Capital Fund should be put back into school budget

Sharing Education Capital Project Funds:
A Lesson from McMinn County

In 2011, the cities of Athens and Etowah sued McMinn County because the county had put money into an education capital projects fund and used those funds for renovations and additions to county schools, and the cities believed that those funds should have been shared with their school systems. McMinn County responded that they were not obligated to share these capital project funds with the city. The trial court agreed and entered judgment for the county.

The trial court stated, “When a county makes a tax assessment for future capital outlay projects, such an assessment is not subject to proration among all LEAs in the county.” The trial court found that the relevant statute is clear and unambiguous — it requires sharing only of funds for current operation and maintenance purposes, and funds collected for future capital projects are not for current operation and maintenance.

Predictably, the cities appealed. In December 2014, the Tennessee Court of Appeals affirmed the trial court’s decision for the county. The cities attempted a further appeal to the Tennessee Supreme Court, but that Court declined to hear the case in May 2015. There can be no other appeals. The trial court’s decision is now final.

Under this case, counties in which there are multiple school systems may make appropriations to an education capital projects fund and expend that money for school capital projects without being required to share those funds with any city or special school districts in the county. These funds can only be used for capital projects.

This case only affects money appropriated and set aside for capital expenditures for education. Any money used for current operation or maintenance purposes, as well as funds borrowed for education capital expenditures, must be shared with the other school systems in the county.

To read the case, please click HERE to view a PDF.

Source: CTAS Newsletter


10 thoughts on “Capital Fund should be put back into school budget

  1. Care to take a guess at what McMinn County’s debt is?

    (*Hint: It’s a whole lot less than a quarter-billion*)

      • WOW!! Wonder if Mayor John Gentry (? 2003 ? – 2015) would consider moving to Blount and run for office? Maybe even bring some of his fiscally conservative staff with him?

        Something they’re doing seems to work … their population is 42% of ours, they’ve only a 27.4% LFPR compared to our 33.2%, 10% un-employment rate to our 7%, & they’ve 43% of our number of households.

        McMinn county has a Metro form of school system, with 2 elementary schools, 1 HS, & 1 special ed school; compared to our 3 school systems w/ 4 high schools, 1 spec ed, 9 middle/9th grade/jr schools, & 18 (EIGHTEEN) elementary schools (shout out to Dr. Brian Bell, Brady Inc, CRC, et. al.). McMinn’s got 2 hospitals & 1 clinic. McMinn has 740 roads with 749 miles of asphalt, to our X roads & 834 miles of asphalt.

  2. 42% of a similar demographic population would also only require 42% of the school classrooms. McMinn county actually contains three school systems, McMinn County, Athens City and Etowah City. The city systems are the ones spending 25% more per student than the County (similar to Maryville and Alcoa), but suing for more money. Your numbers are off on the number of schools. The County system has two high schools and seven elementary/middle schools. They do use the K-8 school model (no separate middle schools), so they would automatically require 2/3 the number of school buildings as Blount does, even with the same population. Athens City has five schools: two pre-K-2nd grade, two 3rd-5th grade schools, and a single middle school. Etowah City has a single k-8 school. Both of the city systems feed into the two county high schools. To make it “apples-to-apples” with Blount, that would be two high schools, 9 middle and 10 elementary schools – closer to 50% on facilities.

    So to summarize, they have higher unemployment, lower labor participation rate, less economy of scale for the school system because of the low population density – and somehow spend less and have ZERO debt. Why can’t Blount do that?

    But it doesn’t stop there – guess what else McMinn has? A new justice center and jail expansion. I am pretty sure however, that they do not have spy vans, 20-30 “missing” police cars, hostage telephones, six-figure salaries or high-speed-pursuit racetracks like Blount does.

    • This is one of the Major Problems the entire state-o-tenasi has … there’s no Industrial Tax Rate. In TN, Industries are taxed at the same rate as Commercial businesses; such as Banks, Real Estate Companies, Real Estate Developers, & Wal-Marts.

      Doesn’t Blount tax all commercial property at 35%?

      If memory serves me, back in ~2010; the oldest industry in Blount county was heavily taxed on what was called “personal property”–Blount levying a tax for ingot storage. However, the 13 banks extant back then weren’t taxed any extra for the storage of their “personal property” of greenbacks.

      TARP terds

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