School Finance

Shelby County Board of Education files funding lawsuit against state

PHOTO: Kayleigh Skinner
Shelby County Superintendent Dorsey Hopson discusses the district's school funding lawsuit against the state of Tennessee as board members Chris Caldwell and Teresa Jones offer their support.

Declaring that “money makes a difference” when it comes to educating Tennessee’s public school students, the Shelby County Board of Education sued the state on Monday claiming that Tennessee isn’t adequately funding its schools, especially for its most vulnerable children.

In a 38-page suit filed in Davidson County Chancery Court, the Memphis-based district argues that the state has violated its constitutional duty to “equitably and adequately fund public school education for all students.”

The suit notes that Memphis and Shelby County have a disproportionately high number of students who are minorities, have disabilities and live in extreme poverty. “Because of the lack of funding, the District is unable to provide many of these impoverished, mainly-minority students with an education that would allow them to achieve the outcomes mandated by the Tennessee Constitution …” the suit says.

The lawsuit by Tennessee’s largest public school district adds significant weight to ongoing litigation over the adequacy and equity of education funding through the state’s Basic Education Plan, or BEP.

In March, the boards for seven school districts in southeast Tennessee, led by Hamilton County Schools in Chattanooga, filed a lawsuit charging that the state has created a system that “shifts the cost of education to local boards of education, schools, teachers and students, resulting in substantially unequal educational opportunities across the State.” That lawsuit is pending, and the state has urged dismissal, arguing that the legislature has leeway in funding K-12 education.

Asked about the latest funding lawsuit on Monday, a spokesman for Gov. Bill Haslam declined to comment on any pending litigation. A spokeswoman for Tennessee Education Commissioner Candice McQueen also declined to comment. Both were named as plaintiffs in the lawsuit, along with members of the State Board of Education and state legislative leaders.

Shelby County School leaders held a morning news conference at Riverside School to explain why they are taking the state to court.

“We are asking the state to live up to its constitutional obligation,” said Superintendent Dorsey Hopson. “(Our students) deserve better than this. We want to give the type of education that our kids need and deserve.”

District leaders have argued that the state grossly miscalculates how much an average teacher costs and doesn’t take into account the financial impact of the growing charter school sector and a host of state-mandated reforms placed on large urban school districts.

If the state fully funded public schools, Shelby County Schools would get an extra $100 million in state funding annually, according to school board member Chris Caldwell.

All year, district leaders have explored the possibility of litigation and in June hired the Wichita-based office of Lewis Brisbois Bisgaard & Smith, a firm that has helped urban districts win a similar school funding lawsuit in Kansas.

In the meantime, the cash-strapped school system has cut more than $275 million from its budget in the last two years alone, resulting in the closings of 17 schools since 2013, teacher layoffs and increased class sizes. County government leaders say the county has largely picked up the state’s slack, allotting 60 percent of its budget toward public education across Shelby County.

“… We have had to constantly cut resources, lay off needed staff members, and remove programs that can help our students remain competitive,” said Teresa Jones, chairwoman of the Shelby County Board of Education. “In a time when academic and career standards are increasing, our students need more resources.”

The lawsuit contends that the district cuts are the result of inadequate state funding, forcing the district to break state constitutional mandates to provide an adequate education for its children. The suit blames the level of funding on some BEP components, combined with an under-appropriation of money to fully fund the formula.

District leaders predict the lawsuit could take years to wind through the court system and could cost hundreds of thousands, if not millions of dollars, in legal fees. But board members and administrators said they are confident that the district will reap millions more back in a victory or settlement and set a legal precedent for all of the state’s 142 school districts.

The state annually distributes about $6 billion in tax revenue to local districts based on the BEP formula.

Haslam, who this year championed a $147 million increase in education spending across Tennessee to address BEP funding and increase teacher salaries, repeatedly has urged district leaders to engage the state in conversation instead of litigation.


Editor’s note: This story updates an earlier version to show that the lawsuit has been filed and to include subsequent comments from leaders of Shelby County Schools.


Colorado schools are getting a major bump in the state’s 2018-19 budget

Students waiting to enter their sixth-grade classroom at Kearney Middle School in Commerce City. (Photo by Craig Walker, The Denver Post)

Colorado’s strong economy has opened the door for state lawmakers to send a major cash infusion to the state’s public schools.

As they finalized the recommended budget for 2018-19, the Joint Budget Committee set aside $150 million, an additional $50 million beyond what Democratic Gov. John Hickenlooper had asked for, to increase funding to schools.

“We believe this is the most significant reduction in what used to be called the negative factor since it was born,” said state Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee.

Colorado’s constitution calls for per pupil spending to increase at least by inflation every year, but the state hasn’t been able to meet that obligation since the Great Recession. The amount by which schools get shorted, officially called the budget stabilization factor, is $822 million in 2017-18. Under state law, this number isn’t supposed to get bigger from one year to the next, but in recent years, it hasn’t gotten much smaller either. 

But a booming economy coupled with more capacity in the state budget created by a historic compromise on hospital funding last year means Colorado has a lot more money to spend this year. In their March forecast, legislative economists told lawmakers they have an extra $1.3 billion to spend or save in 2018-19.

The recommended shortfall for next year is now just $672.4 million. That would bring average per-pupil spending above $8,100, compared to $7,662 this year.

Total program spending on K-12 education, after the budget stabilization factor is deducted, should be a little more than $7 billion, with the state picking up about $4.5 billion and the rest coming from local property taxes.

The budget debate this year has featured Republicans pressing for more ongoing money for transportation and Democrats resisting in the interest of spreading more money around to other needs. The positive March forecast reduced much of that tension, as a $500 million allocation for transportation allowed a compromise on roads funding in the Republican-controlled Senate. That compromise still needs the approval of the Democratic-controlled House, but suddenly a lot of things are seeming possible.

“We knew we were going to have more revenue than we’ve ever had to work with,” Hamner said of the status at the beginning of the session. But that presented its own challenges, as so many interest groups and constituencies sought to address long-standing needs.

“The fact that we’ve been able to reach such incredible compromises on transportation and K-12 funding, I think most members will be very pleased with this outcome,” Hamner said. “Where we ended up is a pretty good place.”

The big outstanding issue is proposed reforms to the Public Employees Retirement Association or PERA fund to address unfunded liabilities. A bill that is likely to see significant changes in the House is wending its way through the process. The Joint Budget Committee has set aside $225 million to deal with costs associated with that fix, which has major implications for teachers and school districts budgets.

The Joint Budget Committee has also set aside $30 million for rural schools, $10 million for programs to address teacher shortages, and $7 million for school safety grants.

The budget will be introduced in the House on Monday. Many of the school funding elements will appear in a separate school finance bill.

Going forward, there is a question about how sustainable these higher funding levels will be.

“It does put more pressure on the general fund,” Hamner said. “If we see a downturn in the economy, it’s going to be a challenge.”

What's fair

Colorado’s state-authorized charter schools could get more money next year

Students at The New America School in Thornton during an English class. (Photo by Nic Garcia)

Charter schools authorized at the state level by the Charter School Institute are likely to get more money in the 2018-19 budget year. That’s one year before most other charter schools will see benefits from last year’s charter school funding equity bill.

That bill was a major compromise out of the 2017 session, and it requires school districts to share money from voter-approved tax increases with the charter schools they’ve authorized, starting in 2019-20. The bill also created the mill levy equalization fund to distribute state money to the Charter School Institute’s 41 schools. Because no local school board approved these schools, they wouldn’t otherwise be eligible for revenue from these increases, known as mill levy overrides.

Charter School Institute administrators came calling for their money this year, though, with a request for $5.5 million from the general fund. They arrived at this number by identifying institute schools within the geographic boundaries of districts that already share some extra revenue with their local charters and assuming institute schools got a similar share.

Institute Executive Director Terry Croy Lewis called it a “first step” toward parity that would bring institute and district-authorized charter schools to the same level in advance of the new law going fully into effect in 2019. Lewis said it seemed like a fair approach because the parents at institute-authorized schools often live within the geographic boundary and pay taxes at the same rates as parents whose children go to traditional schools or district-authorized charters.

However, the charter equity bill says that extra money for institute schools has to be distributed on an equal per-pupil basis. The original approach, which created more equity among schools in the same geographic boundary, created more disparities among institute schools in different regions – and the law might not have allowed it.

“I don’t think you can define equity in this conversation because equity cuts a lot of different ways,” said state Sen. Dominick Moreno, a Commerce City Democrat and member of the Joint Budget Committee.

Budget analyst Craig Harper suggested to the Joint Budget Committee that separate legislation might be necessary to allow the distribution proposed by the Charter School Institute, something no lawmakers wanted to see after the bruising fight over the charter school equity bill.

Instead, the Charter School Institute revised its proposal to distribute the money among its schools on a per-pupil basis, regardless of geography and whether the local district already shares money.

What sort of difference does this make?

In the first distribution scenario, Early College of Arvada, located in the Westminster district, would have gotten nothing – because Westminster doesn’t currently share money with its own charters. Under the new proposal, the school would get $131,233 based on its pupil count. Meanwhile, Colorado Early College – Fort Collins, which would have gotten $621,357 because the Poudre district already shares money, would instead get just $374,952

Lingering confusion over the distribution question led JBC members to postpone a decision several times before they voted 4-2 this week to include the $5.5 million request in the 2018-19 budget.

It still has to survive the extended battle over the budget that takes place in the full House and Senate each year.