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Esoteric tax rule facing overhaul cost local school districts nearly $50 million since 2010

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Missing from the debate in Shelby County this spring over an esoteric tax rule has been exactly how big of a dent changing the rule would have made in local school districts’ budgets.

Now, an analysis by education advocates and verified by Chalkbeat answers that question: The current rules meant that nearly $50 million over six years that could have gone to Shelby County school districts did not.

The Shelby County Schools board joined advocates and other district leaders in pushing the county commission to change the way the county processes tax revenue. The commission initially voted last week to change the rules so that surplus property taxes can go to schools, rather than depleting districts’ revenue from a different tax on motor vehicles, known as the wheel tax. (Surplus property taxes do not count against any of the county’s other revenue streams for schools.)

If the commission decides to move forward with the rule change during Monday’s final budget meeting, recent history suggests that local districts could get an additional $8 million a year spread across them on top of the $16 million being added to operations.

The share represents a tiny fraction of Shelby County Schools’ proposed $954 million operating budget. But to a cash-strapped district with declining enrollment and a pending lawsuit against the state for underfunding, every dollar counts.

The historical analysis was conducted by Tennessee Stand for Children, which argues that the tax’s design shortchanged schools at a time when additional funding was needed to boost student achievement.

“The county administration has placed a higher priority on over-aggressive debt service and keeping the base amount to schools as low as possible than making sure that our children get the resources they sorely need,” the group said.

But county officials defended the current arrangement, saying that the process ensures school systems receive exactly what commissioners budgeted for them — nothing more, nothing less.

“They’ve gotten exactly what we’ve budgeted for schools,” said Mike Swift, the county’s director of administration and finance. “They didn’t get the surplus but they didn’t have to be concerned that they might get less.”

The commission, whose members are divided on the wheel tax issue, is set to make a final decision during Monday’s meeting.

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