In a short special meeting Tuesday, the Oak Ridge City Council agreed to give the city’s schools $250,000 to allow the system to avoid a potential loss of millions of dollars in state funding and avert a possible Oct. 1 shutdown.
The one-time transfer will come from higher-than-expected sales tax revenues in Roane County.
The vote was 4-1-1. Oak Ridge Mayor Tom Beehan, Mayor Pro Tem Jane Miller, and Council members Chuck Hope and Charlie Hensley voted in favor of the extra funding, which had been recommended by City Manager Mark Watson.
“The Oak Ridge City Council is not going to do anything to close the Oak Ridge Schools,” Beehan said. “We will allocate this money.”
Council member Trina Baughn voted no, and Council member Anne Garcia Garland abstained. Council member David Mosby was absent.
Baughn said the documentation provided by the Oak Ridge Board of Education did not support claims that the state would allow the board to shut down the schools, or that the state would withhold $1.87 million per month, as education officials have claimed. Baughn called the claims unfounded.
“This was a manufactured crisis,” she said. “We could be setting our taxpayers up for an even greater financial burden next year.”
Garcia Garland said the city manager and City Council should have been notified about the shortfall earlier.
“This situation should have been dealt with over the summer,” she said.
The schools had failed a state maintenance of effort test that requires local revenues to remain at least the same from year to year. School officials had requested the $250,000 from the city to make up the shortfall and meet the two-tier maintenance of effort test.
In a Sept. 11 letter, Maryanne M. Durski, executive director of the Tennessee Department of Education Office of Local Finance, told Oak Ridge Schools Superintendent Bruce Borchers that the system had to submit a budget by Oct. 1 that passed the maintenance of effort test, as well as a 3 percent fund balance test (the current budget passes that second test).
“If that is not in place by October 1, BEP (Basic Education Program) funds will be withheld until a budget is submitted that passes both tests,” Durski said.
School officials had blamed the $250,000 shortfall on a City Council decision to withhold $766,000 in May 2012 in an ongoing dispute over how to spend new revenues generated in Anderson County, but outside of Oak Ridge, under a 2006 sales tax referendum. City officials say the tax revenues should continue to be used to pay down the debt on the $66 million renovation of the Oak Ridge High School. But school officials say the money was forwarded to Oak Ridge under a five-year “gentleman’s agreement” and should now be used for operational expenses.
City officials see it differently, arguing, among other things, that they had to continue making the ORHS debt payments to preserve the city’s credit rating, and saying the $766,000 wasn’t necessarily withheld from the schools since it was still being used for educational expenses.
City and school officials on Monday both said that there is more work to do to resolve the high school debt issue. Hensley advocated for a mediator between the two sides.
“This situation is probably something that we’re not going to agree on,” Hensley said.
The Oak Ridge Board of Education will now consider an amended budget that includes the additional money in two hearings during a special meeting at 5:30 p.m. Monday and again during a regular meeting that starts at 6 p.m. That budget will then be sent to the state by the end of the month.
Oak Ridge Schools Superintendent Bruce Borchers, who started in June, said he was very happy with the outcome of Tuesday’s vote and was ready to continue collaborating with the city. Borchers expressed optimism that the long-simmering dispute over the high school debt can be resolved.
See this special meeting agenda here.
Note: This story was last updated at 9:10 p.m.