Volume 4, Number 11 November 2002

INSIDE THIS ISSUE Tennessee Supreme Court Strikes Down Rural School Funding Plan Rural Perspective Featured at National School Funding Conference Leave the Money on the Table: Vermont Better Off Going It Alone Michigan Looks at Declining Enrollment in Rural Schools Arkansas Schools Needing Improvement Listed If You Resist, They Will Audit Public Likes Small Schools, Fair Funding, More Money for Low Performing Schools Declining Enrollment: Widespread, But Especially in the West About RPM RPM Archives

Tennessee Supreme Court Strikes Down Rural School Funding Plan

The Tennessee Supreme Court has concluded for the third time that the state's school funding system violates the state constitution. The central issue in this ruling (Tennessee Small School Systems v. McWherter) is that the Tennessee Teachers' Salary Equity Plan adopted by the state legislature in 1995, violates constitutional guarantees of equal protection by failing to provide all students with equally qualified teachers.

This case began in the late 1980s when a group of small and rural school systems sued the state arguing that students in their districts did not enjoy the opportunities afforded students in wealthier districts because the school financing system depends too much on local property taxes. The Supreme Court agreed with the school systems and said that any school aid formula must provide sufficient funds to schools to cover the actual costs of educational programs and services.

In response, the Tennessee legislature adopted the Basic Education Program (BEP) as the state's new education funding mechanism in 1995. The BEP is based on the cost of providing specific services and programs, taking into account 42 components of a basic education. The 42 cost components are reviewed annually by the legislature and include, among other things, the cost of vocational education, guidance counseling, textbooks, transportation, library services, special education, and capital expenditures for facilities. The components also included the costs of hiring secretaries, librarians, principals, custodians, psychologists, and superintendents.

But incredibly, the legislature did not include the cost of hiring teachers among the 42 components in the BEP. Instead, the legislature enacted a one-time salary equity plan that attempted to equalize teachers' salaries across the board by pegging salaries to the 1993 statewide average pay of $28,094.

In 1998, the small school plaintiffs went back to court charging that the BEP is unconstitutional because disparities in teacher salaries have grown and, unlike the 42 components in the BEP, teacher salaries are not annually reviewed and adjusted to assure equity. The Supreme Court agreed with the plaintiffs, saying that teacher salaries are "the most important component of any education plan and a major part of every education budget.

The state unsuccessfully argued that the current plan had, in fact, equalized teacher salaries. But according to the court, average salaries vary as much as $16,000 per year between some rural and some wealthier school districts. In the Supreme Court's view, "it takes little imagination to see how such disparities can lead to experienced and more educated teachers leaving the poorer school districts to teach in wealthier ones where they receive higher salaries."

But even as it was handing rural and small schools a major court victory in the case, the court backed off requiring total equalization of school spending for teacher salaries, saying that nothing "prevents a local school system from supplementing teachers' salaries from its own local non-BEP funds when such funds are in addition to its local BEP contribution. Some disparities in teachers' salaries from school district to school district will exist." How much continuing disparity the court will tolerate based on these supplements paid from local sources of wealth remains to be seen. But the court made it clear that a plan for paying teachers must come from the legislature, not the courts, because it "speaks for the people on matters of public policy such as this."

Lead attorney for the plaintiffs is Lewis Donelson, III, a senior partner in the Memphis firm of Baker, Donelson, Bearman and Caldwell. He is a member of the Rural Trust Board of Trustees.