Comptroller proposes state take over public school funding

NASHVILLE, Tenn. Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. — State Comptroller John Morgan wants the state to take on all funding of public schools in an effort to improve Tennessee’s low graduation rates.

Morgan is proposing that public school funding be raised from $5,108 per student to $7,218 with only school construction costs left to local governments. School districts would still operate schools and be accountable for their performance.

The state would fund the program by claiming half of maximum local sales taxes and by imposing a new state property tax under the plan. Morgan says the net impact on taxpayers would be negligible because of reductions in local taxes.

Morgan said poor educational attainment hurts the earning potential of many Tennesseans. The state’s per capita income is 91 percent of the national average.

“If we don’t do something to fundamentally change our vision in Tennessee, we can’t compete,” Morgan said.

By law, half of local-option sales taxes — the up to 2.75 percent that cities and counties can add to the state’s 7 percent sales tax — is already dedicated to education. So for the 33 counties that impose the full 2.75 percent rate, there would be no difference in how the money is spent.

But for the 62 counties that tax less than the maximum rate, the state would take more than half, meaning some counties would have to either raise their local rates or be responsible for a disproportionate amount.

Additionally, a state property tax of about $1.92 per $100 of assessed value would be required to meet the funding level Morgan proposes.

“Local property taxes in many places could be significantly reduced if the state were funding (school) operations,” said Morgan. “Some people would pay less; most would pay more probably since total funding would move closer to what other states spend.”

“As a state, we would still be way below the (Southern regional) average tax burden under any plausible scenario,” he said.

Morgan presented his plan to the Tennessee Advisory Commission on Intergovernmental Relations — a state policy-research group — earlier this month.

Legislative leaders and Gov. Phil Bredesen have yet to express an opinion about Morgan’s proposal.

Morgan, whose office participates in the financial and administrative management of the state, is elected by the General Assembly.