Morgan suggested during a Senate Education Committee presentation that the state's Basic Education Program (BEP), the model for sending state dollars to public schools, is more driven by money than an emphasis on outcomes.
"It seems like to me if we are to be effective at recruiting and retaining highly effective teachers ... teacher salary is important, but at the same time we raise salaries there ought to be something on the other side of the transaction if you will," Morgan told lawmakers. "What I would suggest is that we seriously consider asking every system in exchange for focusing additional resources on salaries ... ask every system to adopt a pay-for-performance system."
More than 20 years ago, then-Gov. Lamar Alexander advocated and signed education reform measures to include an incentive pay program for teachers.
When the BEP was enacted in 1992, the state adopted a county-level fiscal capacity model to fund local school systems.
But the Tennessee Supreme Court has issued three decisions striking down the state's method of funding public schools. An attempt to change the funding method by moving to a system-level fiscal capacity model has not been successful.
In this legislative session, Gov. Phil Bredesen and lawmakers are grappling with making BEP adjustments while deciding on Bredesen's proposed 40-cent-per-pack cigarette tax hike to fund more than $200 million in education improvement programs.
The state's largest metropolitan school districts, meanwhile, continue to complain about the BEP's funding method and have formed their own coalition to advance their agenda.
"People in Hamilton County are extremely unhappy," state Sen. Ward Crutchfield, D-Chattanooga, told Morgan.
Northeast Tennessee school districts, including Kingsport City Schools, also have aired concerns about the BEP.
"It's more difficult to get people energized about funding the BEP if they don't think it is being fairly administered," Morgan said. "And that lack of support and that potential added expense make it, I think, more difficult to make improvements. And a lack of confidence in our accountability measures makes it even harder to convince policy makers at state and local levels to invest more in education."
While the BEP is driven by money and numbers of students, it isn't focused on "adequacy issues," Morgan said.
"It doesn't address recruiting and retaining highly effective teachers, things we believe are important in achieving outcomes," he said. "It doesn't break through the single salary schedule as it relates to specialties that you are having trouble finding. It may cost more to get math and science teachers who are highly effective in your system."
In what Morgan called a "reasonable comparison of operating expenses," he said BEP's average per-pupil state and local share of funding in 2005 was $5,100 as opposed to more than $8,300 in peer Southern states.
"We rely heavily on local tax bases to fund education whether it be through the mandated share of the BEP or the supplemental amounts that every system believes they have to put into education to buy what they think they need to buy," Morgan said. "The effect of that system is that over time ... the state share of education in Tennessee has actually declined."
Morgan noted that cities with a strong property and sales tax base are able to give more of a local share to their school districts, while the BEP tries to help out in county funding shares.
"When BEP was passed, I remember thinking that would be the solution to all our problems. Did we miss the mark?" state Sen. Joe Haynes, D-Goodlettsville, asked Morgan.
Morgan said that student performance has risen, and underperforming school systems are doing better.
"The problem is that as we were doing better, everyone else was doing better as well," Morgan said.