Because the school system’s fiscal 2019-20 budget doesn’t meet Tennessee’s required local maintenance of effort law, school system officials say they face the loss of more than $4 million in Tennessee funding each month, starting Oct. 15.
Some school board members at a Thursday work session talked about suing the County Commission over the budget. The board members decided to schedule a called meeting for 6:30 p.m. on Tuesday, Oct. 8, at which the board could vote to sue the commission. That also is the date state officials will decide whether to withhold a $4,024,800 monthly Basic Education Program payment usually transferred on Oct. 15.
“We have no other (option) than to pursue it in the court system,” Board of Education Vice Chairman Randall Jones said. The Comptroller of the Treasury Office and Department of Education both called county school officials Thursday morning to inform them of the MOE problem and, according to Board of Education Chairman Michael Hughes, also contacted Mayor Richard Venable in a separate phone call.
Hughes said state officials, school board attorney Pat Hull and Tennessee School Boards Association attorney Chuck Cagle agree the commission has failed to meet maintenance of effort requirements.
“Everybody’s agreed (at the state level) it doesn’t meet maintenance of effort,” Sullivan County Director of Schools David Cox said. He declined to speculate how long the system could continue to operate and pay employees without state funding but said it takes about $500,000 a day to operate the system.
Meanwhile, the school system after the work session sent out an email to employees notifying them of a possible shutdown of the system, although the letter said officials are working to avoid that. Pay would resume after the school system began operating again, the email said.
WHAT IS AT THE CORE OF THE ISSUE?
The rub is that the 2019-20 county school budget, and thus the whole county budget, does not meet Tennessee’s maintenance of effort requirements, school system officials said at the Thursday evening work session. The disagreement goes back to $800,000 the commission did not fund for the school system — although the commission “approved” the school budget as the school board submitted it, school board members said.
Board of Education Chairman Michael Hughes said that Sullivan County Accounts and Budgets Director Larry Bailey has suggested the school board change its estimate of losing 2 percent of its share of the countywide student population to 1 percent, which would put $875,000 in local revenues shared by school systems back in the county school system budget.
“It fixes it on paper,” Cox said.
County officials have argued that historically the loss is usually 1 percent or lower, Commissioner Mark Vance said Thursday night, but Hughes and Jones said so far this year the system is on track to lose 2 percent if not more. Hughes said the commission has no line-item veto authority, and he said he has declined to meet behind closed doors to work out a solution if the meeting included more than one county commissioner, which would break the state’s “Sunshine” law.
“This year, it’s probably more justified than it has been in years past,” Hughes told the board, adding that a 3 percent loss wouldn’t be out of the question. He said average daily attendance and average daily membership are down 2.9 percent to 3.4 percent for the year so far and Kingsport has very minor decreases. County school system officials said the system has lost about 270 students this year in a system of about 9,000 students.
“I don’t think it would be responsible for us and maybe illegal for us” to budget for a 1 percent decrease when actual numbers show a 2 percent one,” Hughes said. “If there was ever a time that 2 percent would be realistic, it would be now.”
One more statistic Jones gave: The system this school year had 644 kindergarten students but last year had 717 seniors graduate, a difference of 73. Cox said the largest high school class, 10th-graders, is 749.
WHAT DO OTHERS SAY?
Venable and Bailey could not be reached for comment. Jones said Bailey was free to suggest ways to balance the budget but that any fix would have to undergo a vote by the school board, which in August voted against amending the budget as Bailey had suggested. Commissioner Sam Jones Thursday night declined comment, although he said he had heard a school system shutdown might occur. Commissioners Angie Stanley and John Gardner could not be reached for comment.
“The impasse is between the Board of Education and the Sullivan County Commission,” Vance said. “The comptroller’s office agree with the 1 percent.”
Hughes said that in 2017, the County Commission took funding away from the Kingsport, Bristol and county school systems but then gave some money back to the county system for recreation uses. However, Hughes said when that happened the money that had been considered a reimbursement for providing de facto parks and recreation facilities for non-school use then became part of maintenance of effort.
The commission also declined to fund a $1.6 million renovation and maintenance request from the commission, having cut that in last year’s budget. The issue, Hughes and Jones said, is that the commission approved the school budget as submitted but left out the $800,000 and $1.6 million, something school system Finance Officer Ingrid DeLoach said she’s never seen since she’s been working in local government finance starting in 2002.
FOLLOWING IS A TEXT OF THE EMAIL:
Dear SCDE Employee:
Upon the direction of the Board of Education, I would like to notify you of a potential budgetary concern. It was confirmed today that the budget which was approved and submitted by the County Commission for our General Purpose School Fund does not meet the required Maintenance of Effort Test from the TN Department of Education. The Maintenance of Effort Test is an established procedure to ensure that local funding is not decreased lower than the per pupil revenue budgeted in the prior year. With the failure of the Maintenance of Effort Test, the BEP funds that are received monthly will be held until a resolution is reached.
Beginning on October 15th, this loss of revenue will amount to $4,024,800.00 per month and will continue until the budget is resolved by the Maintenance of Effort test being met. Obviously, this loss of revenue would be detrimental to our school system and if unresolved, could cause us to temporarily suspend daily operations, including transportation, instruction, school nutrition, athletics, and Central Office services.
In the event that we would be forced to temporarily cancel school and suspend daily operations, each SCDE employee would receive earned compensation as daily operations are resumed.
If you have questions, please respond here. From those submissions, a list of FAQs will be developed to provide further clarification.
David A. Cox, Ed. D.
Director of Schools
Sullivan County Public Schools
PO Box 306
Blountville, TN . 37617