Funding fights

States often get sued over school funding. Here’s what makes Tennessee stand out.

It’s official: three of Tennessee’s four urban school districts are suing the state for more money.

Last week, Metropolitan Nashville Public Schools became the latest district taking the state to court, following on the heels of litigation already in process by school systems in Memphis and Chattanooga. The districts’ situations differ enough to justify separate suits, but the underlying message is the same: local school leaders believe Tennessee isn’t providing enough money to properly educate students.

Their crusades may be successful, based on the track record of similar cases across the country. And national school funding experts also side with the districts. They say Tennessee’s funding formula is badly in need of updates.

Similar lawsuits have been filed in 45 of 50 states. The cases started cropping up after 1973, when the U.S. Supreme Court ruled in San Antonio Independent School District v. Rodriguez that education is not a federal right, and therefore school funding is entirely a state matter. From then on, if school leaders believed their state legislature wasn’t giving them enough money to educate students properly, they could go to their state courts as a recourse.

About 60 percent of school funding cases have gone to trial, and states have lost the vast majority of those, says Michael Rebell, an attorney who has represented districts in New York State in funding cases.

“In almost every state constitution, there’s an explicit cause that guarantees students some kind of an adequate education … so you have a very strong legal anchor to begin with,” Rebell said. “And when you give evidence of what’s going on in schools, particularly in underfunded areas, judges tend to be shocked at conditions in these schools.”

Most cases thrown out were due to a judge who said school funding was not under the court’s purview and should be handled by the legislative and executive branches. That’s an argument Tennessee Rep. Bill Dunn made during the most recent legislative session when he unsuccessfully lobbied for a constitutional amendment barring courts from interfering in schools.

The separation-of-powers argument hasn’t held much water in Tennessee, though. State courts heard three historic school funding cases from the late 1980s to the early 2000s, siding with local districts every time. Those cases keyed in on built-in inequities in the state’s funding formula that cause some districts to get more money than others.

New focus

The latest round of lawsuits, while all different, zoom in on inadequacy and argue that Tennessee is not funding its schools based on the true cost of educating today’s students.

The move from a focus on equity to adequacy is a trend nationwide, abetted by the move toward more rigorous academic standards, Rebell said. Districts are no longer as focused on whether they are getting more or less than other districts, but if they are getting enough money to help their students meet standards — in other words, to provide kids with an adequate education.

“Every school should have enough resources to meet adequacy, however we define it,” he said.

And when it comes to providing adequate funding to educate students based on today’s standards, national experts say Tennessee isn’t.

Tennessee uses a complex formula known as the Basic Education Program, or BEP, to generate and distribute state education dollars to public schools to provide a basic level of education. But critics charge that the formula, developed more than a quarter century ago in response to one funding lawsuit against the state, falls short on two fronts: 1) it doesn’t properly account for the cost of educating students in the 21st century; and 2) Tennessee doesn’t spend enough money on schools, period.

Tennessee has made historical increases in education spending under Gov. Bill Haslam. Still, in a time of economic surplus, it lags behind other states in school spending.

"Tennessee is really at the bottom of the national barrel in terms of how much funding it provides to support public education."David Sciarra, Education Law Center

“Tennessee is really at the bottom of the national barrel in terms of how much funding it provides to support public education,” said David Sciarra, executive director of the Education Law Center, a group advocating for fair and equitable school funding.

But state officials argue otherwise. This summer, the state released a 25-page defense of its funding formula in response to the lawsuit filed last year by Shelby County Schools in Memphis. Haslam has maintained all along that the state is filling its constitutional duty to its public school students. And the State Department of Education, in its statement about Nashville’s lawsuit, noted that education spending has increased steadily during the last few years.

Time to reset

Experts say Tennessee is overdue for a reset. They say the state should step back and look at what it costs to educate kids today, taking into account how technology, demographics and school accountability have changed since the BEP was approved in 1992. (The legislature included some updates to the formula this year, while leaving out others.)

“One of the things the legislature could embark on (would be) a cost study to figure out what kind of formula would serve Tennessee schools today given the demands lawmakers are placing on schools and students for performance,” Sciarra said.

Tennessee’s formula also should take into account the high concentration of impoverished students served by many of its districts, say advocates for equitable funding. The state already gives districts more money per low-income student. But when low-income students are segregated in schools, the impact of poverty magnifies, says Rebecca Sibilia, CEO of EdBuild, another nonprofit organization focused on fair school funding.

Gov. Bill Haslam
Gov. Bill Haslam

“This is where your students are much more likely to encounter violence on their way to or from school, they are much more likely to only have one parent at home, be faced with lower (living conditions),” she said. “When you start to fund for concentrations for students with higher needs, you can actually start to address some of those larger societal needs.”

Sibilia points to California as a school funding success story. The state recently overhauled its spending formula — and ramped up education spending.

But it’s rare to see states start over. “Comprehensive overhauls don’t happen that often,” she said. “The fact that they don’t is indicative of how very political the discussion is.”

Sciarra says that’s where the courts come in.

“The reason you see litigation is not because people want to go to court,” he said. “It’s because the other branches of government aren’t doing their job.”


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.