Last year’s state budget surplus hit $3 billion.
The state K-12 budget is $5.6 billion.
After two months into this school year, the state has $640 million in surplus—three times the state’s $200 million K-12 budget increase for the entire year.
While money is stockpiled in record surpluses, Tennessee dropped in funding rankings, now down to a lowly 46th in the nation.
Tennessee sits on $9 billion – the largest cash reserve per person of all states east of the Mississippi River.
Mississippi is the only southern state we beat in education funding.
The state can and should do more for education funding.
Revenue is there, is the will?
This school year the state increased funding by $200 million—less than a dollar per-student per-day.
A big part of the problem for state budget makers is that a number like $200 million sounds good when proposed, but doesn’t go far for Tennessee’s one million students. It’s time to rethink what is needed and what is possible.
It takes $1 billion new dollars to get us to the southeast average in funding per student, about $5 per-student per-school day.
With a combined estimated $6 billion in surplus, the revenue is there to invest without touching the tax-base or putting the state in any kind of financial peril. So what are the hold-ups to a needed historic increase?
Fiscal processes keep budgets artificially low.
Tennessee has a tradition of paying cash for everything. We don’t borrow money for roads or buildings and do not defer on paying unexpected costs. This tradition has its benefits, such as keeping TCRS one of the strongest retirement systems in the country and Tennessee not missing any actuarial requests for additional pension funds since the 1970s. This pay-as-you-go fiscal tradition is reflected in the way Tennessee state government adopts budgets.
In order to pay cash you need to have an understanding of what revenue is available in the next year, and for the near and long term. These are known as revenue estimates.
Revenue estimates for each year’s budget are set by the State Funding Board, a committee of the governor, finance director, and constitutional officers of Treasurer, Comptroller and Secretary of State.
The board enlists economists from state universities to provide revenue forecasts.
The forecasts are the basis for growth recommendations from the funding board that become the foundation for the state budget.
These economists have been woefully wrong for years, drastically underestimating actual revenue growth by billions of dollars. The continuous low-balling error has kept these dollars from being appropriated for critical education funding needs rather than going into the proverbial state mattress as cash reserves.
“The low-balling problem has become so extreme that surpluses are no longer in the hundreds of millions, but now in the billions,” said Jim Wrye, TEA’s chief lobbyist. “The extreme errors of revenue low-balling stop us from making needed investments and getting out of the bottom-five in education funding. It’s time for more reliable growth estimates.”
Wrye notes that pay-as-you-go and massive increases in education funding are compatible with recent record revenue surpluses.
“We likely will see more than $6 billion in surpluses over two years. Certainly $1 billion added to the state K-12 budget will barely make a dent in available revenue,” Wrye said.
If we have the dollars, why aren’t they invested in our classrooms?
To understand the challenges to increased funding, it’s helpful to identify different segments of the capitol crowd.
There are some—privatizers and their legislator allies—who believe Tennessee public schools are fundamentally flawed and not worth the investment. They are a distinct minority.
Others follow Tennessee’s brand of fiscal conservatism that has never increased education funding more than a couple hundred million in a year. This group often forgets that there are nearly one million students in our public schools and that large sums are required and acceptable.
A few do not believe increased funding has much of an impact on student outcomes. Research and common sense say otherwise.
Then there are those who will not question the budget process that helps maintain the state’s strong financial position while keeping Tennessee education funding at some of the lowest levels in the nation.
If we are to see a needed drastic improvement in state education investment, all of these groups and perceptions will need to be challenged by the membership of TEA along with our allies.