Does a Tennessee county commission have to fund a special school district inside the county, and can the General Assembly change that rule?

Plain-English summary

Tennessee has three kinds of local education agency (LEA) operating side-by-side in different counties: county school systems, municipal school systems, and special school districts. The funding rules differ depending on which type is involved. County school systems are funded primarily by countywide property taxes the county commission levies under Tenn. Code Ann. § 49-2-101(6). Municipal school systems can levy their own city-level property taxes. Special school districts are funded by a dedicated property tax levied directly by the General Assembly through a private act creating the district (Tenn. Code Ann. § 49-2-107).

Rep. Ron Lollar asked the AG twelve interconnected questions about whether the General Assembly could restructure that scheme, particularly with respect to special school districts whose boundaries are coterminous with a city. The questions covered: (1) the current obligation of counties to fund special districts, (2) whether the GA can mandate that counties become the single funder of special districts, (3) county-mayor amendment power over LEA budgets, (4) annual mandatory funding increases negotiated by county mayor and special-district board chair, (5) "first three years" funding-flexibility rules, (6) selective application of the weighted full-time-equivalent average daily attendance (WFTEADA) formula, (7) mandatory city property-tax reduction when the county takes over special-district funding, (8) city assumption of existing capital debt, (9) mandatory or permissive WFTEADA modification agreements, (10) rural school bonds without WFTEADA proceed allocation, (11) whether the single-funder mandate would violate Tennessee Constitution Article XI, Section 8 (the "general laws only" clause), and (12) mandatory mediation when a county commission fails to approve an LEA budget by July 1.

The AG's bottom line on Question 1 is grounded in City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005). Under current law, a county commission has no obligation to fund a special school district that exists alongside the county school system. Special school districts are funded by their own property tax, levied by the General Assembly through the private act creating the district. The County's only school-funding duty is to its county school system.

On the remaining eleven questions, the AG's answers are almost uniformly the same: yes, the legislature has the constitutional power to enact the proposed law, but the specific wording matters and the law cannot run afoul of (i) federal law and the federal Constitution, (ii) the Tennessee Constitution generally, (iii) the Small Schools trilogy (which requires the State to maintain substantially equal educational opportunities throughout Tennessee), or (iv) Article XI, Section 8 of the Tennessee Constitution (which prohibits special legislation suspending general laws of statewide mandatory application without a rational basis).

The Article XI, Section 8 analysis matters most for the questions that target only special districts whose boundaries are coterminous with a city (Questions 4, 5, 6, 9, 10). The AG treats those as narrow classifications, but concludes they survive rational-basis review because a plausible rationale (those districts may be traditionally underfunded; the carve-out may be needed to provide substantially equal educational opportunity) is available. Question 11 reaches the same conclusion on the single-funder mandate itself: because there is no current general law of statewide mandatory application requiring counties to fund special districts, the legislature has broad discretion to create a new funding rule.

The takeaway for Tennessee policymakers: the General Assembly can fairly comprehensively rewrite the funding rules for special school districts, including making counties responsible for their funding, allocating WFTEADA differently, requiring mediation on disputed LEA budgets, and forcing cities to take on capital debt or reduce property tax rates. The cap on legislative creativity is the Small Schools equal-educational-opportunity mandate and Article XI, Section 8's anti-special-legislation rule, both of which only bite when the law is irrational or actually reduces equality of educational opportunity statewide.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Tennessee's school-funding statutes have been substantially restructured since 2010, most significantly through the Tennessee Investment in Student Achievement (TISA) Act of 2022, which replaced the Basic Education Program (BEP) formula. The WFTEADA framework discussed in this opinion was part of the older BEP funding system; the post-2022 TISA framework allocates dollars differently. The Small Schools trilogy remains binding Tennessee constitutional law, but its specific operational meaning is bound up with the current school-funding formula, not the 2010 one. Anyone advising on current Tennessee school-funding restructuring should look at the current statutes and current Department of Education guidance, not at this 2010 framework.

Common questions

Q: What is a Tennessee "special school district"?
A: A local education agency created by a private act of the Tennessee General Assembly with its own boundaries (usually independent of any single city or county), its own board, and its own dedicated property tax levied by the same private act under Tenn. Code Ann. § 49-2-107. They exist in pockets of West and Middle Tennessee for historical reasons. The Memphis/Shelby County area, the Jackson/Madison County area, and several smaller communities have or have had special districts.

Q: Who pays for a special school district under current law?
A: Property owners inside the district, through a property tax levied directly by the General Assembly via the private act that created the district. The county does not have an independent statutory duty to fund the district.

Q: Why doesn't the county have to fund the special district inside its borders?
A: Because the special district is set up to be self-funding through its dedicated tax. The Court of Appeals in City of Humboldt v. McKnight analyzed the statutory scheme and concluded that "[i]n this statutory scheme of responsibility and accountability, the county has no role unless and to the extent it is actually operating a school system" (2005 WL 2051284, at *16). Counties do not "oversee or be responsible for municipal, special, or other school districts that operate within the county's borders."

Q: Can the General Assembly require counties to fund special districts?
A: Yes, the AG concluded, on broad legislative-power grounds. The Tennessee Constitution vests all legislative power in the General Assembly (Article II, § 3), including the exclusive power to control public expenditures (Mayhew v. Wilder, 46 S.W.3d at 784). The GA's power over public education is grounded in Article XI, §§ 9 and 12. Subject to constitutional constraints, the GA can rewire the school-funding rules.

Q: What are the Small Schools cases?
A: A trilogy of Tennessee Supreme Court decisions (1993, 1995, 2002) holding that the Tennessee Constitution requires the State to maintain a system of free public schools providing the opportunity to acquire an education and that the funding structure must afford "substantially equal educational opportunities" across districts. The cases ordered the General Assembly to equalize funding across rich and poor districts. Any new school-funding legislation has to be checked against the Small Schools mandate; legislation that reduces funding equity is constitutionally suspect.

Q: What is Article XI, Section 8 of the Tennessee Constitution?
A: The "general laws only" clause. It says the legislature has no power to suspend general laws for the benefit of any individual, county, or class without a rational basis. It is the Tennessee analog to the federal Equal Protection Clause but it specifically targets special legislation. Under Riggs v. Burson, 941 S.W.2d 44 (Tenn. 1997), Article XI, § 8 is triggered only when a statute "contravenes some general law which has mandatory statewide application." Even then, if a rational basis exists, the statute survives.

Q: Why does Article XI, § 8 matter for the special-district funding questions?
A: Because some of the proposed laws would target only special districts whose boundaries are coterminous with a city (a narrow class). To survive Article XI, § 8 scrutiny, the legislature would need a rational basis for the classification. The AG concluded a rational basis can usually be found (those districts may be underfunded; the carve-out may aim at equalizing opportunity).

Q: What is WFTEADA?
A: The weighted full-time equivalent average daily attendance formula, the historical mechanism for allocating shared resources among LEAs in a county that has multiple LEAs (county system plus special district, for example). The formula gave each LEA a share of certain countywide resources proportional to its weighted student count.

Q: Can the General Assembly require LEAs to amend their budgets based on the county mayor's "written comments"?
A: The AG said yes, the GA has the power. That kind of law would not on its face violate Small Schools (it does not lessen state funding obligations) or Article XI, § 8 (because it would apply to all counties statewide). But the specific text matters; a poorly drafted version could create problems.

Q: What if the county commission and the LEA cannot agree on a budget by July 1?
A: Tennessee law (as of 2010) did not require mediation. The legislature could enact such a requirement, the AG concluded, and it would not on its face violate Small Schools or Article XI, § 8 because it would apply statewide and would not reduce equality of opportunity.

Background and statutory framework

The current statutory scheme. Tennessee's education-funding structure is a layered combination of state and local funding. The State funds a foundational share through the BEP (as of 2010; now TISA). Local funding comes from local property taxes, with the levying mechanism depending on the type of LEA:

• County school systems: county property tax levied by the county legislative body under Tenn. Code Ann. § 49-2-101(6).
• Municipal school systems: a city-level property tax levied by the municipality.
• Special school districts: property tax levied directly by the General Assembly through the private act creating each district, under Tenn. Code Ann. § 49-2-107.

The Court of Appeals in City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005), confirmed that the county is responsible only for funding its own county school system; it has no statutory duty to fund municipal or special districts inside the county. The decision recited the relevant statutes and noted that "[s]tatutes governing special school districts and municipal school districts clearly anticipate that property owners within the district will be taxed by private act of the General Assembly" (at *24).

The Small Schools trilogy. Tennessee Supreme Court decisions in 1993, 1995, and 2002 (Tennessee Small School Systems v. McWherter, 851 S.W.2d 139, 894 S.W.2d 734, and 91 S.W.3d 232) held that the Tennessee Constitution's education clause requires the State to maintain a public school system that affords substantially equal educational opportunities across districts. The cases ordered the legislature to equalize school funding. Small Schools III clarified that "the critical point" is "educational funding structure be geared toward achieving equality in educational opportunity for students, not necessarily 'sameness' in teacher compensation." 91 S.W.3d at 243.

The Article XI, § 8 framework. Article XI, Section 8 says: "The Legislature shall have no power to suspend any general law for the benefit of any particular individual, nor to pass any law for the benefit of individuals inconsistent with the general laws of the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunities, or exemptions other than such as may be, by the same law extended to any member of the community, who may be able to bring himself within the provisions of such law."

The Tennessee Supreme Court's framework is two-step. First, did the challenged statute contravene a general law of statewide mandatory application? If no, Article XI, § 8 is not triggered at all. Riggs v. Burson, 941 S.W.2d 44, 53 (Tenn. 1997). If yes, the second question is whether the classification has a rational basis. If yes, the statute survives. As the opinion frames it (citing City of Chattanooga v. Harris, Dandridge v. Williams, and Harrison v. Schrader), rational-basis review is highly deferential: if any reason can be conceived to justify the classification, the statute is upheld, and the reasons need not appear on the face of the statute.

Application to the twelve questions. The AG worked through each in turn:

• Question 1. Current law gives the county no duty to fund a special district. (Held under City of Humboldt.)
• Question 2. The GA can mandate single-source county funding statewide. Wording cannot violate federal law, state law, or Small Schools. The status of the school district as a "special" district would remain.
• Question 3. The GA can require LEA budgets to be amended to reflect the county mayor's written comments. Would apply statewide; no Small Schools or § 8 problem.
• Question 4. The GA can require annual mandatory funding increases negotiated by the county mayor and special-district board chair. Narrow class (coterminous-with-city districts), but rational basis available (underfunding concern).
• Question 5. Same answer for a "first three years" funding-flexibility window.
• Question 6. Same answer for selective WFTEADA application. Narrow class, but rational-basis review survives.
• Question 7. The GA can require a city to reduce its property tax when the county takes over special-district funding. Applies generally to all such scenarios; no preliminary classification problem.
• Question 8. The GA can require the city to take over the special district's capital debt. Same analysis.
• Question 9. The GA can require WFTEADA modification agreements (mandatory or permissive). Narrow class, but rational basis available.
• Question 10. The GA can authorize rural school bonds without WFTEADA allocation. Narrow class, but rational basis available.
• Question 11. A single-funder mandate would not violate Article XI, § 8 because there is no current general law of mandatory statewide application requiring counties to fund special districts. The legislature has broad discretion to create new funding rules in the absence of contrary general law. (Rector v. Griffith, 563 S.W.2d at 904: "almost unlimited discretion to enact private legislation affecting the structure and organization of local government units" where no contrary mandatory general law exists.)
• Question 12. The GA can require mediation when a county commission fails to approve an LEA budget by July 1. Would apply statewide; no Small Schools or § 8 problem.

The unifying theme. The opinion is essentially a Constitution-101 walk-through of why the General Assembly has wide legislative latitude to restructure school funding. The legal levers are (i) federal law (the Equal Protection Clause), (ii) Tennessee Small Schools (equality of educational opportunity), and (iii) Article XI, § 8 (no special legislation suspending statewide general laws without a rational basis). None of these set a high bar against the proposed restructuring, so the legislature has substantial design space. The constraint is rationality, not optimality.

Citations and references

Statutes:

• Tenn. Code Ann. § 49-2-101(6) (county school-tax duty)
• Tenn. Code Ann. § 49-2-107 (special school district property taxes)

Constitutional provisions:

• Tenn. Const. art. II, § 3 (legislative power)
• Tenn. Const. art. XI, § 8 (general laws only)
• Tenn. Const. art. XI, §§ 9, 12 (local government and education)
• U.S. Const. amend. XIV (Equal Protection)

Cases:

• City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005)
• Tennessee Small School Systems v. McWherter, 851 S.W.2d 139 (Tenn. 1993)
• Tennessee Small School Systems v. McWherter, 894 S.W.2d 734 (Tenn. 1995)
• Tennessee Small School Systems v. McWherter, 91 S.W.3d 232 (Tenn. 2002)
• Mayhew v. Wilder, 46 S.W.3d 760 (Tenn. Ct. App. 2001)
• City of Chattanooga v. Harris, 442 S.W.2d 602 (Tenn. 1969)
• Riggs v. Burson, 941 S.W.2d 44 (Tenn. 1997)
• Rector v. Griffith, 563 S.W.2d 899 (Tenn. 1978)
• Dandridge v. Williams, 397 U.S. 471 (1970)
• Harrison v. Schrader, 469 S.W.2d 822 (Tenn. 1978)
• Peay v. Nolan, 157 Tenn. 222, 7 S.W.2d 815 (1928)
• State ex rel. Weldon v. Thomason, 142 Tenn. 527, 221 S.W. 491 (1920)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-058.pdf

Original opinion text

April 28, 2010

Opinion No. 10-58

County Commission's Role in Funding Special School Districts

QUESTIONS

1. In a county in which a county school system and a separate special school district are operated, what is the responsibility of the County Commission to provide funding to the special school district?

2. Would it be lawful for the General Assembly to enact a law which provides that in any county wherein there is more than one local education agency ("LEA"), one of which is a special school district, the county is mandated to be the single local source of funding for the special school district and be solely responsible under the laws of this state for the local support of operations and maintenance of such special school district? Would such an enactment by the General Assembly affect the status of the school district as being a special school district?

3. Is it lawful for the General Assembly to require that LEAs must amend their budgets to reflect the "written comments" of the county mayor concerning the LEAs' proposed budget?

4. Is it lawful for the General Assembly to require that the county shall annually increase funds appropriated to special school districts in which the city's boundaries are coterminous with the special school district, by an amount to be negotiated by the county mayor and the president or chair of the board for such special school district, provided that the funding amount agreed to by the county mayor and the president or chair of the board of such special school district must be jointly approved by the board of such special school district, the county commission, and the legislative body of the city which is conterminous with the boundaries of the special school district?

5. Is it lawful for the General Assembly to enact legislation requiring that during the first three years during which a county commission becomes the single source funder of a special school district whose boundaries are coterminous with that of a city, the county commission may increase funding to the special school district without increasing the funding to any other LEA in the county?

6. Under the scenario above, may the General Assembly also enact legislation requiring that the weighted full-time equivalent average daily attendance ("WFTEADA") formula shall apply to some LEAs in the county and not others?

7. May the General Assembly enact legislation requiring a city to reduce its property tax rate when the county commission becomes the single source funder of a special school district which operates within the borders of a city?

8. May the General Assembly enact legislation requiring that in the event that the county commission becomes the single source funder of a special school district whose boundaries are coterminous with a city, the city must assume all existing capital debt service and costs previously borne by the special school district?

9. May the General Assembly enact legislation which requires that in counties in which the county commission is the single source funder of special school districts whose borders are coterminous with a city, the LEAs must enter into agreements to modify the WFTEADA formula? What if the legislation provided that the LEAs may by agreement modify the WFTEADA formula?

10. May the General Assembly enact legislation which requires that in counties in which the county commission is the single source funder of special school districts whose borders are coterminous with a city, the county commission may issue rural school bonds without making a WFTEADA allocation of the proceeds among the LEAs within the county?

11. Would a law requiring that the county commission become the single source funder of any special school district in any county wherein there is more than one LEA, one of which is a special school district whose boundaries are coterminous with the city's boundaries, violate Article XI, Section 8, of the Tennessee Constitution?

12. Would it be lawful for the General Assembly to enact a law which permits or requires that in the event that the county commission fails to approve the budget submitted by an LEA by July 1st, the county commission and the LEA may or must engage in non-binding or binding mediation?

OPINIONS

1. In a county in which there is both a county school system and a separate special school district which is funded by property taxes levied by the General Assembly, the county commission has no responsibility to provide funding to the special school district. See City of Humboldt v. McKnight, No. M2002-02639-COA-R3-CV, 2005 WL 2051284, at *16, 21-27 (Tenn. Ct. App., Aug. 25, 2005) (copy attached).

2. Yes. However, this question does not give the specific text of the proposed statute; therefore, it is impossible for this Office to give specific advice concerning the constitutionality of this proposed law. In general, the General Assembly may enact laws which do not violate the United States Constitution, the Tennessee Constitution, or any federal laws. The General Assembly has constitutional power to make laws governing both local government affairs and public education. Tenn. Const. Art. XI, Sections 9 and 12. The legislature has the power to enact a law providing that, in any county in which there is more than one LEA, one of which is a special school district, the county is mandated to be the single local source of funding for the special school district. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding. Such an enactment by the General Assembly would not affect the status of the school district as being a special school district.

3. Yes. While the legislature has the power to enact a law providing that LEAs must amend their budgets to reflect the "written comments" of the county mayor concerning the LEAs' proposed budgets, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

4. Yes. While the legislature has the power to enact a law providing that the county shall annually increase funds appropriated to special school districts in which the city's boundaries are coterminous with the special school district, by an amount to be negotiated by the County Mayor and the president or chair of the board for such special school district, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

5. Yes. The legislature has the power to enact a law providing that, during the first three years during which a county commission becomes the single source funder of a special school district whose boundaries are coterminous with that of a city, the county commission may increase funding to the special school district without increasing the funding to any other LEA in the county. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

6. Yes. While the legislature has the power to enact a law providing that the WFTEADA formula shall apply to some LEAs in the county and not others, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

7. Yes. While the legislature has the power to enact a law requiring a city to reduce its property tax rate when the county commission becomes the single source funder of a special school district that operates within the borders of a city, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws.

8. Yes. The legislature has the power to enact a law requiring that, in the event the county commission becomes the single source funder of a special school district whose boundaries are coterminous with a city, the city must assume all existing capital debt service and costs previously borne by the special school district. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws.

9. Yes. The legislature has the power to enact a law providing that, in counties in which the county commission is the single source funder of special school districts whose borders are coterminous with a city, the LEAs must enter into agreements to modify the WFTEADA formula. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

10. Yes. The legislature has the power to enact a law providing that, in counties in which the county commission is the single source funder of special school districts whose borders are coterminous with a city, the county commission may issue rural school bonds without making a WFTEADA allocation of the proceeds among the LEAs within the county. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

11. No. The legislature has the power to enact a law providing that, in any county in which there is more than one LEA, one of which is a special school district, the county is mandated to be the single local source of funding for the special school district. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. It does not appear that a law which requires that the county commission become the single source funder of any special school district in any county wherein there is more than one LEA, one of which is a special school district whose boundaries are coterminous with the city's boundaries, would violate Article XI, Section 8, of the Tennessee Constitution.

12. Yes. The legislature has the power to enact a law requiring that, in the event that the county commission fails to approve the budget submitted by an LEA by July 1st, the county commission and the LEA may or must engage in non-binding or binding mediation. However, the wording of the statute cannot run afoul of the United States Constitution, the Tennessee Constitution, or any federal laws. This includes not running afoul of the three Tennessee Small School Systems decisions that ordered the Tennessee General Assembly to eliminate disparities in education opportunities throughout Tennessee's public school districts by better equalizing public education funding.

ANALYSIS

The full analysis applies the following framework across all twelve questions. Tennessee Constitution Article II, Section 3 vests all legislative power in the General Assembly, and Article XI, Sections 9 and 12 grant the GA broad power over local-government affairs and public education. The GA's exclusive prerogative to control the expenditure of public moneys was reaffirmed in Mayhew v. Wilder, 46 S.W.3d 760, 784 (Tenn. Ct. App. 2001) (citing Peay v. Nolan, 157 Tenn. 222, 228-29, 7 S.W.2d 815, 816 (1928); State ex rel. Weldon v. Thomason, 142 Tenn. 527, 534, 221 S.W. 491, 494 (1920)). Subject to U.S. Constitution, federal law, and the Tennessee Constitution, the General Assembly may enact whatever school-funding legislation it chooses.

Three constitutional constraints frame the analysis:

(i) The Fourteenth Amendment Equal Protection Clause and Article XI, Section 8 of the Tennessee Constitution prohibit classifications without a rational basis (City of Chattanooga v. Harris, 223 Tenn. 51, 56-57, 442 S.W.2d 602, 604 (1969); Dandridge v. Williams, 397 U.S. 471 (1970); Harrison v. Schrader, 469 S.W.2d 822 (Tenn. 1978)). Rational-basis review is highly deferential; if any reason can be conceived to justify the classification, the statute is upheld.

(ii) The Small Schools trilogy (Tennessee Small School Systems v. McWherter, 851 S.W.2d 139 (Tenn. 1993); 894 S.W.2d 734 (Tenn. 1995); 91 S.W.3d 232 (Tenn. 2002)) requires the State to maintain a system of free public schools that affords substantially equal educational opportunities throughout the State. Small Schools III clarified that the focus is equality of opportunity for students, not sameness in teacher compensation.

(iii) Article XI, Section 8's general-laws-only rule is triggered when a statute "contravene[s] some general law which has mandatory statewide application" (Riggs v. Burson, 941 S.W.2d 44, 53 (Tenn. 1997)). Even then, the statute is upheld if a rational basis exists. Rector v. Griffith, 563 S.W.2d 899, 904 (Tenn. 1978), confirms that where no contrary general law of mandatory statewide application exists, the legislature has "almost unlimited discretion to enact private legislation affecting the structure and organization of local government units."

Applying that framework to current school-funding law: City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005), held that a county has no statutory duty to fund a special school district inside its borders. The Court explained: "In this statutory scheme of responsibility and accountability, the county has no role unless and to the extent it is actually operating a school system... Nothing in the statutes requires the county to oversee or be responsible for municipal, special, or other school districts that operate within the county's borders." Id. at 16. Statutes governing special school districts "clearly anticipate that property owners within the district will be taxed by private act of the General Assembly." Id. at 24. Tenn. Code Ann. § 49-2-107 "specifically provides that property owners in special school districts must pay the property taxes levied by the private act creating the special school districts."

A county commission's school-funding duty under Tenn. Code Ann. § 49-2-101(6) is to "[l]evy such taxes for county elementary and county high schools as may be necessary to meet the budgets submitted by the county board of education and adopted by the county legislative body" (emphasis in original).

For the proposed legislation in questions 2 through 12, the analysis on each is the same: the General Assembly has constitutional power to enact the law. The constraints are (i) the wording must not violate federal law or the federal Constitution, (ii) it must not violate the Tennessee Constitution generally, including (iii) the Small Schools trilogy, and (iv) it must not violate Article XI, Section 8 by creating irrational classifications. The Office reviewed each proposal and concluded that, even where the proposed law targets a narrow class (special districts coterminous with a city), a plausible rational basis (those districts may be traditionally underfunded; the special carve-out may aim at equalizing educational opportunity) is available to justify the classification.

For Question 11 specifically, the AG concluded that a single-source-funder mandate would not violate Article XI, Section 8. The first step of the analysis is whether the proposed statute would contravene a general law of mandatory statewide application. As City of Humboldt explained, current law gives the county no responsibility for funding special school districts. There is no statute prohibiting counties from funding special school districts, but there is also no general law of mandatory statewide application requiring such funding. Therefore, the proposed law would not contravene such a general law; the first step of Article XI, § 8 analysis is not satisfied; and the inquiry ends in the legislature's favor.

For Question 12, mandatory mediation when a county commission fails to approve an LEA budget by July 1st would apply to all Tennessee counties and would not lessen the State's Small Schools obligations. The legislature may enact such a law.

ROBERT E. COOPER, JR.
Attorney General and Reporter

GORDON W. SMITH
Associate Solicitor General

DAVID E. COENEN
Assistant Attorney General

Requested by:

The Honorable Ron Lollar
State Representative
214 War Memorial Building
Nashville, TN 37243-0134