Bredesen Unveils $475 Million Plan For BEP "Dramatic Overhaul"

Governor Tells Legislators Proposal Is "Fair, Sustainable, Accountable"

  • Thursday, May 3, 2007

Gov. Phil Bredesen on Thursday morning outlined plans for "a dramatic overhaul of education funding in Tennessee, a strategy developed in concert with members of the General Assembly and designed to restore fairness, sustainability and accountability to the funding process."

The proposal - dubbed BEP 2.0 - was outlined in a speech to a special Joint Convention of the General Assembly.

He said the program is the result of extensive conversations with the leadership of both Houses regarding the Basic Education Plan (BEP), and builds upon a proposal Bredesen presented earlier this year designed to put schools first by allocating additional state money for school systems with high numbers of at-risk students and those with high growth in student populations.

In his speech, Bredesen noted three primary factors that he said made the expanded plan possible: "an indepth examination of the BEP formula prompted by concerns expressed by Senate Education Committee chairwoman Jamie Woodson; broad political leadership in the Legislature to bring about real reform; and substantial new recurring funds paired with a bipartisan consensus to invest them wisely."

"A rising tide floats all boats and makes big changes much easier," Bredesen said. "The chance is here to seize the moment."

The $475 million plan would receive at least half of its funding this year, with the remainder implemented as state finances allow, Bredesen said.

The new money would be used to:

. Fully fund the state's portion of the costs associated with at-risk students
. Fully fund the state's portion of student growth costs in the year they occur
. Expanded funding for English Language Learners, with a goal of one teacher per every 30 students (currently the ratio is 1:45)
. Increase the state's portion of instructional salaries from the current 65% to 75%
. Increase the average teacher salary from $36,700 to $40,000

The plan also calls for a re-design of the way Tennessee allocates money to school systems by replacing the current formula with a new calculation "that is simple, fair and transparent."

The new formula would use a county's amount of assessed property and sales tax revenue to determine ability to pay.

Bredesen said the proposed BEP reform "is a two-way contract."

"It goes hand-in-hand with accountability from our school boards, our administrators and our teachers for their performance. We're saying, 'We'll step up to our responsibility to get you the resources you need; you need to step up to your responsibility for results," Bredesen said.

To increase accountability, Bredesen proposed a focus on three primary areas:

. Increased standards for student achievement
. Increased state involvement in the outcome of failing schools
. Increased expectations on state colleges of education to turn out qualified teachers

"We've shown we can make tough decisions in hard times; let's show we can make smart and sustainable investments in good times," Bredesen said in his speech to legislators. "This is a unique time. If education is really the first priority for you, sieze the moment, sieze the tide."

Hamilton County officials have long complained that the county got the short end of the stick on BEP funds.

At a meeting of County Commission members last week, there was discussion of a possible lawsuit against the state - perhaps in concert with Knoxville and other large counties.

Tennessee Democratic Party Chairman Gray Sasser said, "Today Gov. Bredesen has shown he's not playing politics with our children's future, he's leading Tennessee. Rather than more political rhetoric, Gov. Bredesen is offering common sense policies to improve educational opportunities in all of Tennessee's 95 counties."

Tennessee Education Association President Earl Wiman said, “Tennessee’s teachers and education support professionals join the Governor in asking the General Assembly to 'seize the tide.' Gov. Bredesen’s proposed changes to the way Tennessee funds our public schools are crucial.

“Now the real test will be providing the necessary dollars to fund these changes. We believe that passage of at least a 40¢ cigarette tax increase will be critical, and we are anxious to work with the governor and legislators to examine the new fiscal developments referenced in his address. Without the necessary funding none of the governor’s proposals will be possible.”

He added, “We must have more teachers for children who need to learn English; there must be more teachers for children who need smaller classes and more ‘one on one’ instruction in order for these children to be successful. The funding changes outlined by the governor can make a major difference in helping communities across this state hire the needed teachers that our children so desperately need. As it stands now, many localities simply cannot afford to hire more teachers without significant help from the state,” he concluded.

TEA Executive Director Alphonso C. Mance said, “The governor’s proposals are straightforward and will help streamline the funding formula that has remained inadequate and far too complicated since the inception of the Basic Education Plan. It is, indeed, time to revamp this plan. Through the changes just outlined by Gov. Bredesen, the state would rightfully pay a larger share of the real costs of recruiting and keeping the best teachers for the children of this state, and that is long overdue.

“With the cigarette tax increase for education, and the new revenue sources he mentioned, legislators have the opportunity to provide real leadership in making quality education for every child in Tennessee a reality. We are working hard to let them know how important their votes will be.”

Here is the Bredesen speech:

Lieutenant Governor Ramsey, Speaker Naifeh, Speaker ProTem DeBerry, Members of the 105th General Assembly, Constitutional Officers, Justices, friends, guests and my fellow Tennesseans. I thank you once again for the privilege of addressing you in these chambers.

I have rarely asked this privilege outside of my State of the State messages. My message this morning is about education, as you expect, but it is even more about seizing the moment.

This chamber this morning is full of people who care deeply about educating our children, and you know how much I care about that same thing. It’s not a political position for me, it’s a personal belief. I grew up in my Grandmother’s house; she had a 6th grade education. She had 11 children, and just one of them has a college degree; he got it in the military. Yet they all have had great American lives; owned their own homes, sent their kids on to college — I’m one of those kids. They were able to do this because you could come back from World War II, get a job in a factory, and be in the mainstream of the economy of our country.

The world is changing: you can’t do that anymore. Kids today who are willing to work hard but don’t have that education are not going to be in that mainstream, they’re going to be on the outside looking in.

This chamber is full of people like me; people who remember or have connections to the world of the ‘50s and ‘60s where that factory job worked, but who now have a public responsibility to children with a very different future. We’re the generations who have a foot in both worlds, and we have to make sure we pivot off that foot that’s in the future and not the one rooted in a past that no longer exists.

I asked for this time because in the past few weeks it has become clear that we together have an opportunity to seize the moment when it comes to education.

Even with some tough fiscal issues, I’ve worked hard to support education: full BEP funding even when we were cutting everywhere else, Books from Birth, Pre-K, Math and Science High School. You’ve been full partners in this. With our financial house in order, this year I felt I was able to step out further and propose some significant new investments in our schools and a revenue source — the cigarette tax — to sustain those investments over the long haul.

But I’m here this morning because we have a chance now to expand and broaden and improve the approach I proposed last winter. We have a chance to address not only the funding shortfall in our school systems, but the fairness shortfall as well.

I trace the origins of this expanded approach back to a conversation with Senator Woodson not long after my State of the State message. As you know, Senator Woodson is the chairman of the Senate Education Committee. She told me — and I’m paraphrasing — “You know how much I support education, and I like your proposals, but I don’t think they go far enough. We all know the Basic Education Plan—
the BEP—is flawed, and if you put more money into that with all its flaws don’t you just make the eventual sorting-out we have to do even harder?” It was a very good point.

Craig Fitzhugh — House Finance chairman — is a hard-nosed businessman, and he talked with me about making sure that accountability was an integral part of anything we did. Les Winningham has been committed to making sure that rural districts were treated fairly, and Randy McNally had a number of issues including making sure that districts like Oak Ridge were not penalized for having been willing to invest in public education over the years.

I’m here this morning to say that I heard you.

Last month I asked Speaker Naifeh and Speaker Ramsey for their OK for me to begin talking with those four committee chairs: Education and Finance in the House and Senate; two Democrats and two Republicans. The Speakers gave me the green light, and we have worked with those committee chairs, and later with the speakers and the majority and minority leaders, to reach the point we are at this morning.

This is not the Bredesen plan; if you have to attach names it is the Bredesen, Fitzhugh, McNally, Winningham, Woodson plan. That’s alphabetical, by the way.

This broader look has been made possible by several things that have happened since my State of the State address. First, based on Senator Woodson’s concerns, a group of us rolled up our sleeves and worked to really understand the BEP formulas.

Second, thanks to the work of the Committee Chairs I have mentioned, the Speakers, and others in the General Assembly, there is now the broad political leadership to bring about real reform. Third, while the final numbers won’t be in until next week, it is no secret that we expect to have substantial additional recurring funds to work with this year and a bipartisan consensus to invest them wisely; a rising tide floats all boats and makes big changes much easier. The chance is here to seize the moment.

I want to emphasize that our reform plan is a two-way street with our school systems; it’s a contract with them. We’ll make sure that they have the money they need to educate our children, but it doesn’t stop there: they’ll be accountable for results.

Let me start by talking about BEP reform and how we get to a fairer and better version; I call it BEP 2.0. The original BEP was passed in 1992; it has served our state well. It was passed to settle 16 years of litigation over education funding, a situation I hope we never get ourselves in again. Like what I am about to propose to you, it was partially funded in its first year — in that case with a half-cent sales tax increase, far more difficult than the cigarette tax I’ve proposed — and the remainder funded over the next six years.

That BEP today has two parts; on one side, it’s a way of calculating each year how much we should spend on a student in Tennessee. It takes into account everything from the salaries of teachers and administrative people, to the cost of constructing schools, to the cost of books and diesel fuel.

On the other side it determines for each district how much of the cost of education is the state’s obligation and how much belongs to local government. That side of the BEP has become unfair over the years and badly needs to be addressed.

Going back to the first part of the BEP — figuring out how much money is needed for each student — we’re proposing to fix a number of widely recognized problems. Paying the full cost of at-risk students, funding student growth in the year in which it occurs, funding the costs to a district of English Language Learner, ELL, students, putting a realistic cost for teachers in the formula and paying a full 75 percent of that teacher cost.

Once we have determined how much our state is going to spend in a given year on each student, we then need to decide how the cost is to be split between state and local government. This is where we have gotten off the trail; there are some real inequities in how the money is split that need to be addressed.

One element of this split is the cost differential factor — the so-called CDF you have heard so much about. This factor allocates a total of $108 million to 17 school systems, ostensibly to recognize the higher cost of doing business in their communities. That’s the theory; as a practical matter it was a political fix in 1992 to get more money to some urban school systems. As you might expect, what has happened over the years is that it no longer works in the way intended. For example, the largest beneficiary of the CDF today is Williamson County, which gets an 18 percent premium on their state
funding — paid for by other counties' taxpayers — despite being arguably the county in Tennessee most able to carry the load. Conversely, Hamilton County — Chattanooga — is an urban system with the second largest number of failing schools in the state; Hamilton County gets nothing - that's not fair. This reform plan eliminates the CDF.

This state/local split is also determined by a fiscal capacity formula that is outdated and obscure. Rather than being plain spoken and clear, it uses regression analysis to calculate coefficients, and reminds me of an old black and white movie where the mad scientist sets some dials on a machine in the basement of the castle, and turns the crank, and it clanks and lights and bells go off, and finally it spits an answer out the bottom. The mad scientists in the fiscal capacity case are some great people in the Department of Education, but the process is the same.

We propose to dramatically simplify this process and make it transparent to the public. If you have taken freshman algebra and own a $20 calculator you should be able to figure out what your district is
entitled to.

These changes will make BEP 2.0 more fair, more defensible in court, and more transparent to the public.

When you add up the cost of these changes, the answer is an additional $475 million, and that is more than we have to work with this year, even with the 40-cent cigarette tax increase and extra growth money.

What we propose to do is to echo what our state did in 1992; bite off a big piece this year, establish a secure long-term funding mechanism, and continue to build the funding in the years ahead until we finish off the plan. The advantage of this is that we are doing what good managers do; set a framework in place and then work each year to complete it, rather than constantly picking at one issue after another.

This BEP reform is part of a two-way contract. It goes hand in hand with accountability from our school boards, our administrators and our teachers for their performance. We’re saying, “We’ll step up to our responsibility to get you the resources you need; you need to step up to your responsibility for results.”

First, there are standards. Before you can hold someone accountable, you have to be clear with them what is expected, and there are serious issues with standards in Tennessee. Among the most serious is
our lack of “truth in advertising”; we are telling our kids and our schools that they are doing well in cases where they simply are not. I’m not the only one who feels this way; in their report on public education last month, the U. S. Chamber of Commerce gave Tennessee an ‘F’ in “Truth in Advertising.”

Here’s why: when our 8th grade students take the Tennessee tests in math, we tell 87 percent of them and their parents that they are “proficient”. When our 8th grade students take the national standards exam, the NAEP tests, 21 percent of those same 8th graders are graded as “proficient”.

If our kids were just going to be competing with other Tennessee kids, we could get away with this. But you know that’s not the world these kids are going to live in.

There are legitimate differences in opinion among liberals and moderates and conservatives about how to improve our schools. One thing however everyone can agree on is the need to be completely honest about just where we are; to be honest with our parents, to be honest with our children and to be honest with ourselves.

Second, any effort to improve our schools ought to start with those that are clearly failing. We have in Tennessee 20 schools today that have hit the wall; under our own laws are called out for having failed to show adequate progress for at least six years running; these are failed schools. Seventeen of them are in the Memphis school system, two are in Hamilton County, and one is in Nashville. That list will grow by another five or six this August.

Under our existing laws, the state has broad powers in these cases; we can close the schools, we can
remove the schools from the school system and make them charter schools or run by one of our universities, we can even remove school board members. We’ve never used those powers. I commit to you to take a far stronger hand in fixing these schools by aggressively using the laws we already have.

Third, we need to demand more from our colleges of education. The reality is that they are sending us too many teachers who don’t have the hard content knowledge that it takes to teach effectively. Most of the teachers in the Tennessee school system are products of our state’s own colleges of education, and we are going to start holding their feet to the fire on teacher preparation.

Our colleges of education need to be less of an academic department of the university and more of a professional school, like a law school or a medical school. When a student goes to medical school, they don’t spend a lot of time on the “History of Medicine”; they don’t take a watered-down “Math for Doctors” course. They study content; they learn professional skills: how to diagnose, how to treat, what to do if someone has a heart attack. And they learn it both in the classroom and in the hospital.

Our colleges of education need to be more like that, and specifically they need to send us teachers who know their subject matter, who know how to use the tools of their trade — their test scores for example — and who have had practical experience in doing so when they arrive at our door.

We've got some great teachers in Tennessee. I’ve gotten to know a lot of them over these past four years, and the good ones are ready for some changes. They think of themselves as professionals, they want to be paid like professionals, and they’re willing to be held accountable like professionals.

So that’s where we are: I put a good plan on the table last winter; and you — Democrats and Republicans both — have broadened and improved it. That’s the way things should work. I want to add a postscript. In order to put BEP 2.0 in place, we know that we have to come up with money in addition to what the 40-cent cigarette tax will produce. The working assumption has been that if we had an additional $140 million of revenue growth in hand when the funding board meets next week, we would be able to increase our state pay raises to a full 3 percent and still have enough left over to realistically consider the more comprehensive BEP 2.0 model. Our early tax collections indicated that this was a reasonable hope, perhaps a stretch.

Updated results have come in these last 36 hours, and the likelihood is that we will have considerably more than the $140 million. The possible range has been in the $100-300 million area, and it now seems likely that when the funding board considers the numbers and projections next week, their estimate could be near the upper end of that range.

That opens up a number of possibilities at this late date, including pre-funding some future year additions to the BEP percentage formula and the possibility of phasing in the cigarette tax over time. I discussed the situation with the speakers as soon as I was aware of it, and will work with them and you over the next few days to intelligently take into account this fortunate development. We’ve come a long way together on education reform, and if we can continue in that spirit for the next few days, we’ll all be proud of what we have accomplished.

We’re at a crossroads. I’ve served in public office for 12 years now, and have been through 13 budgets.

I’ve had some very tough years; I have never had a year with as much new money as we have before us now; this is unique and is unlikely to happen again. We've shown we can make tough decisions in hard times; let's show we can make smart and sustainable investments in good times. Believe me, I understand the politics and pressures this good fortune produces. We need to keep those politics and pressures at bay; this is a unique time, seize the moment. If education is really the first priority for you, seize the moment, seize the tide.

I rarely use quotations in my speeches, but I want to close with one, from Shakespeare:
“There is a tide in the affairs of men, Which, taken at the flood, leads on to fortune. Omitted, all the voyage of their life, Is bound in shallows ….”

This is one of those moments; seize the tide.

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