Push Back for Teachers

The school system deserves a refund on unjustified sales tax fees

It's downright shameful that public school teachers are the only local government employees getting terminated under the budget that County Commission approved last week.

Commissioners gave the back of the hand to a school board request for an additional $1.75 million that would have permitted restoration of 30 teacher and 10 teacher aide positions that Schools Superintendent Jim McIntyre had felt compelled to cut in order to conform to County Mayor Mike Ragsdale's $378.5 million recommended school budget.

Granted that times are tough all over and granted further that not all of the position cuts would result in layoffs due to attrition. But reducing the number of public school classroom teachers is the last way the county should be looking to economize. Instead, it's become the only way that will result in a loss of jobs.

In rejecting the school board's request, several commissioners invoked a belief that there is "fat" in the school system's Central Office and that McIntyre should look to make cuts in administrative positions there rather than cut back on teachers.

This is an old canard that seemingly rears its head whenever there's a school budget crunch. The last time it was invoked, in 2001, a Texas-based consulting firm selected and compensated by County Commission conducted a comprehensive evaluation of the school system. While finding a need for tighter financial controls and room for savings in some other areas, the evaluation concluded that, "It is clear that the central office is understaffed."

Under McIntyre's superb leadership, I have great confidence that the school system is much better managed now than it was back then. Before resorting to teacher position cuts to balance a budget that didn't provide any increase in funding, McIntyre extracted some $17 million in other cuts to offset largely fixed-cost increases for things like pensions, health insurance, and what are known as step raises for teachers based on their seniority. He further sought to get the teachers to forego these raises for which the school system is obligated under its state-mandated collective bargaining agreement with the Knox County Education Association (i.e. the teachers union). But the KCEA members, in a referendum, rejected McIntyre's appeal.

One of the causalities of the school system's austerity rations is full implementation of a program that is crucial to achievement of its overarching goal: namely, preparing every student for college and/or the 21st-century workforce. That program, known as Excellence in Literacy, devoted coaches, specially trained teachers, and specialized curriculum to getting students who are reading far below grade level back on track. Phase I of the program was introduced in the county's middle schools in 2007 at a cost of $2.6 million and has achieved remarkable successes. But Phase II of the program—an extension to elementary schools—has been held in abeyance.

Not until it's fully implemented does the school system stand much of a chance of achieving a prime measure of success: a 90 percent high school graduation rate with 80 percent of the graduates scoring 21 or better on the ACT test, which is widely considered the standard of college readiness.

Fortuitously, there may be one way for the school system to get more money even in these difficult times; and that's to gain exemption from some of the fees that the county trustee collects on all school revenues. In the current fiscal year, the school system paid well in excess of $3 million in trustee fees, including more than $2 million (or 2 percent) on the upwards of $100 million in property tax revenues it receives and $1 million (or 1 percent) of its $100 million in local option sales tax revenues.

The fees on property taxes may be justified because the trustee has to spend money to collect them. But he does absolutely nothing to earn them on sales taxes, which are collected by the state. Former County Trustee and then County Executive Tommy Schumpert is clear the sales tax fee is unjustified and should be waived, and when he served as county trustee, Schumpert did just that. But under the regimes of his successors, they have been collected in full. It's true that the trustee remits collections in excess of the expenses of his office to the county's general fund to the tune of $2.6 million this year. But none of this money goes directly back to schools.

As a rule, state law mandates trustee collection of these fees. However, there is a little-known exception made for agreements between a city and a county. Even less well known, when the city of Knoxville and Knox County first imposed a local options sales tax (then 1 percent) in the early 1960s, they agreed that all of the proceeds would go to schools and not be subject to trustee's fees. Subsequent increases in the tax rate to 2.25 percent have gone half to schools and half to general funds and haven't been the subject to any intergovernmental agreement.

In a 1989 opinion, then County Law Director Dale Workman advised that the initial 1 percent sales tax take, which is 61 percent of the total going to schools, should be exempt from trustee fees, but that ruling has been honored in the breech, at least since 1998.

So the school system is now entitled to present the trustees—and by extension, the county—with a bill to recover not just current-year fees but also for perhaps as much as $5 million in wrongfully collected fees for more than a decade. I say push back.