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FILE - In this Feb. 9, 2015 file photo, Gov. Bill Haslam delivers his annual State of the State address to the Tennessee Legislature in Nashville, Tenn. Years of Republican attacks on President Barack Obama’s health care law may have paid dividends at the ballot box, but they also made it much harder for GOP governors to make the case that expanding Medicaid in their states is a good idea. Haslam corralled the broad support of business groups and the state's powerful health care industry for his plan to cover 280,000 low-income residents. He ended up losing out to a steady drumbeat of anti-Obama rhetoric and threats of primary challenges to Republican lawmakers who considered going along. (AP Photo/Mark Humphrey)
 

Story updated

This story has been updated to include additional information on counties that have authorized lawsuits.

NASHVILLE -- Already faced with recent votes by five local school boards to sue Tennessee over its education funding formula, Gov. Bill Haslam said Monday he's "not sure that suing people ever helps the conversation."

Speaking with reporters, Haslam noted he expects to meet this coming Monday with school directors from Hamilton County, which last week voted to sue the state, as well as Knox and Shelby counties, where school boards are also contemplating litigation.

Metro Nashville Public Schools Director Jesse Register, who has tried to hold his board back, is also expected to attend. Metro's school board has given Register 30 days to get some kind of agreement from the state.

The four districts represent the largest of the state's 141 school districts.

"One point I'd like to make, once you're in litigation with people, you have a little different conversation because you realize everything you say could end up in court," the governor said.

The state's share of funding for local education is distributed through the nearly 23-year-old Basic Education Program funding formula, which school districts both large and small say is not adequate to the task. School boards in Bradley, Grundy, Marion, McMinn, Polk and Coffee counties have also authorized lawsuits.

"This is not just about the four large districts," Hamilton County Board of Education attorney D. Scott Bennett told board members last week. "These [smaller] districts are looking to Hamilton County primarily because we got the conversation started."

To avoid litigation, districts want Haslam to present a plan with endorsements from top legislative leaders to adequately fund the latest version of the formula, known as BEP 2.0. Representatives of large systems believe adequately funding teacher salaries and health insurance would cost about $560 million -- the equivalent of about a half-cent on the state sales tax.

This is not just about the four large districts. These [smaller] districts are looking to Hamilton County primarily because we got the conversation started."

Other estimates are the formula is as much as $1 billion underfunded overall.

Haslam, a Republican, said that "obviously I want to listen to their point. ... I think one of the points we'll make [to the Big Four districts] is that if you look at states' contributions to K-12 education in the last four years, Tennessee would be at the top of the list in terms of percentage of budget."

The governor added, "We're always going to work to not just adequately fund education but do it in the right way with the best outcomes. And I think superintendents actually have a unique insight in that. Like us, they're not just ... obviously they want more money, but they're interested in outcomes as well."

Haslam said his administration has done all it can to increase funding during lean times and is recommending an additional $44 million for the BEP and nearly $100 million for teacher salaries in the 2015/2016 budget.

Asked where the state would come up with the money if districts actually sue and win -- which rural systems have done on three previous occasions -- the governor said "there's a lot of hypotheticals there. Obviously they have to sue and we would obviously make the case we've made real progress in funding education.

"If that happens [if they win], I don't know what we'd do," Haslam continued. "The funding challenges in Tennessee are unique, but they are real."

As for whether the situation might force reluctant fellow Republicans in the GOP-run General Assembly to approve a sales-tax increase, Haslam said, "it's just to hard to say."

Tennessee, which has no general state income tax, relies heavily on the state sales tax, now at 7 percent except for food purchases, which are taxed at 5 percent.

Some Republican lawmakers hope to eliminate the Hall income tax on interest and dividends.

"My concern is we have a very narrow revenue base," Haslam said. "We basically live off sales tax and some business tax, and then the Hall tax, which is another $270 million, $280 million. When you compare that to most states' revenue base, ours is very narrow."

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.

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