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School Funding Still Not Equal

by Joe Sullivan

When Tennessee's Basic Education Program (BEP) was enacted in 1992, it was supposed to equalize school spending throughout the state. While meaningful strides have been made in that direction, wide disparities remain between better-funded and more poorly funded school systems.

In Oak Ridge, for example, 1998-99 expenditures per student of $6,832 remained 146 percent of the state average, and average teacher pay of $44,309 stood at 125 percent. By contrast, Union County outlays per student of $4,105 were 88 percent of the state average, and average teacher pay of $30,194 stood at 85 percent.

Now, the same lawyer, Lewis Donelson, who pressed the lawsuit that begat the BEP is suing to redress teacher pay inequality in particular. Conventional wisdom has it that Donelson will prevail on his motion for summary judgment at an Oct. 6 hearing on grounds that the state has failed to comply with a 1995 state Supreme Court decision requiring that the BEP "must include equalization of teachers' salaries."

The Legislature responded to that decision by enacting a plan for largely state-funded supplements to teacher salaries in counties where pay averaged less than $28,094. But these supplements have never amounted to more than $12 million a year out of total BEP classroom outlays of over $2.2 billion. Assuming the court rules as anticipated after the Oct. 6 hearing, the onus will revert to the Legislature to come up with a much costlier and potentially draconian remedy.

"The only logical conclusion is that the state should assume total responsibility for teacher compensation," says state Treasurer Steve Adams. But that begs the questions of what the pay scale should be and at what cost to the taxpayers. To bring all other teachers in the state up to Oak Ridge's top-of-the line scale would cost an estimated $750 million. Even to key the scale to the present statewide average of $36,000 would cost an estimated $400 million and create the specter of whacking teacher pay in school systems that exceed the average. (Since Knox County is slightly—yet embarrassingly—below the average, it wouldn't be among those whacked.)

Fortunately in this case, logic seldom prevails in the Tennessee legislative arena, and the prospects for state usurpation of teacher-pay responsibility appear remote. Even Donelson, while acknowledging that this approach "is the simplest and most straightforward," spurns it as unaffordable. Nor does he favor repealing a state law that entitles local school systems to make local supplements to the state's present base salary schedule, which averages about $27,000.

"I'm not saying that all teacher salaries should be the same, but rather that there should be some reasonable relationship among them after allowing for cost of living differentials," says the sage Memphis lawyer, who also served as the state's commissioner of finance and administration when Lamar Alexander was governor. He reckons an equalization cost to the state of $125 million after reallocation of some BEP funds from rich school systems to poor ones. "The real disparity is between rich municipalities and poor counties," he contends.

Of the 20 school systems in the state whose outlays exceed 110 percent of the state average, 16 are municipal. And a quirk in the BEP funding formula has contributed significantly to their ability to pay up. Because of the formula's complexity, the quirk is not easy to explain. But it has to do with the way each school system's fiscal capacity is calculated as a basis for determining the proportion of state funds to which it's entitled under the BEP.

On a statewide basis, the state pays 75 percent of BEP-defined classroom costs while localities pick up 25 percent. But the state share varies—from a low of 58.6 percent in Davidson County to a high of 95.4 percent in Hancock County—depending on fiscal capacity. This capacity is measured largely in terms of property and sales tax base but also includes personal income data and other factors. Because some of these data can only be obtained on a countywide basis, municipal school systems within a county are presently entitled to a pro rata share of a county's entitlement based on their respective school enrollments. Thus, relatively well-to-do municipalities within lower capacity counties can actually get more than 75 percent of their BEP-defined classroom expenses paid for by the state. In East Tennessee, Oak Ridge, Maryville, Alcoa, Cleveland, Elizabethton, Greeneville and Johnson City all fit this profile of municipal school systems that are making out like bandits. (By way of contrast, the 64.8 percent state share of these expenses in Knox County is the third-lowest in the state.)

The Tennessee Advisory Commission on Intergovernmental Relations (TACIR), which devised the fiscal capacity formula, is understood to be working on revisions that would permit each school system to be assigned a fiscal capacity of its own. The sooner this can be accomplished the better.

There's no doubt that communities like Oak Ridge, Maryville and Alcoa will retain their commendable commitment to quality education. And if they need any consolation over funding cuts that could crimp their teacher salaries, they should refer to a recent RAND study that compares student achievement gains in relation to school funding on a state-by-state basis between 1990 and 1996.

The study concludes that, "having a higher percentage of teachers with master's degrees and extensive teaching experience appears to have comparatively little effect on student achievement across states. Higher salaries also showed little effect, possibly reflecting the inefficiency of the current compensation system in which pay raises reward both high-and low-quality teachers." On the other hand, the study found that, "differences in state scores for students with similar families can be explained, in part, by per pupil expenditures and how these funds are spent. States at the top of the heap generally have lower pupil-teacher ratios in lower grades, higher participation in public pre-kindergarten programs and a higher percentage of teachers who are satisfied with the resources they are provided for teaching."

That same study can be used, of course, to cast doubt on the justification for teacher pay equalization under the BEP. However, in a landmark 1993 decision, the state Supreme Court concluded that the state constitution requires "a public school system that provides substantially equal educational opportunities to the school children of Tennessee." The 1995 decision extended the equalization requirement to teacher pay. These constitutional principles deserve to be upheld with greater emphasis placed on the factors cited in the RAND study that have contributed to superior student achievement.

September 14, 2000 * Vol. 10, No. 37
© 2000 Metro Pulse