As the General Assembly gears up to make budget changes in response to the economic downturn due to the coronavirus, what is cut, and by how much, will be the focus of lawmakers. Making sure public education is not cut, is the focus of TEA and its members.
“Be ready to act in the fight to preserve state school funding. It’s going to be up to us,” said TEA President Beth Brown. “It takes voices back home demanding legislators do what is right by our students, and TEA is the only organized educator constituency.”
How much revenue will drop next fiscal year, what reserves can be accessed to fill shortfalls, and what taxes need to be preserved or enhanced are TEA’s three focus areas.
“Before there are reductions to the budget, the administration and legislators need to access the state’s large cash reserves and halt all planned tax cuts for the next year. In a time of crisis, there are no sacred cows or untouchable resources,” said Brown. “We will need every state penny for our students in the coming year.”
There is $1.2 billion in the Rainy Day Fund, and $5 billion in appropriations carry forward. While most carry-forward funds are needed to pay services such as teacher group insurance and unemployment benefits, there are substantial funds that can be used to avoid cuts.
“What we learned in the voucher fight when Career Ladder reserves were taken to pay for a $2.4 million no-bid contract was that the administration can access pots of money at its discretion. Every reserve not required for important services should be accessed,” said TEA lobbyist Jim Wrye. “And we need to stop tax cuts like the planned phase out of Tennessee’s income tax on investments. Every dollar matters.”
Revenue loss estimates range from $500 million to $1.5 billion. Where the final estimate lands will determine how big a budget-battle we are in.
Tennessee is a sales tax state, relying on consumer spending for revenue. Sixty percent of the General Fund, the part of the state budget funding K-12, is generated by the sales tax.
April state sales tax revenue was $61 million less than a year ago, a 6% decrease.
However, prior to the coronavirus outbreak Tennessee was running another large General Fund surplus, a key TEA talking point. Tennessee collected $180 million more in state sales tax than budgeted at the end of March, and all collection categories were still in surplus.
“If we can get through next three months of this fiscal year without going in the red or having to tap reserves, it will go a long way to protecting K-12 funding for next year,” said Wrye.
There is $59 million for the BEP Instructional Component (teacher salary funds), $66 million in overall BEP growth, and $15 million for educator insurance premiums in the budget passed in March. While there can be tinkering in the BEP growth formula and insurance costs to reduce those figures, salary monies are discretionary, as is the $41 million in the unconstitutional voucher program funding.
TEA has been working with legislators to make one thing clear: the voucher funding is the first thing to go. And as the unconstitutional law continues to falter in the courts, with the court of appeals recently denying the state’s plea to let the program go forward, there is a growing sense it will be zeroed out in the budget.
“Procedurally, if the program is deemed unconstitutional or unlawful, I don’t think that we can legally budget monies toward it,” said Rep. David Hawk (R-Greeneville), a member of the House budget committee. “We cannot spend dollars on an unlawful program. It’s just common sense.”
Increases in teacher salary funds must be maintained, because as local revenue also suffers some districts will need those additional dollars to prevent layoffs.
“If revenue doesn’t falter greater than we saw in April, there will be no reason to cut K-12 increases,” said Wrye. “May revenue figures will be out in the second week of June. We’ll know then the extent of our fight. And fight we will.”