insights (2006-05)

Bredesen’s Dereliction on School Funding

Gov. Phil Bredesen deserves a blackmark for his failure to support changes in the state’s formula for funding public schools that’s riddled with inequities. After initially spurning last fall’s recommendations by a key committee of the State Board of Education for revisions to redress these inequities, Bredesen has at least come around to a more neutral posture toward them. So there’s now at least some room for hope that efforts to revamp the funding formula, known as the BEP, will come to fruition in the State Legislature despite the governor’s lack of support.

The chairman of the Senate Education Committee, Sen. Jamie Woodson, is in the forefront of the movement pressing for adoption of the recommendations of the BEP Review Committee of the State Board of Education on which she serves. Knox County Mayor Mike Ragsdale has contributed mightily to the effort by mobilizing the mayors of the state’s large urban counties in protest against the ways in which the present formula discriminates against their school systems, especially in Knox and Hamilton.

This discrimination is exemplified by the fact that Williamson County, demonstrably the wealthiest in the state, got $328 more per student in state funding than the $2,242 per student Knox County received this past school year. That difference, when multiplied by Knox County’s public school enrollment of roughly 53,000, amounts to a $17.4 million funding shortfall—enough to get Knox County schools out of the budget bind that’s been constricting them.

The BEP’s complex school funding formula purports to measure each school system’s fiscal capacity and distribute state dollars in inverse proportion to each system’s ability to fund its schools with local tax revenues. The state’s average contribution this past school year was $3,027, and poorer counties undoubtedly deserve and have been mandated by the State Supreme Court to get enough more to equalize educational opportunity throughout the state. Yet under the perverse workings of the formula, even Davidson County, with the highest fiscal capacity of any, gets more state funding per pupil than Knox, which shares the lowest rung on the BEP ladder with Hamilton County.

The reasons Williamson County gets so much more than Knox County serve to illustrate the most glaring inequities in the BEP.

For one, the formula includes what’s known as the Cost Differential Factor (CDF) that purports to measure cost differences among counties and reward counties with above average costs with a funding multiplier based on them. If the CDF were based on cost of living differentials it would have some merit, but that is not the case. Rather, the CDF is based on a compilation of wages for a hodgepodge of job categories, very few of which have any relevance to teaching. Yet state funding for instruction in Williamson County gets boosted by a 1.18 CDF multiplier whereas Knox County’s multiplier is only 1.01. (Three counties—Davidson, Shelby and Williamson—account for the preponderance of the $93 million in CDF dollars the state parceled out this past school year.)

For two, the BEP includes what’s known as the Service Factor, which bases allocations to counties on their school enrollment as a percentage of the county’s population. Because Williamson County students comprise 18.2 percent of the population it gets a big bump in its state funding compared to Knox County, where public school enrollment is 13.4 percent of the population. Yet the Tennessee Advisory Commission on Intergovernmental Relations, which is widely regarded as the most authoritative voice in the state on school funding matters, is loud and clear that the Service Factor has no relevance to measuring a county’s fiscal capacity and should be eliminated from the BEP formula. That’s because the formula’s two primary measures of capacity—a county’s property tax base and its sale tax base—are both expressed on a per-pupil basis, making the Service Factor redundant.

Another disparity in the BEP is that it fails to take into account the additional tax revenues available to municipal school systems in a county. Right now, school systems in cities such as Oak Ridge, Maryville and Alcoa qualify for the same state funding per pupil as their respective county systems despite the fact that these municipalities have more capacity to support their schools. TACIR has developed a prototype model that would take into account the capacity of each of the state’s 136 school systems rather than base funding solely on the capacity of its 95 counties.

At a pivotal meeting in October, the BEP Review Committee recommended “studying and moving forward with comprehensive, simultaneous, and timely improvements to the BEP” that include:

The reason for making all of these changes simultaneously is that they are ingeniously crafted to make up with increases on the one hand (e.g. by increasing funding for at-risk students and raising the state salary share to 75 percent), much of what some systems would stand to lose on the other as a result of conversion to a system-level model and elimination of the CDF. Even so, the package would still mean funding reductions for some systems totaling $42 million that would need to be made up through what are called hold harmless payments, and the package as a whole would cost $163 million in additional state funding.

Within a few days after the BEP Review Committee made its recommendations, though, Bredesen at a lunch talk to the Cleveland Rotary Club was quoted as saying, “I do not have any intention of picking it up and making it happen… I think it’s one of those things that maybe someday, at some point in the future, some governor will tackle as a matter of cleaning up the program. But it’s not on my radar screen.”

More recently, Bredesen has been quoted as saying he would not stand in the way of the BEP revamping, but that he’s not prepared to fund it in his budget. Granted, the $163 million price tag is more than the state’s budgetary constraints will allow in the fiscal year ahead, so a multi-year phase-in may be in order. But Bredesen should also be taken to the woodshed for his failure to endorse (or at least not oppose) proposals to generate more than $200 million in additional revenue by raising the state’s cigarette tax to the national average of 84 cents a pack form 20 cents at present. These proposals, by Sens. Steve Cohen and Rosalind Kurita, could have gone a long way toward meeting education needs from Pre-K to higher ed, but Bredesen undermined them.

I’ll be pleasantly surprised if Bredesen does more than recommend a modest increase in BEP funding for all school systems based on their enrollment of at-risk students and English language learners. Because large urban systems have the largest concentrations of such students, they would benefit the most. However, the extra million dollars or so that Knox County might receive barely makes a start toward getting the additional $18 million that would result from implementation of the BEP Review Committee’s recommendations.