Learning about money

Friday, August 27, 2010
Marshall County Commissioner-Elect Anna Childress confers with Talvin B. Barnes, a Maury County school board member who's just been elected as a county commissioner.

NASHVILLE -- The second largest amount of money put into Tennessee's Basic Education Program is coming this year from the federal government that's sending nearly $195 million, newly elected county commissioners were advised Wednesday during seminars presented by the University of Tennessee.

The congressional action will apparently temporarily resolve conflict between Marshall County commissioners and the school board headquartered in Lewisburg where the leaders have struggled with a BEP requirement for maintenance of effort to locally fund schools and a countervailing requirement to keep a certain level of money in reserves.

Marshall's out-going commission argued against letting the school board spend reserves because it might increase what's actually spent this year, and thereby force increased funding by the commission to the board of education next year.

However, the school board hasn't presented a spending plan that would be adopted by the now-former commission. Voters elected 10 new commissioners on Aug. 5. They were sworn in Thursday. They take office next week on Wednesday.

Several of them attended the UT County Technical Assistance Service seminars Tuesday and Wednesday at the Nashville Marriott near the airport where speakers included State Treasury Comptroller Justin Wilson and Lynne Holliday, a consultant with UT on the BEP requirements and other financial and legislative issues. The two-day event was dubbed an "orientation" for newly elected commissioners.

During interviews between sessions, Holliday said, "The U.S. Department of Education has given Tennessee the option to distribute to schools ($195 million) through Title I (a federal education program) or by the BEP. They (state leaders) decided to do it by BEP."

Holliday was talking to Maury County Commissioner-elect Talvin B. Barnes, a school board member who's leaving that panel, realizing no budget has been passed and his county has a new school without money to pay teachers.

The federally-funded BEP allocation to Maury "could help you open that new school," Holliday told Barnes, adding that the distribution - such as some $3 million to Tipton County and $2 million to Sevier County - would also be available to Marshall County.

"Next year, it goes away," she said.

As the recession continues and consumers refrain from spending money, state and local sales tax revenues are depressed, so money is short when commissioners are required to adopt another annual budget.

Told of the double-edged sword of requirements to maintain funding to schools - by not cutting spending on education, and the mandate to have sufficient reserves - or face criticism in annual state audits, the comptroller first noted that the maintenance of effort requirement "was a legislative decision" by the General Assembly.

"And," Wilson said, "I've got to do what the legislature says." His auditors compare what they find in county financial records to state requirements.

Wilson had not examined in detail the intersection of two requirements that seem to have unintended consequences such as an unwritten requirement to increase appropriations to schools when too much money is spent from the school budget's reserve account.

The requirement to increase county funding to schools arises when more money must be allocated to maintain reserves.

"This may well be something the General Assembly ought to look at," Wilson said. "It needs to be transparent and out in the open."

Lt. Gov. Ron Ramsay, while campaigning for the GOP nomination to run for governor, immediately realized "maintenance of effort" was the issue presented to him during an interview in Lewisburg, and he commented on the requirement for adequate reserves and a separate law that required spending at least as much as had been spent the year before.

"If you're in extraordinary times, as we are right now - and hopefully that doesn't last forever - and you're living off your reserve funds, then that shouldn't count against your maintenance of effort," Ramsey said.

Maintenance of effort was one of the reasons Marshall County's Budget Committee has rejected the school budget. The school board wants to spend more that $887,000 from reserves. That's interpreted as dipping too close to the minimum required in the reserve fund, also known as the fund balance.

Speaking to the several hundred newly elected county leaders, Wilson offered a few remarks to indicate he understands what they face.

"Congratulation, I guess," he said. Then with a reference to declining sales tax revenues, the comptroller spoke a few lines of a 1977 Kenny Rogers hit, "You picked a fine time to leave me, Lucille."

He also suggested commissioners create an audit committee.

Marshall County commissioners were scheduled to have a new nominating committee in time for appointments next month.