Tennessee Supreme Court Reaffirms Its Holding: Constitution Requires Equal Educational Opportunity and Cost-Based Funding

On October 8, 2002, the Tennessee Supreme Court ruled part of the state's school funding system unconstitutional. In the third decision (MS Word Document) in Tennessee Small School Systems v. McWherter in a decade, the court held that the Teachers' Salary Equity Plan adopted by the State Legislature in 1995 violates "the state's constitutional obligation to formulate and maintain a system that affords a substantially equal education opportunity for all students."

The original lawsuit began in 1988, and the court found for the plaintiffs in 1993. In 1992, while the case was pending, the legislature passed the Basic Education Program (BEP) as the state's new education funding mechanism. The BEP is cost-driven and takes into account 42 components necessary for providing a basic education, including special education and capital expenditures. The 42 cost components are reviewed annually.

Plaintiffs went back to court in 1998, charging that the 1995 salary equity plan is unconstitutional because it has failed to reduce significantly the disparities in teacher salaries, and teacher salaries are not included as a component of the Basic Education Program. The court found no rational basis for excluding the "largest and most important component of all, the cost of providing teachers" from the cost-driven BEP and held that "the cost determination and annual cost review" are indispensable parts of the BEP. These indispensable provisions are not included in the salary equity plan.

For years, rural school districts have been complaining that teachers are leaving for districts that pay up to $16,000 more in annual salary.

Prepared October 9, 2002