If a new Tennessee municipal school district is formed, how does the county distribute property tax money to it?

Subject

Opinion No. 12-64, Apportionment of Local Education Funding, June 25, 2012

Plain-English summary

Senator Mark Norris asked the Tennessee AG how Shelby County would have to distribute countywide property tax funds if one of its suburban municipalities formed a new municipal school district. Specifically, must the distribution be on an "average daily attendance" (ADA) basis?

The AG concluded no, the apportionment must be on a "weighted full-time equivalent average daily attendance" (WFTEADA) basis. Tenn. Code Ann. § 49-3-315(a) says: "[a]ll school funds for current operation and maintenance purposes collected by any county . . . shall be apportioned by the county trustee among the LEAs in the county on the basis of the WFTEADA maintained by each, during the current school year." WFTEADA is "one (1) full-time equivalent average daily attendance multiplied by the cost differential for a program" (§ 49-3-302(18)). The statute defines "local education agency" or LEA as "any county, city, or special school district, unified school district, school district of a metropolitan form of government or any other school system established by law" (§ 49-3-302(11)).

The AG distinguished a prior opinion (10-58) that found no county funding obligation to a special school district in Gibson County. That opinion turned on the unique structure of Gibson County, which had no county school system at all and where the legislature had specifically funded the municipal and special schools by district-specific property taxes. City of Humboldt v. McKnight (Tenn. Ct. App. 2005) was the controlling case there. Shelby County's situation is different and the standard WFTEADA rule applies.

Currency note

This opinion was issued in 2012. 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.

Historical background and statutory framework

Constitutional foundation

Tenn. Const. art. XI, § 12 requires the General Assembly to provide for the maintenance and support of a system of free public schools. The legislature has broad power and discretion to fulfill that obligation (Tennessee Small School Systems v. McWherter (1993)).

Statutory framework: LEAs

The current system delivers educational services through local education agencies (LEAs). Tenn. Code Ann. § 49-3-302(11) defines an LEA broadly: "any county, city, or special school district, unified school district, school district of a metropolitan form of government or any other school system established by law." So a new municipal school district created within Shelby County would be an LEA.

The apportionment rule

Tenn. Code Ann. § 49-3-315(a) provides:

[A]ll school funds for current operation and maintenance purposes collected by any county . . . shall be apportioned by the county trustee among the LEAs in the county on the basis of the WFTEADA maintained by each, during the current school year.

WFTEADA "means the 'weighted full-time equivalent average daily attendance,' defined as 'one (1) full-time equivalent average daily attendance multiplied by the cost differential for a program'" (Tenn. Code Ann. § 49-3-302(18)). The "cost differential" weighting accounts for differences in the cost of providing different educational programs. Multiplying basic ADA by that differential gives an apportionment that reflects the cost burden each LEA actually carries.

Plain-meaning application

Under the plain-meaning rule, when the statute is clear, courts look no further (Mills v. Fulmarque, Inc.). The statute is clear: countywide school funds for operations and maintenance are apportioned by WFTEADA among the LEAs of the county. A new municipal school district in Shelby County would be an LEA, and would share in those funds on the WFTEADA basis.

Distinguishing Op. 10-58 (Gibson County)

The AG had earlier concluded (Op. 10-58, April 28, 2010) that a county commission has no obligation to fund a special school district. That conclusion rested on the specific facts of Gibson County, addressed by the Tennessee Court of Appeals in City of Humboldt v. McKnight (2005). Gibson County had not operated a county school system since 1981; all K-12 students attended schools operated by the municipal and special school systems. The legislature had levied property taxes at specified rates on property in those districts to fund those schools. Under that unique structure, the Court of Appeals held the county had no obligation to assess a county-wide property tax for school funding.

Shelby County's situation is different. The county has a county-wide school system that funds K-12 education through countywide property taxes. When a new municipal school district forms in such a county, § 49-3-315(a) governs the apportionment. Op. 10-58 does not control because Gibson County's structure was a special exception.

The standard rule

A county commission must apportion funding from countywide property taxes to all school districts within the county on a WFTEADA basis under § 49-3-315(a), unless the local government has been authorized by general law or private act to structure its education system and funding mechanisms otherwise.

Common questions

Does this opinion affect Shelby County's current school district structure?

The opinion analyzed the legal framework for apportionment if a new municipal school district were created. Whether and when such a district actually forms (and what happened in Shelby County's specific structure after 2012) is a separate factual question. Verify current Shelby County education funding arrangements and any later legislative or judicial developments.

What's the difference between ADA and WFTEADA?

ADA is average daily attendance, a head-count-based measure. WFTEADA is the same number weighted by program cost differential. Higher-cost educational programs (special education, vocational, etc.) carry higher cost differentials and produce higher WFTEADA values per student. That weighting tries to align funding with actual cost.

Could a county opt out of WFTEADA apportionment?

According to this opinion, only if "authorized by either general law or private act to structure its education system and funding mechanisms otherwise." The Gibson County structure (City of Humboldt v. McKnight) was the result of a specific legislative scheme that funded the municipal and special schools directly. Without similar authorization, § 49-3-315(a) applies.

Does this opinion say anything about whether municipalities can create their own school districts?

The opinion assumes the formation of a new municipal school district is legally permissible (a separate statutory and constitutional question). It addresses only what happens to countywide property tax revenues once such a district exists.

What is the "cost differential" for a program?

The differential is established by Tennessee Department of Education regulations and varies by program type. A regular-education student carries a baseline differential of 1.00; programs like special education, English-language learners, and vocational education carry higher differentials. The opinion did not specify particular numbers.

Does this apportionment apply only to "current operation and maintenance" funds?

Yes, by the express terms of § 49-3-315(a). Capital outlay, debt service, and other categories may have different apportionment rules.

Citations

• Tenn. Const. art. XI, § 12
• Tenn. Code Ann. §§ 49-2-101 to -2101 (LEA structure)
• Tenn. Code Ann. § 49-3-302(11) (LEA definition)
• Tenn. Code Ann. § 49-3-302(18) (WFTEADA definition)
• Tenn. Code Ann. § 49-3-315(a) (apportionment rule)
• Tennessee Small School Systems v. McWherter, 851 S.W.2d 139 (Tenn. 1993)
• Mills v. Fulmarque, Inc., 360 S.W.3d 362 (Tenn. 2012)
• City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005)
• Op. Tenn. Att'y Gen. 10-58 (April 28, 2010)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-064.pdf

Original opinion text

June 25, 2012
Opinion No. 12-64
Apportionment of Local Education Funding

QUESTION

If a municipal school district is created in Shelby County, is the County required to apportion funding from countywide property taxes to the municipal school district on an average daily attendance (ADA) basis?

OPINION

Shelby County would be required to apportion funding from countywide property taxes to the municipal school district based on "weighted full-time equivalent average daily attendance" (WFTEADA).

ANALYSIS

The Tennessee Constitution requires that the General Assembly provide for the maintenance and support of a system of free public schools. See Tenn. Const., art. XI, § 12. Under this constitutional provision, the General Assembly has extensive power and discretion regarding the methods and means used to provide for the public school system. See, e.g., Tennessee Small School Systems v. McWherter, 851 S.W.2d 139, 156 (Tenn. 1993). The current statutory public school system is based upon the delivery of educational services by local school systems or local education agencies (LEAs). See Tenn. Code Ann. §§ 49-2-101 to -2101.

Tenn. Code Ann. § 49-3-315(a) addresses the local taxes levied to support a county's public schools, stating in pertinent part: "[a]ll school funds for current operation and maintenance purposes collected by any county . . . shall be apportioned by the county trustee among the LEAs in the county on the basis of the WFTEADA maintained by each, during the current school year." WFTEADA means the "weighted full-time equivalent average daily attendance," defined as "one (1) full-time equivalent average daily attendance multiplied by the cost differential for a program." Tenn. Code Ann. § 49-3-302(18). A local education agency, or LEA, is defined as "any county, city, or special school district, unified school district, school district of a metropolitan form of government or any other school system established by law." Tenn. Code Ann. § 49-3-302(11). Thus, per the unambiguous provisions of these interrelated statutes, if a municipal school district is created in Shelby County, then the County is required to apportion funding from countywide property taxes to the municipal school district on the basis of the WFTEADA. See Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012).

This Office has previously addressed a question similar to the one posed, but relating to a different factual scenario. In Op. Tenn. Att'y Gen. 10-58 (April 28, 2010), the question was: "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?" This Office opined that "[i]n 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" (emphasis added). The opinion relied on City of Humboldt v. McKnight, 2005 WL 2051284, at *16, 21-27 (Tenn. Ct. App., Aug. 25, 2005), in which the Tennessee Court of Appeals held that in the educational structure presented by the specific facts of that case the county had no obligation to assess a county-wide property tax for school funding. The question addressed by Op. Tenn. Att'y Gen. 10-58 did not specify the structure of the local education system involved or explain its funding mechanism.

The Humboldt case dealt with the unique factual situation, not applicable to Shelby County, where under Tennessee law Gibson County since 1981 had not operated a county school system and all K-12 students attended schools operated by the municipal and special school systems. Humboldt, 2005 WL 2051284, at 1. The Tennessee legislation creating each of the Gibson County municipal and special schools levied a property tax at a specified rate on property in the schools' respective districts to fund these schools. Id. at 3. There was no evidence in Humboldt that disparities existed in educational opportunities among the school systems within the county. The Court of Appeals concluded that the establishment of this unique school system in Gibson County was constitutional and, under these circumstances, the county had no obligation to assess a county-wide property tax for school funding. Id. at *17-27. Thus, Humboldt did not address the specific question raised in this request regarding the proper operation of Tenn. Code Ann. § 49-3-315(a), which concerns the apportionment of funding for LEAs located in a county where the county is responsible for the funding of all LEAs.

Accordingly, a county commission is required to apportion funding from county-wide property taxes to all school districts within the county on the basis of the WFTEADA in accordance with Tenn. Code Ann. § 49-3-315(a) unless the local government has been authorized by either general law or private act to structure its education system and funding mechanisms otherwise.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

MELISSA BRODHAG
Assistant Attorney General

Requested by:
The Honorable Mark Norris
State Senator
9A Legislative Plaza
Nashville, TN 37243