BEP 2.0

What you need to know about the governor’s school funding plan

PHOTO: TN.gov
Gov. Bill Haslam delivers his 2016 State of the State address in February, including his proposal to increase funding for K-12 education for the 2016-17 year.

Gov. Bill Haslam’s proposal to alter the way Tennessee funds its public schools is winding through the legislature, setting the stage for a potential increase of $261 million in K-12 education spending next year while also addressing the state’s ever-present malaise over the state of school funding.

Haslam championed his plan to update the state’s spending formula, called the Basic Education Program, or BEP, in his State of the State address in February. The resulting changes, as well as one-time investments in literacy and teacher pay, would amount to “the largest investment in K-12 education in Tennessee’s history without a tax increase,” Haslam said at the time.

The state defines the BEP as the amount of funds sufficient to provide a “basic level of education” for Tennessee students. The formula was created in 1992 after a group of small Tennessee school districts banded together in the late 1980s to sue the state for more funding. The legislature revised the formula in 2007 to a version known as BEP 2.0, but that version has never been fully funded.

Haslam has been examining how to change the BEP since at least 2014, even before two separate lawsuits were filed last year by Shelby County Schools and by seven districts in southeastern Tennessee led by Hamilton County Schools. Last month, Haslam told his teachers cabinet that BEP is “one of the hardest things” he deals with because Tennessee’s 142 districts vary so much in size, demographics and wealth.

“We worked really hard to balance the competing needs,” he told teachers.

His proposed changes are to be considered next in the Senate Finance Committee and a House finance subcommittee. Should the bill pass the legislature, here’s what it would mean:

BEP 2.0 is done for.

In 2007, then-Gov. Phil Bredesen proudly unveiled BEP 2.0 as a school spending plan that would infuse school districts with almost $500 million more.

“The chance is here to seize the moment,” he told the General Assembly of the ambitious plan, which would fully fund the state’s portion of costs associated with “at-risk students;” fund the state’s portion of student growth costs immediately; expand funding for the state’s growing English language learner population; and update the ELL student-to-teacher ratio from 1:45 to 1:30.

Then the recession hit, halting BEP 2.0’s rollout. The state opted instead to use a hybrid formula — half BEP 2.0, which was developed by the University of Tennessee, and half of the original formula, which was developed by the Tennessee Advisory Commission on Intergovernmental Relations. Many educators eagerly anticipated the eventual day the legislature would fully fund BEP 2.0.

This budget nips that hope in the bud by enshrining the hybrid formula into law.

But districts would get more money for teacher salaries, English language learners, technology, special education and other components provided for in BEP 2.0.

Though the governor’s plan nixes BEP 2.0, it permanently increases the state’s spending on English language learners (funding ELL teachers at a 1:20 student ratio and translators at a 1:200 student ratio), and special education students, technology and teacher pay, especially when it comes to teachers insurance. For years, the state only paid for teachers to have 10 months of health insurance. Last year, the General Assembly mandated that the state provide for 11 months of insurance. Haslam’s proposal this year finally gives teachers’ year-round insurance.

Stephen Smith, deputy commissioner of education, recently told lawmakers that the state is now exceeding its commitment set forth in BEP 2.0 by $178 million.

While Haslam proposes to increase money allotted for salaries, many districts will be required to up local spending on salaries too. Any resulting increase in state funding of instructional components is accompanied by a 30 percent increase in required local funding, on average. Individual districts may have local matches more or less than 30 percent, depending on their affluence. BEP 2.0 would have upped the state’s share of education costs to 75 percent.

Some districts will receive less money in other areas.

Another carryover from BEP 2.0 is the eventual elimination of a “cost differential factor,” known as CDF, that 16 districts in five counties receive to address a higher cost of living. Reducing the CDF would cut state spending by about $34.7 million. Almost half of that money would have gone to Shelby County Schools and the municipal districts in Shelby County. Other counties that would be impacted are Davidson, Anderson, Williamson and Sullivan.

Want to know more about the BEP proposal? Check out this report from the Tennessee Comptroller’s Office of Research and Education Accountability.

Clarification: March 24, 2016: The story has also been clarified to reflect that the state will have exceeded the funding commitment set forth by BEP 2.0 in 2007 in total, not just in teacher salaries.

 

School Finance

IPS board votes to ask taxpayers for $315 million, reject the chamber’s plan

PHOTO: Dylan Peers McCoy

Indianapolis Public Schools officials voted Tuesday to ask taxpayers for $315 million over eight years to help close its budget gap — an amount that’s less than half the district’s initial proposal but is still high enough to draw skepticism from a local business group.

The school board pledged to continue discussions in the next week with the Indy Chamber, which released an alternative proposal last week calling for massive spending cuts and a significantly smaller tax increase. The school board rejected the proposal as unrealistic and instead voted to add a much larger tax measure to the November ballot.

If the school board and the chamber come to a different agreement before the July 24 meeting, the board can change the request for more taxpayer money before it goes to voters. Some board members, however, were dubious that they would be able to find common ground.

“While I appreciate the fact that we want to continue to negotiate, I’m pretty sure that I’m at rock bottom now,” said school board member Kelly Bentley. “That initial proposal by the chamber is, unfortunately in my mind, it’s insulting. It’s insulting to our children, and to our neighborhoods, and to our families.”

Chamber leaders, whose support is considered important to the referendum passing, were skeptical about the dollar amount. In a press release, the group said the district was “taking another step towards seeking a double-digit tax increase.”

“We’re concerned that our numbers are so divergent,” said chamber president and CEO Michael Huber in the statement. “We need to study the assumptions behind the $318 million request; clearly the tax impact is significant and the task of winning voter support will be challenging.”

During the board meeting, which lasted more than two hours, district leaders discussed why schools need more money and why the chamber report is unrealistic. They also took comments from community members who were largely supportive of the tax increase.

Joe Ignatius, who mentors students through 100 Black Men of Indianapolis, said that he has seen the benefits of more funding from referendums in other communities.

“This should be a no brainer, to invest in our future for the students,” Ignatius said. “Don’t think about the immediate impact of the dollars that may come out of your pocket but more the long-term impact.”

If the district goes forward with its plan, and voters approve the tax increase, the school system would get as much as $39.4 million more per year for eight years. A family with a home at the district’s median value — $75,300 — would pay about $3.90 more per month in property taxes. (Since the initial proposal, the district reduced the median home value used in calculations on the advice of a consultant.)

The district plan comes on the heels of months of uncertainty. After the school board abandoned its initial plan to seek nearly $1 billion for operating expenses and construction, district officials spent weeks working with the Indy Chamber to craft a less costly proposal. Last month, the board approved a separate referendum to ask taxpayers for about $52 million for school renovations, particularly school safety features.

But the groups came to different conclusions about how much money the district needs for operating expenses.

The chamber released an analysis last week that called for $477 million in cuts, including eliminating busing for high school students, reducing the number of teachers, closing schools, and cutting central office staff. The recommendation also included a $100 million tax increase to fund 16 percent raises for teachers.

District officials, however, say the cuts proposed by the chamber are too aggressive and cannot be accomplished as quickly as the group wants. The administration and board members spent nearly an hour of the meeting Tuesday discussing the chamber plan, why they believe it’s methodology is wrong, and the devastating consequences they say it would have on schools.

Even if the $315 million plan proposed by the district passes, it will come with some sacrifices compared to the initial plan. Those cuts could include: reduced transportation for magnet schools, field trips, and after school activities; school closings; increased benefits costs for employees; and smaller pay increases for teachers and employees.

The district did not make a specific commitment to how much teacher pay would increase if the amount asked for in the referendum is approved, but Superintendent Lewis Ferebee said the funds would pay for consistent raises.

“We would be at least addressing inflationary increases and cost of living, but we hope that we can be higher than that,” said Ferebee. “It would depend a lot on what we are able to realize in savings.”

The school board’s decision to rebuff the chamber’s recommendation puts the district in a difficult position. The chamber has no official role in determining the amount of the referendum, but it could be a politically powerful ally.

Last week, Al Hubbard, an influential philanthropist and businessman who provided major funding for the chamber analysis, said that if the district seeks more money than the group recommended, he would oppose the referendum.

The total tax increase would vary for each homeowner within district boundaries. The operating increase would raise taxes by up to $0.28 for every $100 of assessed property value, while the construction increase would raise taxes by up to $0.03 per $100 of assessed property value.

On school finance

Facing tax opposition, Indianapolis leaders may settle for less than schools need

PHOTO: Alan Petersime

One day before the Indianapolis Public Schools Board is expected to approve a ballot measure to ask taxpayers for more funding, district officials appealed to a small group of community members for support.

Fewer than 40 people, including district staff, gathered Monday night at the New Era Church to hear from leaders about the need for more school funding. School board members plan to vote Tuesday on whether to ask voters to approve a tax hike to fund operating expenses, such as teacher salaries, in the November election. But just how much money they will seek is unknown.

The crowd at New Era was largely supportive of plans to raise more money for district schools, and at moments people appeared wistful that the district had abandoned an early plan to seek nearly $1 billion over eight years, which one person described as a “dream.”

Martha Malinski, a parent at School 91 and a recent transplant from Minneapolis, said the city appears to have a “lack of investment” in education.

“Is the money that you are asking for enough?” she asked.

Whatever amount the district eventually seeks is likely to be dramatically scaled down from the first proposal. Superintendent Lewis Ferebee has spent more than seven months grappling with the reality that many Indianapolis political leaders and taxpayers don’t have the stomach for the tax increase the district initially sought.

“We are trying to balance what’s too much in terms of tax burden with the need for our students,” said Ferebee, who also raised the possibility that the district might return to taxpayers for more money if the first referendum does not raise enough. “If we don’t invest in our young people now, what are the consequences and what do we have to pay later?”

After withdrawing their initial plan to seek nearly $1 billion over eight years, district officials spent months working with the Indy Chamber to analyze Indianapolis Public Schools finances and find areas to trim in an effort to reduce the potential tax increase. But the district and chamber are at odds over how aggressive the cuts should be.

Last week, the chamber released a voluminous list of cuts the group says could save the school system $477 million over eight years. They include reducing the number of teachers, eliminating busing for high schoolers, and closing schools. The chamber has paired those cuts with a proposal for a referendum to increase school funding by $100 million, which it says could raise teacher salaries by 16 percent.

District officials, however, say the timeline for the cuts proposed by the chamber is not realistic. The analysis mostly includes strategies suggested by the district, said Ferebee. But steps like redistricting and closing schools, for example, can take many months.

“Where we are apart is the pace, the cadence and how aggressive the approach is with realizing those savings,” he said.

Not everyone at the meeting was supportive of the administration. Tim Stark, a teacher from George Washington High School, asked the superintendent not to work with charter high school partners until the district’s traditional high schools are fully enrolled. But Stark said he is still supportive of increasing funding for the district. “It is really important for IPS to get the funds,” he said.

The chamber has no explicit authority over the tax increase but it has the political sway to play an influential role in whether it passes. As a result, Indianapolis Public Schools officials are working to come to an agreement that will get that chamber’s support.

A separate measure to fund building improvements was announced by the district in June and incorporated into the chamber plan. That tax increase would raise $52 million for building improvements, primarily focused on safety. That’s about one-quarter of the initial proposal.