NASHVILLE — Continued progress on a 2007 overhaul of the state’s education funding formula could be delayed again in next year’s budget if Tennessee revenues continue to fall, a top lawmaker warned Wednesday.

Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, said that while he hopes the state can fund regular growth next year in the Basic Education Program formula, falling revenues and a global looming recession again could postpone movement on the formula revamp known as BEP 2.0.

“I think it just further delays implementing the BEP (2.0),” Sen. McNally said. “It would be extremely difficult to see any improvement items in next year’s budget.”

It would take about $80 million to fund regular, inflationary growth in the K-12 funding formula, Sen. McNally said.

The 2007 BEP 2.0 reform changed the funding formula in favor of school districts in areas such as Hamilton County.

The reform was estimated to cost $517 million and partially was funded in its first year with some $290 million. But Gov. Phil Bredesen’s hopes of adding another $86.5 million installment in the 2008-2009 budget were wrecked by the initial impacts of the housing mortgage on revenues.

Now, things are growing worse. Fears about the increasingly dire revenue situation have prompted the state to take a number of actions, directing department heads in August to plan for 3 percent budget cuts in the upcoming 2009-2010 budget to be presented to lawmakers next year.

Just last week, Finance Commissioner Dave Goetz ordered state agencies to prepare to cut their current 2008-2009 budgets by $106 million, with TennCare and higher education bearing most of the brunt. That comes on top of $126.5 million already being withheld from various agencies, making for a total of $235.5 million in the current year.

Mr. Goetz said Tuesday that continuation of the BEP 2.0 funding reform “may or may not be” delayed yet again next year.

“We don’t know,” he said, citing the uncertain revenue situation. “It’s too early to know for sure what we’re going to be able to do. As you know, the governor has always had as a top priority funding the BEP, first the growth, then we’d be funding the 2.0. That’s the issue.”

The state today is expected to release revenue figures for September collections, which some officials say could be worse than August figures. August collections fell $56.5 million below estimates as the economy continues to nosedive in sales-tax dependent Tennessee.

“I’ve been told they’re expecting something like an $80 million shortfall in the second month,” Secretary of State Riley Darnell said.

Other officials said the figure might be lower if business tax collections perked up at the last minute.

Mr. Goetz declined comment on Wednesday, noting the figures will be released later today.

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