Tennessee Education Association

Great Public Schools for All Students


Why Tennessee stuffs millions into reserves while so many education needs are unmet

Tennessee schools get top 10 results with bottom 10 funding. We lead the South in graduation rates and statewide ACT scores, yet are behind all neighboring states in funding per student save for Mississippi. What would it take to get off of the bottom of the list and provide the funding Tennessee schools deserve?

Invest state tax revenue in our public schools instead of stuffing it in reserves.     

For the past five years Tennessee has been running huge revenue surpluses as education needs go unmet. Over this five-year span the state collected nearly $3 billion more in general fund revenue than it anticipated. Last year alone the state general fund had a $580 million surplus. These are millions that could have gone to classrooms. 

While surpluses contribute to important outcomes like having the country’s healthiest teacher retirement system, the size of surpluses must be weighed with the critical needs of students and teachers. 

An example is RTI, where the state budgets $13 million, yet it is estimated to cost $160 million to have enough RTI specialists for every school and student in need. Not fully funding RTI while stashing surplus revenue in reserve accounts is a choice, and one that is not in the best interest of the state.

“A child only has one chance at third grade. Withholding funds that could benefit that student when it clearly is within our means is simply wrong,” said TEA President Beth Brown. “Educators do our part every day, and with revenue available, it is time the administration and legislature do their part.”

According to the most recent state financial report, Tennessee has $5.5 billion in reserves and is the only state east of the Mississippi with more cash than debt, not having borrowed money through bonds since 1976 and meeting every pension obligation since 1973. This remarkable record of fiscal responsibility provides more of an opportunity to get Tennessee out of the education funding basement.     

Missed opportunities to make investments have real impacts on educators.  

Tennessee ranks in the middle of Southern states for teacher salaries (we finally “beat Bama” last year) but still is in the bottom third nationally. Had Gov. Haslam’s last budget provided $255 million instead of $55 million for teacher pay, the state would still have had a $380 million surplus while providing a 5% across the board raise, important in a time when attracting and retaining teachers is increasingly difficult.   

It will be a battle to change minds and processes of state decisionmakers. Surpluses occur because the budget process chronically—and some say intentionally—underestimates revenue growth. The state forecasts future revenues that form the basis of the state budget, forecasts that have been consistently short of actual collections. 

From 2014-2015 through 2018-2019, the state predicted overall general fund revenue growth between 9% and 11%. The actual growth over the same period was more than double the estimates—roughly 25%—leading to the $3 billion surplus. 

Tennesseans deserve realistic revenue forecasts that don’t shortchange schools. Missing growth estimates by double digits is not good governance nor is it responsible to students and teachers, not while Tennessee is near the bottom in education funding.   

A select group of state officials has been meeting to decide the range of state revenue growth estimates for the 2020-2021. If the past is any guide, it will be far too low, causing far too little education investment. 

Adjusting growth predictions upward by less than one percent can generate hundreds of millions for classrooms and still leave the state with a healthy surplus. Look for TEA to make citizens and members aware of this critical aspect of state budgeting, working to ensure revenue that is collected is invested in our public schools. It is financially responsible for both Tennessee schoolchildren and the state.    

“It is time our schools get the funding they deserve—funding we’ve earned with our hard work and results—by budgeting the taxpayer funds Tennesseans pay for our schools,” said TEA President Beth Brown. “We are stuffing reserve accounts with cash while teachers dig into their pockets for classroom supplies. We are trying to make our own family budgets work while the state doesn’t do what it clearly can afford for the education budget. We can be fiscally responsible and responsible to our children. It just takes political will and leadership.”

If we need any more proof the state can do more, in just the first two months of the current fiscal year, the state collected $154 million more than it anticipated.    

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