BEP Review Meeting Today

The BEP Review Committee is a group established by the Legislature to annually review the state’s education funding mechanism — the BEP.  Membership consists of the Chairs of the House and Senate Education Committees, representatives of the State Board of Education, the Comptroller’s office, Tennessee School Boards Association, Tennessee Organization of School Superintendents, a representative of the “small schools” coalition, along with superintendents and finance directors of various school systems.

At the end of the Legislative session, the General Assembly directed the BEP Review Committee to develop a “consensus recommendation” on moving to a system-level fiscal capacity model — one that would evaluate ability to pay based on the school district’s, rather than the whole county’s economic data.

The largest part of today’s meeting was devoted to a presentation by Leonard Bradley, a Vanderbilt professor and a member of the Peabody Center for Education Policy.  The Peabody Center became involved at the invitation of the State Board of Education, following considerable dissent last year over the proposed system-level formula developed by TACIR.  One of the agreed-upon goals of the BEP Review Committee is that the formula should be as simple as possible, defensible, and easy to explain; Bradley stated that they recognized the most immediate problem was to examine issues lurking within the current BEP.

The haste, of course, is that the BEP Review Committee was clearly directed by the Legislature to develop a consensus recommendation for change by Nov. 1, the date of the committee’s annual report.  One of the things I found disturbing is that several months have elapsed without further study or attempt at consensus, with a recommendation due in two months.  Bradley was not optimistic about being able to even gather the necessary data by that time, although he did acknowledge that they had ascertained that the necessary data does exist within state government.

That data is primarily comprised of property valuation by school system, although sales tax data may also be available.  The short term goal seemed to be simply using property values and sales volumes to establish a district’s ability to pay, and assigning state funding commensurate with that ability.
Richard Kitzmiller of Kingsport pointed out that if this sytem is used, it would be necessary to change state law regarding shared taxes (all county residents pay some portion of their property taxes dedicated to education operations, including city residents, all of whom pay county taxes, but only a portion of which is returned to their city school system).  If the County were no longer required to share, City residents would not have to pay the portion of County taxes dedicated to education.  The City could then raise property taxes by the amount needed to make up the difference — likely, a smaller tax rate than what was removed by the County, as property values in the Cities tend to be higher.

The same would be true for not sharing sales taxes — therefore, Oak Ridge would get back the half-cent superseded by the County in May.

Nothing was decided at today’s meeting, except that three more meetings will be needed before the Nov. 1 deadline.  At present, they are scheduled to be on Sept. 28, Oct. 11, and Oct. 23.  At the first of those, the Peabody Center should have a basic idea of what the new way to determine fiscal capacity should be.

I confess that they seemed to me to be speaking in code, but at the break, Dr. Kitzmiller (the Kingsport superintendent, who is a member of the committee and an advocate for municipal school systems) told me that it’s his opinion that this would be a positive change.  We would certainly receive less State funding, since all the cities are more affluent than their respective counties, but without having the “shared” taxes, we would have more revenue available for the same or less burden upon the taxpayer.

A reporter from Metro Pulse was there, but few other local school board members besides Dan DiGregorio and myself.  Oak Ridge lobbyist Bill Nolan was also present, and I don’t think it escaped the committee’s notice that Oak Ridge is both interested and watching.  But, with the real work ahead, it looks like I’m going to be headed back with some frequency this Fall.

2 Responses to “BEP Review Meeting Today”

  1. on 31 Aug 2006 at 2:56 pm Anotherthing2

    Ok I’m more than confused by BEP funding and this is all gibberish to me, so bare with me as I ask a couple of stupid questions. Right now the city and county supposedly receive the same amount of state money from BEP. Is this correct?

    “If the County were no longer required to share, City residents would not have to pay the portion of County taxes dedicated to education. The City could then raise property taxes by the amount needed to make up the difference — likely, a smaller tax rate than what was removed by the County, as property values in the Cities tend to be higher.

    The same would be true for not sharing sales taxes — therefore, Oak Ridge would get back the half-cent superseded by the County in May.”

    I don’t understand how this would work to equalize the state funding. If the county doesn’t share it’s property taxes with Oak Ridge Schools and if Oak Ridge residents are given an abatement on that portion of the property tax rate that would support county schools then isn’t the county being given the short end of the stick again? You have already pointed out that city property values are usually higher than county values. So in effect the county looses even more money this way and that funding has to be made up somehow.

    Then on top of that you’re saying that the cities keep their sales taxes to fund schools? Now if that is correct how does the state fund the rural school systems? I don’t see enough money available from the state to make up the two differences in property taxes and sales taxes. I find it hard to believe that the state is going to fund Anderson County another million dollars to make up the difference of lost sales tax if the cities keep all their sales taxes besides the property tax abatements.

    I agree there has or should be a better and simpler way to fund schools rather than this convoluted formula but this doesn’t sound equitable by any stretch of the imagination. What am I missing? Besides a lot, I know.

  2. on 31 Aug 2006 at 3:31 pm Netmom

    I think the thing that you’re missing is that Oak Ridge (and very likely Clinton and all other cities that have municipal school systems) would appear “wealthy” in comparison to the rural areas, and would therefore receive much, much less state funding.

    Conversely, without counting the tax base of the cities with their own school systems, the county would appear “poor” and would receive much higher levels of state funding.

    Switching to a system-level model without eliminating the shared taxes leaves city residents paying much higher property taxes (city and county combined), but receiving much less State funding for schools because of the higher total property values (based on the city alone and not the county as a whole) — that was the problem with the TACIR prototype.

    Several weeks’ work remains for the folks at the Peabody Center and the BEP Review Committee before we know whether this is workable for anyone. Their directive is a “consensus recommendation,” which means there can’t be any big losers. I don’t know if it’s possible without the State putting a lot more into education.

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