Charter schools prompt concerns about money in Tennessee

photo Education Commissioner Kevin Huffman

FAST FACTThough charter school growth has been fast in Tennessee, enrollment is still just a fraction of the state's overall student population. Between the 2009-10 school year and the 2012-13 year, Tennessee charter school enrollment grew from 7,207 students to 12,807 students. That compares to more than 922,000 students enrolled in regular public schools statewide.Source: 2012 Tennessee Report CardTENNESSEE CHARTERSCurrently, 69 charter schools operate in Tennessee. 3 are in Hamilton County 17 are in Davidson County 39 are in Shelby County 10 are in the Achievement School District (1 in Nashville and 9 in Memphis)Source: Tennessee Department of Education

Metropolitan Nashville Public Schools officials say they're under financial siege from rapidly multiplying charter schools. And the state's three other large school districts -- including Hamilton County -- fear they're next.

So all four are clamoring for changes in the state's education funding formula, calling charters a "tipping point" for broader concerns about inequities toward large school systems.

School board members from the "Big Four" -- Hamilton, Knox and Shelby counties and Metro Nashville -- want Gov. Bill Haslam and state lawmakers to provide new funds to account for the growth in charter schools, which they say state policies are driving.

And if Haslam and state lawmakers refuse? Some say the districts might turn to the courts and try to force changes in the state's Basic Education Program formula.

The number of charter schools statewide has grown from just four in 2003 -- the year after charters were first approved by the Legislature -- to 48 by 2012. Much of that growth occurred in Davidson and Shelby counties. Hamilton County has three charter schools, with another approved to open in 2014.

"I was really surprised with what Nashville's being burdened with. It is unbelievable. It is out of control. I feel like I have to speak out," said Hamilton County school board member David Testerman.

Testerman was one of between 20 and 30 school board members from the largest districts who huddled last weekend in a side meeting at the Tennessee School Boards Association's annual conference. Metro Nashville school board member Will Pinkston started by pointing out the growing financial burden charter schools are placing on the school system there, then expanded into general concern about underfunding of the state's Basic Education Program.

The funding formula doesn't take proper account of the recent growth of charter schools, critics contend. School board members say that might be bearable, if only the formula was fully funded. But it's not, and districts are going without millions of dollars each year in operating cash. State officials say it would take another $140 million to finish funding BEP 2.0, a revised formula approved in 2007. Only half the overhaul was funded before the Great Recession struck in 2008, and Haslam has shown little interest in completing the move.

"I would not say the formula's unfair. The thing is they're not funding the formula," Testerman said. "Something's wrong. Either the formula's wrong or they need to go back and fully fund the BEP. If they'd fully fund it, it'd take away the whole argument."

School leaders listened to Pinkston, the Nashville Metro school board's budget chairman, as he led them through what he sees as a nightmare funding scenario playing out right now in Nashville's schools. He said the school system has reached a tipping point with its budget. This is the first year, he said, that charter school funding is eating up all new growth dollars.


Charter schools are privately run public schools that operate on tax dollars and are free of many of the regulations that bind traditional public schools. Because dollars follow the child under the state's funding formula, state and local money leaves traditional public schools as parents choose charters for their children.

In Hamilton County, charters get about $7,000 per student, though that figure differs across districts. By comparison, the average amount spent per pupil in Hamilton County public schools comes to $9,444, according to the Tennessee Report Card issued last week.

Pinkston said of the $14 million in new revenue Nashville is getting this year, "every dime of it" heads "back out the door to charter schools." Next year, he said, charter schools will take an additional $22.7 million "based on new schools we've approved and growth at existing schools."

"That likely will be the first time that cash outlays for charter schools [don't] just consume every dime of new available revenue but consume every dime and then some, which eventually will lead to cuts in existing schools," Pinkston said.

Haslam's education commissioner, Kevin Huffman, said last week that 90 percent of school systems believe the BEP treats them unfairly. Haslam agreed.

"It's not just the large school systems, but the small school systems," Haslam said. "You know, we've been under threat of lawsuit from them and sued by them in the past for 20 or 30 years. It's been an ongoing issue."

In fact, the BEP was created as a result of a 1988 lawsuit filed by a coalition of small school systems that said state funding didn't meet the constitutional requirements for a free public education system. The BEP was enacted in 1992. Small schools eventually won the lawsuit.

Haslam, a Republican, so far has shown little interest in completely funding the BEP 2.0 reform pushed through by his predecessor, Democrat Phil Bredesen. Bredesen's move came after large counties, led by then-Hamilton County Mayor Claude Ramsey, threatened a lawsuit of their own.

Last week, Haslam said "our commitment is to go back and look at the BEP. It's incredibly difficult to have it work out equitably."

As for the impact of charter schools, Haslam appeared less than sympathetic.

"I think the flip side of that is if you look, again in Nashville, if you look at the schools with the best results, a large number of those were charters," the governor said. Later, he added, "at the end of the day our responsibility is to provide the very best education with those public dollars we can for our school system."

Huffman told reporters the formula won't be "tweaked" in the upcoming 2014-15 budget, though he said it "seems problematic that everybody seems to think that somehow they're getting a raw deal with the BEP."


Since Haslam took office in 2011, he and Huffman along with majority GOP lawmakers, the charter school association and well-funded advocacy groups, have flung open the door to charters, doing away with caps on how many there can be and who can attend them. Pinkston said there were 21 charter schools in the whole state less than four years ago. Today, 22 are open or approved in Nashville alone.

"Some of them do good work," he said. "Others struggle a bit."

If the BEP 2.0 were fully funded, Superintendent Rick Smith said, Hamilton County would be in line for about an extra $14 million annually.

"I would promote the idea that the BEP right now needs to be funded," Smith said.

Even if that means going to court?

"The answer to that is not yet," Pinkston said. "Everybody believes there needs to be a good-faith dialogue with the administration about issues that are unique to urban school systems. However, if they're not interested in having that conversation I suspect there is appetite among two or more big districts to pursue a legal solution."

Some board members say the idea of cash following students to charter schools creates problems for them. That's because costs -- for buses, school buildings and electric bills -- don't suddenly decrease when a few children leave for charter schools.

"We still have to pay utilities. We still have to pay teachers," said Hamilton County school board chairman Mike Evatt. "Our operating costs don't go down just because we lose a few hundred kids."

Testerman has similar complaints. But his disagreement with charters is fundamental. He doesn't think public tax dollars should fund privatized schools. If a school board chooses to let a charter school in, that's fine, he believes. But he dislikes the current situation in Tennessee that allows the state Board of Education to override a local board's veto of a charter school.

"For schools to come forward and write these charters pretty much knowing they'll be approved, I think is a problem," Testerman said.

Last year, the state board overruled one such veto in Nashville, sending the application back with recommended changes to some local concerns. But Nashville school board members ignored the state and refused to approve the application, prompting Haslam and Huffman to fine the system $3.4 million. Since then, state House Speaker Beth Harwell, R-Nashville, has pressed legislation creating a statewide charter "authorizer" to deal with such refusals and override local boards deemed to have unfairly rejected a charter application.

Harwell defends charter schools and isn't so sympathetic to Nashville school board members' complaints.

"Charter schools have proved to be very successful, and when they're not they're closed," Harwell said. "The school system belongs to the taxpayers and [the money] was given to educate children. So I guess the question is how best to educate those children and public charter schools have proven successful."

Contact staff writer Andy Sher at or 615-255-0550.

Contact staff writer Kevin Hardy at or 423-757-6249.