BEP lawsuit like 'suing taxpayers for tax increase'

BEP lawsuit like 'suing taxpayers for tax increase'

March 26th, 2015 by Andy Sher and Kevin Hardy in Politics State
Gerald McCormick speaks in this file photo.

Gerald McCormick speaks in this file photo.

Photo by Tim Barber /Times Free Press.

House Majority Leader Gerald McCormick charged Wednesday that a multi-county lawsuit challenging Tennessee's funding of public education as inadequate really amounts to "suing the state's taxpayers for a tax increase."

"I think it's better for everyone to work together on this rather than sue each other," said the Chattanooga Republican. "I think they'll end up hurting the kids, suing the state and suing the state's taxpayers for a tax increase..."

School boards in Hamilton and six nearby counties filed the suit Tuesday. Less than 24 hours prior, the heads of the state's four largest school systems, including Hamilton County Superintendent Rick Smith, met behind closed doors with Republican Gov. Bill Haslam and discussed problems with the state's Basic Education Program funding formula.

Hamilton County school board member Jonathan Welch defended the lawsuit, saying the school system has a responsibility to articulate its needs. And with so much going unmet, he said it's up to the Legislature and county governments to figure out how to fund schools.

Welch said the lawsuit is ultimately aimed at helping Tennessee students, teachers and schools -- not hurting them.

"As low as the funding is at this point, compared to the needs we have across our county, I don't know how us advocating for more funding is going to hurt our teachers or students."

The suit alleges Tennessee has "breached its duty under the Tennessee Constitution to provide a system of free public education for the children of the state."

It follows a well-trod legal path established through three lawsuits won by a coalition of small school systems in the 1990s and early 2000s. The threat of the first one prompted the BEP formula and a half-cent sales tax increase. Saber-rattling by then-Hamilton County Mayor Claude Ramsey, a Republican, several years ago led to a revamp of the formula and a cigarette tax boost.

Still, the changes were never fully implemented. And school systems both large and small now say additional demands imposed by the state and other issues have left them struggling. Hamilton County says the state share of funding for its system is $13 million below what it should be.

Fixing the situation for all systems would cost more than $500 million, according to estimates.

Will Pinkston, a school board member from Metro Nashville which could join the lawsuit, took issue with McCormick's statement.

"There are ways to increase funding for public schools without raising taxes.

"For starters," added Pinkston, a one-time top aide to former Democratic Gov. Phil Bredesen, "the administration and the Legislature should consider going back to the practice of closing corporate tax loopholes, which they abandoned a few years ago."

Pinkston said "ensuring adequate funding should begin with energetically protecting the existing revenue base."

Other one-time Bredesen aides say Bredesen raised an estimated half billion dollars over the course of his eight-year tenure through annual "technical corrections" bills. They closed off what Bredesen characterized as corporate "loopholes" in state franchise and excise tax collections.

Some affected businesses, of course, disagreed they were loopholes. But the money enabled Bredesen and lawmakers to put additional funds into education and economic development.

Haslam dropped the practice in his first term. But this year he has recommended a bill that makes a number of business tax changes. If approved, it would raise an additional $17.1 million in the fiscal year 2016 budget that goes into effect July 1.

That would grow to $45.48 million by fiscal year 2018-2019, according to a legislative analysis.

Meanwhile, Knox County Schools Superintendent James McIntyre, who attended Monday's meeting with Haslam, as did superintendents from Metro Nashville and Shelby County, was scratching his head over the lawsuit.

"I was a bit surprised that Hamilton County Schools filed suit the next morning," McIntyre told The Associated Press on Wednesday. "I don't want to second-guess my colleagues, but it did feel like a little bit of a rush to the courthouse ... when we had what I thought was a very productive dialogue."

He called it "unfortunate."

McIntyre is said to have enjoyed good relations with Haslam, a former Knoxville mayor. His name was floated in both political and education circles as a potential state education commissioner when Haslam first became governor in 2011 and again late last year when then-Commissioner Kevin Huffman stepped down.

Metro Nashville Schools Director Jesse Register has opposed litigation, although some of his school board members helped get the entire discussion rolling.

Following Monday's meeting, Haslam and the superintendents spoke with reporters. The governor pointed out his proposed budget includes almost $100 million to boost teacher pay and about $40 million for BEP improvements.

He said there are both short- and long-term steps he can take but his focus will be on student outcomes.

"There's nothing that any of these superintendents have expressed that we'd say no, no, you're wrong, you don't need more of that," Haslam said Monday. "Our challenge in a budget is always how do you make everything work. ... But there are still some real needs that they are convinced can affect outcomes. So we're going to see what we can do."

At that time, a Times Free Press reporter specifically asked Smith whether he would ask the school board to hold off on litigation in light of Monday's meeting. The board, along with boards in Bradley, Polk, McMinn, Grundy, Marion and Coffee counties have been discussing litigation for months and in recent weeks adopted resolutions authorizing the lawsuit.

"Yes, certainly I'm going to talk with our board about what I think's important for all of us but particularly in Hamilton County, yes," Smith said Monday. "I think right now we need to talk. We had a very good conversation today. I expect we'll have further conversations."

Following Tuesday's filing of the lawsuit, Haslam said it effectively shut the door on future talks over the state's funding of education.

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

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