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BEP reforms aim to equalize school funding

May 5th, 2007 1:36 am by Hank Hayes



Equalizing state funding for public schools - the unseen 800-pound political gorilla in Tennessee's classrooms - is something policy makers have tinkered with for years.


Two things about the funding model are certain. Policy makers haven't been able to make the funding model fair enough for everyone's liking. They haven't made it simple enough to comprehend, either.


Tennessee's Basic Education Program (BEP) has been criticized for being a funding model too complex for average Tennesseans - and education insiders - to understand.


Even Gov. Phil Bredesen, while rolling out his $475 million BEP overhaul plan to a special Joint Convention of lawmakers on Thursday, poked fun at how complicated the state's school funding mechanism really is.


"The state/local split ... is determined by a fiscal capacity formula that is outdated and obscure," Bredesen told the General Assembly. "Rather than being plainspoken and clear, it uses regression analysis to calculate coefficients, and reminds me of an old black-and-white movie where the mad scientist sets some dials on a machine in the basement of the castle and turns the crank, and it clanks and lights and bells go off, and finally it spits an answer out the bottom. The mad scientists in the fiscal capacity case are some great people in the Department of Education, but the process is the same."


One reason the state has been unable to find a simplified school funding model to keep everyone happy is that no other state is comparable to Tennessee, according to the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).


TACIR noted in an education brief last September that education funding has long been determined at the county level even though 28 of Tennessee's 95 counties have more than one school system.


"Currently all school systems within each county are treated as though they have the same fiscal capacity per student," the TACIR brief said.


But, as TACIR pointed out, local school finance in Tennessee is complicated in counties with more than one school system because of the fiscal interrelationships among those systems.


For instance, cities may impose property taxes but generally do not specify a tax rate to fund schools and are not required to share revenue with county governments. Even Tennessee's 15 special school districts are not fully independent, TACIR said.


Bredesen's BEP reform plan calls for replacing the current formula by using a county's amount of assessed property and sales tax revenue to determine ability to pay. Those two factors represent more than 90 percent of the amount of local revenue available for education, according to the Bredesen administration.


While the state increases its share of funding for teacher salaries, there is also still a "maintenance of effort" statute in the BEP - meaning that local school systems must maintain their current level of funding.


"No school system loses money, and many get a significant uptick," Bredesen said of his planned BEP overhaul in a conference call with reporters. "When you look at it, it's the ones who deserve the uptick who are getting it - the ones who have put the most local capacity in it as well. ... This will be much more acceptable to the superintendents and county executives."


One other funding quirk Bredesen intends to eliminate is the BEP's so-called "Cost Differential Factor" (CDF), which allocates more than $100 million to 17 school systems to recognize the higher cost of doing business in their communities.


Bredesen called the CDF a "political fix" when the BEP was created in 1992 to get more money to some urban school systems. The CDF attempts to calculate wage competitiveness in a local work force and is based "on an analysis of 90-plus industry subgroupings," according to a summary of proposed BEP changes.


Bredesen pointed out the largest beneficiary of the CDF today is Williamson County - one of Tennessee's most prosperous counties - which gets an 18 percent premium on state funding paid for by other counties' taxpayers.


"Conversely, Hamilton County - Chattanooga - is an urban system with the second-largest number of failing schools in the state. Hamilton County gets nothing - that's not fair," said Bredesen.


Bredesen didn't suggest his overhaul will work forever. He noted the original BEP plan took six years to fully fund stretching across the administrations of Govs. Ned McWherter and Don Sundquist.


Bredesen said lawmakers could fund "a big piece" of his plan this year and finish it off in later years.


"I'd love to finish this off on my watch," he said. "(But) it certainly is a realistic possibility that the next governor would have this to work with as well."


For more information about Bredesen's BEP overhaul plan, go to www.tn.gov.


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