State yearly school costs could hit $700 million if Hamilton County wins lawsuit

Staff file photo by Doug Strickland / People walk through the atrium at the new East Brainerd Elementary School in August.
Staff file photo by Doug Strickland / People walk through the atrium at the new East Brainerd Elementary School in August.
photo Scott Bennett, the board attorney for Hamilton, Bradley and other school systems, sent this along.

NASHVILLE - If school boards in Hamilton and six nearby counties win their lawsuit charging Tennessee has consistently underfunded public education, state officials could find themselves dangling on a $700 million hook.

And possibly more, based on dollar amounts outlined in the complaint pending before Davidson County Chancellor Claudia Bonnyman.

The suit claims Tennessee officials haven't lived up to the constitutional mandate fleshed out in three earlier state Supreme Court rulings on education funding.

Tennessee Attorney General Herbert Slatery's office, which is seeking to deny the suit class-action status and have it dismissed, contends the state is making good faith efforts on funding and that counties are misinterpreting prior court rulings.

Meanwhile, the Shelby County Schools system- the state's largest district, with huge numbers of poor children - has filed a separate funding suit citing its own unique needs.

Behind both lawsuits are years of often-ignored recommendations by governors and by state lawmakers from a panel charged with keeping the state's education funding formula up to date.

The $4 billion Basic Education Program formula - comprising 45 components ranging from personnel to transportation - splits costs between the state and local districts based on locals' ability to raise money for their share.

The panel in charge of making recommendations on updating it is the BEP Review Committee.

In their suit, the districts cite any number of BEP Review Committee recommendations they say have been ignored by state officials. But playing it safe, the suit lists dollar amounts only in specific areas affecting what schools are already doing and where the Supreme Court or state law speak.

They are:

' Teacher salaries: The suit cites BEP Review Committee estimates of $532 million to cover a $10,000-per-educator "gap" between actual average salaries and the state's salary schedule.

' Health insurance: $32 million to provide a 12th month of insurance because the state doesn't acknowledge districts are footing year-round costs for educators' coverage. It used to be just 10 months, but after Hamilton County and the other districts filed the suit, Republican Gov. Bill Haslam added the 11th month into the budget at a cost of $32 million.

' Fully funding the state's share of classroom costs: $132 million. State law says its share is 75 percent, but actual state funding only covers 70 percent.

Add them all up and the figure comes to $698 million.

The suit also names any number of other BEP Review Committee recommendations, but doesn't put a price tag on them. Some recommendations go back years.

For example, funding the remainder of the 2007 changes known as BEP 2.0 would cost $133.9 million. Reducing class sizes in grades 7-12 is $87.9 million. Hiring enough school nurses to provide one nurse per 1,500 students instead of the current one per 3,000 students is $12.9 million.

It goes on.

"We've specifically listed the things that the Supreme Court has said unequivocally the General Assembly has to do" with regard to salary, insurance and the state's percentage of classroom costs, said attorney Scott Bennett, who filed the suit for school boards in Hamilton, Bradley, Coffee, Grundy, Marion, McMinn and Polk counties.

He said the suit also references funding items cited in BEP Review Committee recommendations, "on the basis that the Supreme Court has said the General Assembly is supposed to account for the full cost of educating Tennessee students."

A million here, a million there

Depending on how one slices things, the BEP Review Committee in its November 2013 report pegged the total state cost for its recommendations between $344.57 million and $875.8 million.

The low-ball figure excludes salary improvements. The high-end figure includes funding the entire $10,000 salary "gap." A midpoint of $5,000 per teacher brings total costs for all improvements down to $608.9 million.

Among those watching the court battle is attorney Chuck Cagle, who worked for the State Board of Education in the 1990s. That was when Tennessee lawmakers created the BEP in response to the first funding lawsuit by 77 small districts.

The small districts claimed the old funding formula treated districts unequally and violated the Tennessee Constitution's mandate for a free public education system. The Tennessee Supreme Court found in their favor in three rulings, the latest coming in 2003.

The latest suit questions the "adequacy" of the state's funding formula - not how the pie is sliced but whether it needs to be bigger overall.

Adequacy arguments have "met with mixed results" in other states' courts, said Cagle, who also lobbies for education interests, none of which are involved in the Hamilton County suit.

"Our [state] constitution says that the Legislature shall fund a system of free public schools. And the Legislature may consider that it's done that. The question here is proving to the court that what you've done is just not adequate," Cagle said.

"I think that's going to be a very, very hard set of facts to prove," he said.

Not that Cagle likes the current funding reality. The ratio of nurses to students, for example, is "obscenely low," he said.

Lawyers in Slatery's office contend the adequacy argument would break new ground on rulings they say were aimed at addressing funding inequities between richer and poorer districts.

Hamilton County's Bennett disagreed that the adequacy issue is a stretch.

"To the contrary, the Supreme Court has said you'll never get an equitable distribution of the financial burden until you're starting with the correct numbers," he said. "And that, to me, is exactly the theory we're pursuing. We believe the state has never used the correct numbers."

Rethinking the formula

Meanwhile, the Haslam administration is looking at changing the formula itself. Haslam's BEP Task Force, created in 2014, met last week for the first time since March, when Hamilton and the other counties filed suit.

Among other things, the task force is looking at how to resolve the years-long differences between the original BEP and the half-implemented 2007 BEP 2.0. Each has a different way of calculating the share of what local counties can afford to pay.

Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, takes a dim view of the suit.

"In addition to making [districts] happy, what do they expect from this?" McNally said, adding sarcastically that "we're doing super right now, after all the money we've given them."

He noted that each penny of state sales tax raises about $800 million. And while losing the lawsuit would likely cost the state hundreds of millions of dollars, it ran a $500 million-plus surplus in the last fiscal year.

McNally acknowledged that at least some of that excess would likely reoccur in the coming year, depending on the economy.

But McNally has his own view of how the formula can change. Earlier this month, he asked Slatery for a legal opinion on creating a new funding formula based on student outcomes as measured by testing.

Among other things, McNally cited test scores showing less than half of third- and eighth-graders scored proficient in reading, and Tennessee students remain in the bottom half of states as measured by the National Assessment of Educational Progress (NAEP).

"Given these facts, could the Legislature develop a funding formula for K-12 education based in whole or in part on student outcomes?" he asked in his letter to Slatery.

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

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