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Sullivan schools could close in mid-November without budget fix

Rick Wagner • Sep 28, 2019 at 9:40 AM

BLOUNTVILLE — If the Sullivan County school system doesn’t receive a monthly $4 million Tennessee payment by Oct. 15, the school system director said schools could operate about four weeks before shutting down for lack of funding.

“We could probably operate for about four weeks after we didn’t receive a payment,” Director of Schools David Cox said Friday. Exactly four weeks out would be Tuesday, Nov. 12.

The issue is a Department of Education determination that the school system’s budget of $86 million does not meet local maintenance of effort funding requirements of the state.

“This is a local funding issue that will need to be addressed by the County Commission and the local school board,” Jennifer Johnson, director of communications for the state education department, said Friday from Nashville. “The department issues BEP (Basic Education Program) funds in accordance with state law, which requires the withholding of funding beginning Oct.1, if the issue isn’t resolved. The department takes the withholding of funds very seriously, and it is an action we prefer not to take. We sincerely hope that local officials are able to come together to resolve this dispute and avoid a potential school closure.”

County and school system officials got a conference call from the Department of Education and Comptroller of the Treasury officials Thursday, saying the state maintenance of effort was not met, Oct. 1 was the deadline and Oct. 8 would be the date the process of setting up the electronic funds transfer for Oct. 15 would occur.

The school board will have a regular meeting Thursday, Oct. 3 and has scheduled a called meeting for consideration of a lawsuit against the county or other action Oct. 8. Both start at 6:30 p.m. in the first-floor meeting room of the health and education building off the Blountville Bypass.

“The purpose of the (meeting on the) 8th is to have it in case we need it,” Cox said. “I don’t know what the commission may or may not do.” The commission has a work session set for Oct. 10 and a meeting Oct. 24 but has advertised a called meeting for 6 p.m. Tuesday, Oct. 2.”

HOW MUCH IS THE SHORTFALL?

The shortfall of meeting maintenance of effort is about $800,000.

School funding in Tennessee is based on student enrollment. County Accounts and Budgets Director Larry Bailey has suggested the school system change an estimate that the system would lose 2% of its local revenue — $1,750,000 — to losing just 1%. That would mean a loss of only $875,000 and cover the amount needed to meet maintenance of effort. However, school board Chairman Michael Hughes said the system is seeing enrollment losses that would run about 2% so far this school year.

The school board last month voted not to lower the city-county split projection from 2% to 1%.

In anticipation of a possible school system closing for lack of funds, the school system sent out an email to all employees after Thursday night’s school board meeting. In response to questions posed through a link in the email, a list of frequently asked questions and answers was published on the school system website Friday.

Cox said more than 50 questions had come in by noon and a common one was about whether employees would keep health insurance, which the answer addressed by saying that would be a goal. The FAQs are online at the system website, sullivank12.net.

WHAT EXACTLY IS MAINTENANCE OF EFFORT?

Maintenance of effort is a Tennessee requirement that local funding for school systems can’t be cut unless the student population decreases, and then only by the margin of decrease. Assistant BOE Chairman Randall Jones said maintenance of effort is based on comparing last year’s per-pupil appropriations to this year’s budget and that if a shortfall occurs, it would have to be made up from fund balance. According to a definition of maintenance of effort in an online glossary by the Tennessee Comptroller of the Treasury:

“Maintenance of effort laws for education require that local funding bodies allocate at least the same amount of funding to school districts that they budgeted the previous year for operating expenditures, excluding capital outlay and debt service, unless there is a decline in student enrollment. Maintenance of effort laws ensure that financial contributions by one funding body are used to enhance existing financial support from another. For example, these laws ensure that new or increased state funding provides additional support to schools, and does not result in simply replacing existing local funding, also known as supplanting.

“The Tennessee Department of Education confirms each school district's compliance with maintenance of effort laws by comparing the total budgeted local revenues for day-to-day operations with the budgeted local revenues from the previous year, excluding capital outlay and debt service. In cases of declining enrollment, the department compares budgeted local revenues on a per-pupil basis.”

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