Tag Archives: BEP Funding in Tennessee

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Carrots and Sticks

Even as Tennessee’s COVID-19 numbers continue to surge, some leading lawmakers and Gov. Bill Lee are considering using the state’s funding formula (BEP) to create incentives for districts to return to in-person learning sooner rather than later.

The Tennessee Lookout reports on House Education Committee Chair Mark White’s remarks regarding the creation of a “carrot-and-stick” system designed to push districts to send students back to school buildings.

“I think there will be some type of carrot-and-stick incentive to get students back in the classroom as quick as you can or at least a hybrid form of that if you’re not successful,” White said.

It’s not clear how such an incentive plan would work in practice. However, it could be as simple as providing additional BEP dollars to districts who make a commitment to in-person learning and actually bring students back to classrooms.

While some lawmakers are discussing legislation that would allow districts to maintain current BEP funding levels (a sort of hold harmless in light of students lost to alternative programs during the pandemic), there has not been serious discussion of BEP funding improvements.

A bipartisan state task force recently noted that Tennessee schools suffer from a $1.7 billion funding deficit due to the inadequacy of the BEP. In fact, a state court is scheduled to take up the issue of school funding in October of this year.

Tennessee’s schools have historically been underfunded, and currently sit at 45th in the nation in overall school funding. A national group that rates states on funding effort when compared with funding ability gives Tennessee an “F” in funding effort.

White has chaired the education committee for several years now and Lee is now entering his third budget cycle as Governor. Neither has made any serious effort to improve investment in our state’s public schools. Instead, both have relentlessly focused on a privatization agenda including pushing voucher schemes.

While Lee is seeking a new voucher program thanks to funding provided by the federal CARES Act, there is zero indication he will be pushing for the long-term, systemic changes to the BEP that would correct years of underfunding.

orange carrots on table
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Will Bill Lee Get Serious About Teacher Pay?

New Tennessee Governor Bill Lee is expected to layout his first spending proposal for the state in late February, with a State of the State Address planned for early March. First, he’s holding hearings to learn from state departments about current expenditures and needs/desires going forward.

Yesterday, he heard from the Department of Education and indicated that improving teacher pay would be among his priorities, though he didn’t offer any specifics.

First, let’s be clear: Our state has the money available to make a significant investment in teacher pay.

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.

Next, let’s admit we have a crisis on our hands. Tennessee teachers are paid bargain basement prices and the situation is getting dire:

Tennessee has consistently under-funded schools while foregoing revenue and offering huge local and state tax incentives to Amazon.

In fact, while telling teachers significant raises were “unaffordable” last year, Metro Nashville somehow found millions to lure an Amazon hub to the city. This despite a long-building crisis in teacher pay in the city. Combine a city with low pay for teachers with a state government reluctant to invest in salaries, and you have a pretty low value proposition for teachers in our state.

Now, let’s talk about why this problem persists. It’s because our school funding formula, the BEP, is broken:

The state funds 70% of the BEP instructional component. That means the state sends districts $28,333.90 per BEP-generated teacher. But districts pay an average of $50,355 per teacher they employ. That’s a $22,000 disparity. In other words, instead of paying 70% of a district’s basic instructional costs, the state is paying 56%.

To be clear, those are 2014 numbers. So, let’s update a little. Now, the state pays 70% of $44,430.12, or roughly $31,000 per teacher generated by the BEP formula. But, the actual average cost of a teacher is $53,000. So, districts come up $22,000 short in their quest to stretch state dollars to meet salary needs. Of course, districts are also responsible for 100% of the cost of any teachers hired beyond the BEP generated number. Every single district in the state hires MORE teachers than the BEP generates. Here’s more on that:

First, nearly every district in the state hires more teachers than the BEP formula generates. This is because students don’t arrive in neatly packaged groups of 20 or 25, and because districts choose to enhance their curriculum with AP courses, foreign language, physical education, and other programs. This add-ons are not fully contemplated by the BEP.

Chalkbeat notes another challenge of getting money into teacher paychecks:

Under Haslam, the state increased allocations for teacher pay the last three years, but the money hasn’t always reached their paychecks. That’s because districts have discretion on how to invest state funding for instructional needs if they already pay their teachers the state’s average weighted annual salary of $45,038.

There are, of course, some clear solutions to these challenges. These solutions have yet to be tried. Mainly because they cost money and our political leaders have so far lacked the will to prioritize a meaningful investment in our teaching force. Here’s an outline of how those solutions might work:

There’s an easy fix to this and it has been contemplated by at least one large school system in the state. That fix? Moving the BEP instructional component to the state average. Doing so would cost just over $500 million. So, it’s actually NOT that easy. Another goal of those seeking greater equity is moving the BEP instructional match from 70% to 75%, essentially fulfilling the promise of BEP 2.0. Doing so would cost at least $150 million.

My guess? Bill Lee won’t propose either of these solutions. That doesn’t mean a legislator can’t or won’t — though it hasn’t happened so far.

Stay tuned for late February, when we’ll see what Bill Lee means when he says he’s committed to improving teacher pay.

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Virtual Equality?

As the school year began, I wrote about how students at some MNPS high schools were forced into online classes due to a teacher shortage. This impacted students primarily at Antioch, Whites Creek, and Cane Ridge High Schools. According to my sources, it’s still going on to some degree. That is, actual teachers haven’t been found to fill many of the positions that were empty at the beginning of the year. So, the students are taking courses from Edgenuity.

Here’s what I noted about Edgenuity at the time:

Here’s a review of materials developed by Edgenuity for grades 9-12 ELA done by the Louisiana Department of Education. Here’s the short version: Edgenuity received a Tier III (the lowest) rating for the quality of the materials it provided to students for grades 9-12 ELA.

Here’s what Louisiana had to say about Edgenuity’s 6-8 math materials. Also an overall Tier III rating, but mixed reviews depending on grade level and specific learning objective.

Now, there’s a court case about whether virtual classes provide a “substantially equal” educational opportunity for students.

Education law professor Derek Black notes:

The Tennessee Court of Appeals has taken up a fascinating issue regarding students’ access to teachers.  The problem could only arise in the brave new world of computers.  In short,  a student at a Tennessee high school had fallen behind in algebra and end-of-grade assessments were looming.  The school pulled the student  out of the class and placed the student in a computer based credit recovery program.  Apparently, this occurred with several other students.  The student claims that the school did this to help increase its standardized test scores.

The disputed issue in the case seems to be a narrower one: do students have the right to access a teacher?  The plaintiff says yes.  The school’s attorney says no.

And here’s Black’s analysis of the legal issue at hand:

The Supreme Court in  Tennessee Small School Systems v. McWherter, 851 SW2d 139 (1993), held that students have a constitutional right to “substantially equal educational opportunities.”  The underlying facts in the case involved disparities in teacher salaries across the state.  Consistent with the overwhelming social science consensus, the court indicated that “teachers, obviously, are the most important component of any education plan or system.”  Because salary disparities resulted in students having unequal access to teachers, the Court ordered the state on more than one occasion to remedy is system of funding teacher salaries across the state.

So while state statutes may not create any specific property interest in access to a teacher, the state constitution creates a right to equal educational opportunities, which teachers are the most important part of.

And that’s why the situation at these schools is so interesting. The students at Antioch, Cane Ridge, and Whites Creek didn’t sign up for or choose virtual education. They were not offered the same or similar educational opportunity as students at other MNPS high schools — that is, students at most MNPS schools were assigned to an actual teacher who appeared in-person every day to provide instruction. These students were denied that opportunity and assigned to a program of questionable quality.

Why did this happen? One factor (though certainly not the only one) is teacher salaries. Teacher pay in MNPS is simply not competitive relative to the cost of living. It’s definitely not competitive relative to similar districts around the country.

The teacher salary issue is an important one, because it is the issue that drove the Small Schools court decision. In fairness, teachers at Antioch, Cane Ridge, and Whites Creek earn the same salaries as any other Nashville teachers. However, Nashville’s inability to adequately staff schools creates substantially unequal educational opportunity across the district. In fact, the district cited lack of adequate state resources as one reason it joined Shelby County in suing over BEP (Basic Education Program) funds.

It’s difficult to argue that students who signed up for and planned to attend traditional classes and then were forced into online learning were provided educational opportunities that are “substantially equal” to their peers at schools where this did not happen.

How this will be addressed remains to be seen.

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They Noticed

Tom Humphrey reports that school boards across the state have noticed that this year’s BEP Review Committee report is missing a few items that total some $500 million or more in shortfalls in the state’s funding of schools.

From his story:

Last week the Bradley board, also part of the suit, passed a resolution denouncing the exclusion of the recommendations and calling on the TSBA to adopt its own resolution “calling upon State officials to fund the true cost of educating Tennessee students, specifically to include the cost components recognized and recommended by the BEP Review Committee in past years.”

That’s what happened Sunday night, when 217 of the 219 delegates voted for the resolution seeking full funding of past priorities.

I noted earlier that the Committee’s omissions this year amounted to, “a deliberate attempt to avoid tough issues.”

And, it’s not like the state is short on funds to actually begin properly investing in schools. In fact, there’s a surplus that’s projected to be at least $1 billion by the end of this fiscal year.

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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