 billion in federal education funding.

To be clear, doing so would not change the total dollar amount going to schools – we’d still be in the bottom 10 in the nation in school funding.

Of course, we could use the money to raise teacher pay, invest in infrastructure, and support early literacy.

The state could also afford to make school meals free for all kids.

Alas, instead of actually taking the yearly surpluses and investing more in schools, Tennessee policymakers seem content to leave us at the bottom:

When it comes to school funding, Tennessee lags far behind our neighbors in Kentucky.

Tennessee Education Association President Beth Brown points out the significance of this disparity in a recent email to educators. In it, she notes:

“It’s not about how the funds are divided, it’s about how many state dollars are put into education,” said TEA President Beth Brown. “To get to the Kentucky level of school funding, Tennessee needs $3 billion added to the state education budget.”

Our state’s schools have a range of needs and our state has a pile of cash. Seems like an easy fix – just use the cash to fund the schools.

So far, though, policymakers and Gov. Lee seem reluctant to do that.

Instead, our education policy is focused on funneling public funds to private schools and extreme charter networks.

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

Funding Board Foul

The Tennessee State Funding Board – the group responsible for setting the revenue projections used in state budgeting – met this week and got it wrong. Again. Like they do every single year.

Why does this even matter? Well, the Funding Board estimates are used to determine the parameters for the state budget. When the question is asked “why don’t we budget more for X,” the answer can be: The Funding Board says we won’t have that money.

Except, well, the Funding Board is wrong. ALL THE TIME.

Let’s look at the most recent evidence. This year, Tennessee is sitting on the largest budget surplus ever. EVER. That’s because state revenue came in at $2 billion ABOVE projections.

While the Funding Board is estimating growth for the upcoming (2023) fiscal year to be 2%, the Sycamore Institute notes that revenue for the current fiscal year is coming in at 24% above projections (so far).

  • Actual collections for October 2021 were about 22% higher than budgeted.
  • As of October 31, 2021, Tennessee had collected about 24% of the $16.5 billion in total budgeted revenue for the current fiscal year.
  • Collections through October were about $902 million higher (or 24%) than what was budgeted for the time period.

While this MIGHT be understandable given the COVID-19 pandemic, the reality is the Funding Board gets it wrong a lot – and this results in budgets that are significantly lower than revenue growth would allow. So, we now have a giant surplus while schools are significantly underfunded.

Here’s some analysis from 2020 on what these underestimates mean:

For five years actual revenue growth was more than double state estimates, leaving $3 billion in surplus while public schools remain under-funded. While state K-12 funding did increase by $700 million over those years, had the state doubled K-12 investment to $1.4 billion, a substantial surplus would still have remained while also moving Tennessee schools out of the bottom 10 in funding. 

That’s right, for five consecutive years starting in 2015, state revenue growth was double or more than what the Funding Board projected. The pandemic is no excuse. This is a planned, intentional underfunding of the state budget. Frankly, taxpayers should be furious. Money is being paid in so that the state may offer services. Then, the state is simply NOT offering the services. Or, they are offering services at levels well below what they should be.

K-12 funding is a great example. A bipartisan state body suggests we need an additional $1.7 billion to adequately fund schools. The money is there – in fact, nearly double that amount of money is there. And, we’re collecting around 24% more than planned so far this fiscal year. That’s a HUGE surplus. In fact, it’s nearly $1 billion in just the first three months of the fiscal year.

Still, the Funding Board seems content to set its sights low – far underestimating the potential of Tennessee. This means our schools, our infrastructure, our health care system, public safety, and more are being shortchanged.

Lawmakers would do well to question these faulty estimates. Or, better yet, just throw them away. We have years of historical data that can give us a pretty clear picture of where our revenue will be. We’re $1 billion ahead this year already.

Looking back at 2020, here’s more evidence that the Funding Board is basically just making stuff up – possibly in hopes of starving public services to serve some unknown goal:

There is already a problem with this year’s estimates. The State Funding Board, a panel of constitutional officers and the state finance director, recently approved a growth rate of between 2.7% and 3.1%, well below even the most pessimistic predictions by economists hired by the state. 
It is the lowest rate since 2014, when the board predicted little to no growth. This led then-Gov. Haslam to eliminate a promised $50 million state teacher raise. Actual revenue grew 5% in 2014-2015, leading to a $552 million surplus while teachers got nothing. 


The board also had to increase its growth estimate for 2019-2020, predicting a general fund surplus of $430 – $500 million. Even this upward revision may be far too low. First-quarter general fund growth was 8.1%, more than double the revised estimate, which could generate a surplus up to $900 million.

Getting it wrong by a point or two is expected. Being off in a single year by 2 or more points is an anomaly, but it could happen. But, when actual growth is double or more your estimate year after year for five years or more, there’s a deeper philosophical problem. Or, you just don’t know what you’re doing.

It seems more likely, though, that those behind the numbers know exactly what they are doing.

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

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TN School Funding Report Card: 1 D, 2 Fs

While Gov. Bill Lee’s Administration is off discussing potential changes to state’s funding formula for schools (the BEP), a joint report from the Southern Poverty Law Center and Education Law Center indicates there’s a lot of room for growth. It’s not just how the funds are allocated, it’s also about how much – turns out, Tennessee is near the bottom in the nation when it comes to things like funding level and funding effort – we’re not putting in much money and we’re not trying very hard to change that. Lee so far has not committed to any funding increase in his proposed formula change.

When it comes to funding level, Tennessee earns a ranking of 44th in the nation and is near the bottom in the South, earning a grade of “F” on the Report Card. These numbers are adjusted for regional cost differences and so acknowledge that costs are typically lower in state like Tennessee than they are in places in the Northeast or West Coast.

Next, funding distribution. Tennessee does a little better here, coming in at a D. However, the report notes:

In Arkansas, Louisiana, Mississippi and Tennessee there is no clear variation in funding relative to student poverty. These “flat” funding distributions disadvantage students in high-poverty districts by failing to deliver the additional resources they need to close persistent achievement gaps.

Finally, funding effort. Here, Tennessee is 47th in the nation. Another F. We’re simply not trying very hard to direct money to schools.

The effort index is an important indicator of how a state prioritizes
education spending relative to its economic capacity.

In short, Tennessee has the capacity to direct significant funds toward schools, but policymakers are simply choosing NOT to do so.

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

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The Lowest in the Nation

Tennessee has one of the lowest overall tax burdens in the United States. While that may be a positive in some ways, it can mean less overall revenue available for public investments. However, just because our tax burden is relatively low doesn’t mean we can’t make smart choices. Policymakers could dedicate significant portions of that revenue to high return public goods – like our schools.

Instead, they just don’t.

According to a newly-released report from Education Week, Tennessee spends just 2.9% of all taxable resources on public education. That’s the lowest rate of any state in the nation.

In fact, the report notes that Tennessee ranks 43rd in the nation in terms of investment in public schools. The Quality Counts report produced by Education Week also gives an overall grade on school funding based on inputs such as equity, percent of resources spent, total funding, and percent of students who receive funding at or above the national median average. Tennessee’s grade? A D+. While we receive an A for funding equity, we get an F just about everywhere else.

And, don’t get too excited about that A in equity. We are merely equitably distributing a terribly small piece of pie.

Here’s the deal: Tennessee’s public schools are underfunded by $1.7 billion. We have policymakers, including our governor, who simply are not interested in investing in schools.

Tennessee policymakers, who recently adjourned their legislative session, could have paid for at least a third of the school funding shortfall with JUST the April surplus. Of course, that would assume these lawmakers are serious when they say they want to fully fund schools.

To be clear, making even a $600 million down payment on the necessary investments in schools would leave the state with a surplus approaching $1.4 billion and three months left in the budget year.

Tennessee has one of the lowest tax burdens in the nation. We have a budget surplus that is of historic proportions. We could fully fund our public schools and still have hundreds of billions of dollars leftover. This, then, is not a decision about “keeping taxes low” or about fiscal responsibility. It is, instead, a decision about denying the best possible education to our state’s children.

A budget is, at its core, a policy document. Our public policy in Tennessee is clear: Public schools are not a public good worth funding. This has been true for years and Gov. Lee is merely continuing this sad tradition.

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We Need a Bigger Pie

The League of Women Voters (LWV) is calling on Gov. Bill Lee and the Tennessee General Assembly to take bold action on school funding. The group notes that the state historically underfunds schools and suggests that now is the time to change that reality. In fact, the push from the LWV comes as the state is experiencing an unprecedented revenue surplus.

Here’s more from LWV from a media release:

Chronically underfunded school districts throughout the  state have been especially challenged during the pandemic. However, the inadequacies and  the gross underfunding predate this stressful year. Tennessee currently funds its public school  system at a level that consistently places it in the bottom five most poorly funded states in the  United States, per the National Education Association.

“This goes beyond how you slice the pie to provide varying amounts of funding to the diverse  counties of our state – the pie itself is simply not big enough,” said Debby Gould, president elect of LWVTN. “The League’s position on education is that the state’s coverage,  implementation, and funding of the Basic Education Program should be adequate to assure a  high standard of public education.” 

Under the current formulation, the BEP allows for a per-student budgeted amount  that is $3,655 lower than the nationwide average, and lower than most southeastern states.  Because the BEP formula underfunds our public schools, it puts a heavy burden on communities  to supply the local funds necessary to provide an acceptable standard of public education for  students. 

Each year, a BEP Review Committee analyzes the formula and its results for the preceding year,  making official recommendations to the state for improvement. The committee’s latest report  recommends increasing the BEP teacher salary component to match what districts actually  have to spend. It also recommends increasing the numbers of school nurses and counselors to  meet nationally-recognized standards and increasing the number of interventionists to fulfill  requirements of a state-mandated program designed to keep students from falling behind, or  catch them up more quickly when they do. At the very minimum, Governor Lee and the General  Assembly should incorporate all BEP Review Committee recommendations and provide  recurring funding for them. This action would be a significant step toward adequately funded  public schools for all Tennessee children.

MORE on the inadequacy of the current BEP:

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The Takedown with Amy Frogge

Former Nashville School Board member Amy Frogge offers some key facts about education funding in Tennessee in a series of tweets.

Here they are:

Here are some shocking facts about education funding in Tennessee: 1. TN has chronically underfunded public education. We rank 46th nationally (bottom 5 states) in education spending. We spend less than any of our neighbors, including KY, NC, GA, AL AR, and even MS. 1/

2. According to the states’s own estimates, the BEP (TN’s education funding formula) is underfunded by $1.7 billion per year. If you hear politicians say “the BEP is fully funded,” they’re lying. 2/

3. The BEP, which generates $7400 per student in state funding, is starvation funding. No school district can run on that amount. Local school districts must make up the difference- sometimes funding up to 60% of the costs. 3/

4. According to the TN Dept. of Revenue, TN’s surplus for the current fiscal year is now over $1 billion w/6 more months to go. The Sycamore institute just released an analysis demonstrating that TN will have at least $3.1 billion in “excess” or unplanned revenue this cycle. 4/

5. For the month of January 2021 ALONE, the state generated a $380.1 million surplus! 5/

6. TN has $7.5 billion in cash reserves. Underfunding education is a clear choice. 6/

Not only does the state refuse to invest in our schools and teachers, but the legislature continues to pass unfunded mandates that already strapped local school districts must shoulder. 7/

Here’s what YOU can do to help: Share this information, and please reach out to your representatives! The Governor’s budget can be amended before the end of the legislative session, and we have a golden opportunity to make a difference! 8/

Originally tweeted by Amy Frogge (@AmyFrogge) on February 22, 2021.

Frogge is dead on, of course. Here are some sources supporting her claims:

To be clear, when legislative leaders tell folks back home they “fully funded the BEP,” they are simply saying they put the minimum required funding into the formula. What they aren’t saying is that this formula still has a $1.7 billion hole plus a $1 billion inflationary gap. It’s like saying you made the minimum payment on your credit card bill while ignoring the 40 plus years it will take to pay off the balance if you only pay the minimum each month.

MORE>

There’s also been a decade of deliberately misleading rhetoric around funding schools.

Anyway, Frogge is right. Tennessee has a huge surplus of cash. It is completely reasonable to demand that money be invested in our schools.

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Do We Really Have to Do This?

I mean, really? The Tennessee House Republican Caucus sent out a tweet today bragging about the amount of money the state has invested in teacher pay over the past decade.

Here it is:

I’m not even sure where to start. Well, actually, I am.

  1. $616.5 million sounds great, and it’s neat to aggregate data over a decade, but that BIG number averages out to about $62 million per year. That’s about a 2% increase in the BEP salary allocation (not actual money in paychecks) each year. Calm down a little, already.
  2. Did I mention that $616.5 million might sound great? So, the TN House GOP is all excited about spending $616 million plus over TEN years, while the state is sitting on a $3.1 billion surplus this year alone! That means we could spend $616 million in teacher salaries THIS YEAR and still have more than $2.4 billion LEFT to spend. Read that again. Republicans are bragging about taking an entire decade to allocate in total what is available THIS year and could be funded while still leaving $2.4 billion for other priorities.
  3. A bipartisan group of policymakers reports that we need $1.7 billion in a SINGLE year in order to adequately fund the BEP. That’s because the BEP badly underestimates the number of teachers actually needed to staff schools. Of course, the BEP also fails to take into account proper ratios for school nurses or school counselors. The BEP is pretty much broken, and has been for some time.
  4. It was Republican Gov. Bill Haslam who stopped the BEP 2.0 formula that was an attempt to correct and improve the BEP allocation.
  5. Remember that time when Gov. Haslam got all excited about our NAEP scores and promised a big raise to teachers and then cancelled the raise? Remember how after he cancelled the raise, revenue numbers came in at a level that meant the raise really could have been funded? Good times.
  6. Oh, yeah. School districts fund significantly more teachers than the BEP allocates. Yes, this has been a known problem for some time. Yes, the GOP has been running most of state government for over a decade. No, they haven’t done anything to fix it.
  7. There was also that time when the Haslam Department of Education called on the State Board of Education to give local districts flexibility with BEP salary money. Essentially, this created a situation where the 4% BEP salary allocation increase became a 2% (or less) raise.
  8. Remember the time when Gov. Bill Lee gave a big increase in state funding to charter schools and a tiny raise to teachers? Wonder if teachers remember that? I bet that makes them feel really appreciated.
  9. Remember the year when Gov. Lee became the second governor in a row named Bill to promise teachers a big raise and then cancel it when things got tough? Because, yeah, that was 2020. How’d that tough budget Lee was worried about turn out? Oh, right, that’s the one with the $3.1 billion surplus.
  10. Finally, in the recently concluded special session, Gov. Lee proposed and his legislative leadership secured passage of legislation giving teachers a 10 cents on the dollar COVID raise. That’s right, in a year when there’s plenty of cash and teachers are working more and harder than ever, Gov. Lee is placing the value of teachers at 10 cents on the dollar.
  11. Oh, and yes, Tennessee consistently receives a grade of “F” in both school funding and school funding effort from national groups who analyze state level investment in schools.

So, try again TN House GOP tweeter. Maybe next time, do some math and take a look at the archives.

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

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A Word on the Special Session

Gov. Bill Lee’s “Not So Special Session” on education starts tomorrow at the Tennessee General Assembly. Former Nashville School Board member Amy Frogge offers some insight into what to expect this week.

Here are her thoughts:

The Governor has called a special legislative session this week to address three administration bills. Heads up to educators, parents and friends- we need your help to reach out to legislators who will be voting on these bills!

1. Senate Bill 7001: This testing waiver/hold harmless bill would require school districts to test 80% of students in-person (with pen and paper) in exchange for exemption from the A-F district grading system, placing districts into the Achievement School District, and placing schools on the state priority list (bottom 5%). This bill would require districts to return to in-person instruction. It is unclear how this bill will effect teacher evaluations. The question to ask here is why we are even testing at all this year, during a pandemic and so much chaos. (Hint: follow the money.)

2. Senate Bill 7002 addresses “learning loss” during the pandemic. (This, by the way, is a political- not an education- term.) It would require districts to create in-person, summer mini-camps to help children who are struggling this year. While these camps could be helpful to students, the state is creating another unfunded mandate, because only $67 million will be allotted statewide for the initiative, not nearly enough for implementation. The administration also envisions paying for the camps with stockpiled Temporary Assistance for Needy Families funds, which is likely illegal. BUT here’s the biggest concern about the “learning loss” bill: It will require districts to hold back third graders who are not deemed “proficient” in standardized testing. (Proficiency rates can be manipulated by the state through cut scores.) If you google the term “Mississippi miracle,” you will find that Mississippi used this very same trick to create the appearance of a sudden increase on NAEP test scores. Holding back low-performing third graders creates the illusion of huge one-time testing gains, and implementation of the bill would take place just in time for the 2023 NAEP tests. This is not about best serving the children of Tennessee; it’s about gaming the system. Furthermore, the costs for holding back large numbers of third graders, as mandated by this bill, would be astronomical.

3. Senate Bill 7003 would implement a phonics-based literacy program that proponents claim helped Mississippi’s test scores. In reality, holding back low-performing students caused the increase in scores, as I’ve explained above. Aside from the ruse to game NAEP scores, this bill is problematic, just like the “science of reading” literacy bill that Commissioner Schwinn pushed last year. It opens the door to more school privatization. Schwinn, a graduate of the Broad Academy, has been pushing preferred vendors and no-bid contracts (just like our former superintendent). Reducing the complex art of teaching reading to a marketable, scripted phonics curriculum allows school districts to hire cheaper, inexperienced teachers and allows for vendors to make a lot of money by control the curriculum. District should be embracing balanced literacy instead, of which phonics is just one component.

While Tennessee continues to push the narrative that schools and teachers are “failing” in order to open the door to more and more private profit, we should be instead investing in our students, schools and teachers. The state has long failed to properly fund Tennessee’s schools. This year, there is a surplus of $369 million in our rainy day fund, and the state is about to put another $250 million into that fund. We have more than enough to pay our teachers reasonable salaries and to truly address student needs through more social workers, school nurses, guidance counselors and wrap-around services.

The Governor is also expected to announce a 2% statewide teacher raise tomorrow, but beware of the spin on this promise as well. Already, the state is shorting school districts by not paying enough through BEP funds to fully cover teacher salaries. The BEP funds approximately 66,000 teachers, but according to the state’s own report, there are approximately 77,000 teachers in Tennessee. Local districts must make up for this funding shortfall. The 2%, $43 million teacher raise will only be allotted for 66,000 teachers- not all of the teachers in Tennessee, and it will be paid for through non-recurring funds, which means that local districts will cover the difference in future years. Finally, this raise amounts to $10 per week per teacher- 10 cents on the dollar– an insult to teachers. Please reach out to your representatives to share your concerns about these bills. We should particularly focus on those legislators listed in the comments below who are serving on the education committees. Although this is a quick special session, legislators are not expected to vote on these bills right away due to the MLK holiday today. You have time!

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Fun Facts

The Tennessee Education Association is out with a fact sheet on school funding. The document makes clear Tennessee can certainly afford to invest more money in schools. In fact, TEA identifies more than $800 million in revenue from budget cycles dating back to 2015 that could be invested in schools. Additionally, there’s an estimated surplus of $200 million and new internet sales tax revenue of $200 million.

The bottom line: When Gov. Lee and the legislature say we can’t afford to do more for our schools, don’t believe them.

In fact, since 2010, Tennessee has actually failed to move the needle on school funding. Specifically:

To translate, in 2010 (the year before Bill Haslam became Governor), Tennessee spent an average of $8877 per student in 2016 dollars. In 2016 (the most recent data cited), that total was $8810. So, we’re effectively spending slightly less per student now than in 2010. The graph indicates that Tennessee spending per student isn’t really growing, instead it is stagnating. Further evidence can be found in noting that in 2014, Tennessee ranked 43rd in the nation in spending per student. In 2015, that ranking dropped to 44th. 2016? Still 44th.

We’re not getting the job done. The state’s Comptroller suggests we are underfunding schools by at least $500 million a year.

The analysis of available revenue by TEA makes clear Tennessee can afford to close that gap. Unfortunately, our leaders have so far lacked the political will to make that happen. Why not invest in schools? Why not use available revenue to boost opportunity for every child in our state? Why not close the funding gap?

These are the questions Tennesseans should be asking as the 111th General Assembly begins and Bill Lee assumes office.

 

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Beating Alabama

Governor Haslam gave his State of the State Monday and outlined budget priorities. Immediately, the Tennessee Education Association called on the General Assembly to improve on the small raise Haslam proposed for teachers.

Here’s the deal: A few years back, Bill Haslam promised to make Tennessee the fastest-improving state in the nation in teacher pay. That very same budget year, Haslam’s actual budget included no new money for teacher compensation. Since then, however, his budgets have included back-to-back four percent increases in funds for teacher compensation. This year, however, the budget proposal is for a more modest two percent increase. Should this budget pass as proposed, Haslam’s education budgets will have resulted in average annual increases in funds for teacher pay of about two percent. That’s not much faster growth than surrounding states. In fact, during Haslam’s term of office, actual teacher pay in Tennessee has increased by about one percent per year, very similar to rates in Kentucky, Georgia, and Alabama.

Here’s what’s interesting: Tennessee teachers still earn about $3000 less on average than their counterparts in Georgia and Kentucky. But, our teachers are actually closing in on Alabama. Current numbers suggest Tennessee teachers earn about $300 less on average than Alabama teachers.

Of course, Alabama will pass a budget this year, too. And, it will likely include additional funds for teacher pay. But, if Haslam and the General Assembly were to double the amount of money allocated for increases in teacher compensation in this year’s budget, Tennessee would almost certainly overtake Alabama in average teacher pay.

Can we afford it? The short answer is yes! Revenue has been growing at about 5% this year when comparing year-over-year numbers. If that keeps up, we’ll see about $700 million in new revenue. Sure, some of that is allocated, but moving around $55 million to bump the teacher pay raise from two to four percent shouldn’t be that difficult. And, if we do it, Tennessee will beat Alabama.

I’ve lived in Tennessee almost 20 years now. If there’s one thing I know about my fellow Tennesseans it’s that we love to beat Alabama. Come on, Tennessee General Assembly. You can do it! You can help Tennessee beat Alabama.

Watch out, Kentucky and Georgia, you COULD be next!

 

 

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