Use of Cigarette Tax Increase Within BEP Debated

Governor Phil Bredesen’s cigarette tax increase is closely tied to the state’s funding formula for education, called B-E-P, the Basic Education Program. How the governor wants to spend the money from the cigarette tax increase varies dramatically from how some legislators want it spent under the BEP.

The BEP is the mathematical formula by which state money is distributed to Tennessee’s 136 school systems. Each one puts up matching funds, based on its local taxing capacity.

Last week, Governor Bredesen defended his “Education first” initiative – which basically calls for the state to use the 40-cents a pack increase to pay for at-risk students statewide and pay for jumps in student enrollment in high-growth school systems – systems who now have to wait a year for their growth money. Bredesen says while there are several

things that need to be fixed in the BEP, these two items are the highest priority.

“Because, one, it benefits all school systems and not just a subset of them, and second of all, I think those are two areas that really can be challenged legally if we want to stay out of court. So I’d like to get those things fixed.”

State Senator Jamie Woodson of Knoxville wants to use the cigarette tax increase to beef up the amount of state money that goes into each teacher’s salary. Under the BEP, the state puts up 65-percent of each salary, while the local school board covers the other 35-percent. Woodson, who chairs the Senate Education Committee, has been working all session to return to a time when the state funded 75-percent of teacher salaries. Governor Bredesen says he’d like to hit that 75-percent mark too, but it’s going to take some time.

Earlier this year Bredesen said he would look at changing the BEP But last week, he was vague on setting a date for revising what he calls “an upsurdly complex funding formula.”

“The way the formula works, you actually have to put in a little less money the more your property values are in the district, for instance. It’s kind of crazy the way it has worked out. I’m hoping that this spring I’ll be able to have a conversation with the legislature about directions. I think any changes that you make are going to require more money and I can’t tell you that I’m going to be able to do everything in one year. I think we’ll have a little more money this year but not enough to totally fix every issue with the BEP.”

Bredesen said he has his planning chief, Drew Kim, and the Department of Education putting together new ideas for the formula.