INFORMATIONAL WEBSITE OF
STATE SENATOR RAYMOND FINNEY,
who proudly represents the beautiful Great Smoky Mountains region of Tennessee--
the Eighth Senatorial District (Blount and Sevier Counties)...


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BASIC EDUCATION PLAN 2.0 (BEP 2.0)
Posted on January 2, 2008

INTRODUCTION:

The Basic Education Program (BEP) was established in the mid-1990s to provide a funding formula to generate and distribute federal and state tax funding for Tennessee's public schools. BEP, based on somewhat complicated mathematical computations, was not well understood by many persons, was widely criticized, and attracted legal challenges (lawsuits) about its fairness. Available online is a simplified version of BEP.

In 2007, Governor Phil Bredesen-- in consultation with economists (including Dr. Bill Fox of the University of Tennessee), educators, and General Assembly leadership-- developed an alternative plan, which he dubbed "BEP 2.0." On May 3, 2007, the governor unveiled his plan before the General Assembly. Available online is the governor's speech to the General Assembly.

There are 136 local education agencies (LEAs) in the State of Tennessee. Four LEAs-– Blount County, Sevier County, City of Maryville, and City of Alcoa–- are located in my senatorial district.

BEP 2.0 provides several funding concepts, all of which except one are good for the four LEAs in my district.

Good features include:

  • The state's share of teachers' salaries is increased from 65 to 75 per cent.
  • The state's share for funding at-risk students is increased to 100 per cent.
  • The state's share of funding for English language learners (ELLs) is increased, permitting the teacher:student ratio to be decreased to 1:20 and the translator:student ratio to be decreased to 1:200.
  • The cost differential factor (CDF)– which did not affect my district but which unfairly siphoned funds for use throughout the state for distribution to the remaining LEAs-- is eliminated.

The undesirable feature is:

  • The sharing of state and federal funds is based on a newly devised "fiscal capacity model." The fiscal capacity model is an attempt to consider what share of education funding should come from a local community, considering the community's property tax values and sales tax base. The concept attempts to establish that more affluent counties should receive proportionately less and poorer counties should receive proportionately more from state and federal governments to fund education.

Using Sevier County schools as an example, this county enjoys a booming tourist economy. There is a large sales tax base, which is among the top in the state. There are many expensive tourist developments, e.g., Dollywood, motels and hotels, restaurants, and many other attractions. Sevier County will receive more BEP 2.0 funds, but computation of the fiscal capacity formula for Sevier County causes a net reduction in payment to the county from BEP 2.0 funds over what would have been expected from the original (older) BEP formula.

BEP 2.0 is now codified as TCA 49-3-307. The text of the act is contained in the following table.

49-3-307. Basic education program calculation.

(a) Notwithstanding 49-1-302, 49-3-351, or any other law or rule to the contrary, effective with fiscal year 2007-2008, the Tennessee BEP shall be calculated using the following criteria:

(1) BEP appropriations to LEAs for the 2006-2007 school year, plus appropriations to LEAs generated for annual BEP component cost adjustments based on the 2006-2007 school year, shall constitute a base amount of funding;

(2) The state shall provide seventy-five percent (75%) of the funds generated for instructional positions within the classroom component;

(3) The dollar value of the BEP instructional positions component shall be thirty-eight thousand dollars ($38,000) for fiscal year 2007-2008, and shall be adjusted in subsequent fiscal years in accordance with the general appropriations act;

(4) The cost differential factor (CDF) shall be eliminated from the formula;

(5) (A) The formula shall provide one hundred percent (100%) funding for at-risk students in kindergarten through grade twelve (K-12).

(B) At-risk student means a student who is eligible for free or reduced price lunch pursuant to 42 U.S.C. 1751-1769;

(6) The formula shall provide funding for English language learner students at a ratio of one to twenty (1:20) and one to two hundred (1:200) for teachers and translators respectively;

(7) The formula shall recognize the ability of local jurisdictions to raise local revenues by measuring the ability to generate local revenues from property tax and local option sales tax. This calculation shall be based on applying the statewide average property tax rate for education and the statewide average local option sales tax rate for education to the respective tax bases of each local jurisdiction. No reduction shall be made in any calculation of a local jurisdiction's ability to raise local revenues from property taxes for agreements entered into by the local jurisdiction that result in payments in lieu of taxes being made to the local jurisdiction;

(8) Each LEA shall receive no less than a twenty-five percent (25%) state share in the nonclassroom components;

(9) No LEA's measurement of ability to raise local revenue shall be adjusted more than forty percent (40%) within the BEP formula in any single year; and

(10) The formula shall provide fifty percent (50%) funding for medical insurance premiums for instructional positions.

(b) Notwithstanding 49-1-302, 49-3-351 and any other law to the contrary, the changes in components or factors of the BEP implemented under Acts 2007, ch. 369 shall be phased in, in accordance with funding as made available each fiscal year through the general appropriations act.

[Acts 2007, ch. 369, 3.]

MY DILEMMA AND MY FINAL VOTE:

For several weeks, I worked within the Senate Republican Caucus, attempting to garner support for changing the fiscal capacity model. During the same time, officials from both Blount and Sevier counties practically lived in Nashville, talking to anyone they could corner. All efforts were to no avail, however. Governor Bredesen had expertly presented and promoted his plan. Without considering "winners" and "losers" among the fiscal capacity model disbursements, his plan was simple and seemingly equitable. His plan would avoid future litigation for the existing BEP plan. He effectively traveled throughout the state to promote his plan and eliminate effective opposition. BEP 2.0 was assured of passage from the time it was unveiled to the General Assembly in May, 2007.

We had two controversial "education" plans during the 2007 session-- an increase in the cigarette tax and BEP 2.0:

  • The cigarette tax would add forty (40) cents-- finally, forty-two (42) cents-- to each pack of cigarettes sold in Tennessee. In my opinion, this tax is simply intended to increase revenue and to reduce smoking and has nothing to do with education funding. The governor expertly convinced the media and the public that the tax was "for education." In truth, education was easily funded through existing taxes (we had hundreds of millions of unexpected tax revenues in last fiscal year), and a new tax was unneeded. Passage of the cigarette tax was uncertain, however.
  • As unpopular and controversial as was the cigarette tax, the BEP 2.0 plan was popular in the General Assembly. Passage of the BEP 2.0 legislation seemed assured from the governor's announcement of his plan.

I determined early in the session that I would vote against the cigarette tax. I do not smoke, and I wish no one would smoke. Smoking is a harmful, deadly habit. With the hundreds of millions of dollars of excessive revenue collected in fiscal year 2006-2007 and because a cigarette tax is highly regressive (causing the most financial pressure on Tennessee families with lower incomes), I refused to vote for this tax. Late in the session, the cigarette tax barely managed to obtain a constitutional majority in the Senate, passing by a 17 to 16 margin. (All 16 Democrats and 1 Independent voted for the tax, and all 16 Republicans voted against the tax.) Thus, I voted against the first major "education" tax funding bill presented in the 2007 General Assembly.

BEP 2.0 presented a dilemma for me in this respect: To vote against both the cigarette tax (which was "for education") and BEP 2.0 would make me appear to be against education. I very much support public education and children's welfare. My voting record bears out my strong support of education bills. When the BEP 2.0 legislation came to a vote, I watched carefully the vote board. When virtually every voting light appeared green, indicating an aye (yes) vote, I also voted aye at the very last second. BEP 2.0 passed the Senate by a 32 to 1 vote. Fifteen of 16 Democrats, 1 Independent, and all 16 Republicans voted for BEP 2.0. The only senator to vote against the bill was Senator Roy Herron (D-Dresden).

A summary of the legislative history of the BEP 2.0 legislation is contained in the following table:

. SENATE'S ACTION HOUSE'S ACTION GOVERNOR'S ACTION
BILL NUMBER SB2177 HB2293 .
VOTE 32 aye (yes)
1 nay (no)
May 31, 2007 		86 aye (yes)
11 nay (no)
1 present, not voting
May 31, 2007 		.
SIGNED INTO LAW . . Signed: June 7, 2007
Effective: July 1, 2007
Now codified as: TCA 49-3-307

CONSEQUENCE OF MY VOTE:

At the time of the vote, I thought I was showing my loyalty to education. I am a strong advocate of education. I realize America can remain strong only if our next generation is well-educated and well-trained. In retrospect, I can understand how my vote could be criticized, because parts of the bill help LEAs in my district whereas another part hurts LEAs.

A very few (surprisingly few) people have contacted me, expressing disappointment in my vote. I regret these people are disappointed, but I am pleased they have been civil and constructive in their comments.

I stress to anyone disappointed with this vote these truths:

  • Because of the overwhelming majority of the senators' votes on SB2177, the BEP 2.0 funding plan, my vote had no real effect. The vote on the bill was 32 to 1 in favor of passage. If I had voted nay on the bill, it still would have passed by a 31 to 2 margin. (Only 17 votes are required for bill passage.)
  • The plan had wide support in the Senate. For example, all 16 Republican senators voted for the plan, even though it was proposed by a Democratic governor.
  • Most parts of BEP 2.0 help the LEAs in my district. There is only one part-- the fiscal capacity model-- which is problematic. I am working with Representatives McCord and Montgomery to try to change this formula.
  • Whether the SB2177 passed by a 32 to 1 or a 31 to 2 majority (that is, whether I voted for or against the bill), no change in the status of the bill would have occurred.

The General Assembly also passed a lodging tax in 2007, which will provide a few million dollars annually for Sevier County schools and should help until we hopefully can obtain more favorable BEP funding for Sevier County schools.

I have written Governor Phil Bredesen, Comptroller of the Treasury John Morgan, and Senate Education Committee Chairwoman Jamie Woodson, asking that the fiscal capacity model be looked at again in 2008 to provde a more favorable rate of payment for LEAs in my district.

Please contact me with your comments about BEP 2.0, as follows:

BY POSTAL MAIL:

  • State Senator Raymond Finney
    320 War Memorial Building
    Nashville, Tennessee 37243.0208

BY ELECTRONIC MAIL:

BY TELEPHONE:

  • 1.800.449.8366, extension 12427