In 1993, the Supreme Court of Tennessee ruled, in Tennessee Small School Systems v. McWherter, 851 S.W.2d 139 (Small Schools I), that the state’s education finance system violated the Tennessee constitution’s equal protection clause. The court rejected the argument that local control provides a “rational basis” for vastly unequal school quality: “even without deciding whether the right to a public education is fundamental, we can find no constitutional basis for the present system, as it has no rational bearing on the educational needs of the districts.” Having found the school system unconstitutional on equal protection grounds, the court did not analyze the adequacy of the system under the state’s education clause.

After the legislature revised the funding system, plaintiffs argued that the new scheme violated the state’s equal protection clause because of the slow timetable for reform and the failure to equalize teacher salaries. In 1995, the state supreme court upheld the incremental approach in Tennessee Small School Systems v. McWherter, 894 S.W. 2d 734 (Small Schools II). However, the court also ruled that “the exclusion of teachers’ salary increases from the equalization formula is of such magnitude that it would substantially impair the objectives of the plan.” As a result, the legislature passed the Teachers’ Salary Equity Plan in 1995.

In 1998, plaintiffs returned to court seeking equalization of teacher salaries across the state. In October 2002, the Supreme Court held, Tennessee Small School Systems v. McWherter, 91 S.W.3d 232 (Small Schools III) that the 1995 teachers’ salary equity plan failed to provide substantially equal educational opportunity and found no rational basis for excluding the largest and most important component of that opportunity (i.e. providing teachers) from the cost-driven BEP. The court also held that the cost determination and annual cost review are indispensable  parts of the Basic Education Plan.

Finally, in 2005, the legislature amended the funding formula to include teacher salaries, and in 2006 the trial court closed the case, ruling that no compliance issues remained.

In 2007, the governor and legislature agreed to increase funding of the Basic Education Program (BEP), the primary conduit of state education funds, by $517 million over three years. Fueled in part by a 42-cent per pack increase in the tax on cigarettes, the BEP was expanded by $290 million in 2007. However, with the economic downturn, the full funding increase may now take longer to implement, The Tennessean reported.

After meeting to discuss budget concerns with representatives from four of the state’s largest school districts the day before, on March 24, 2015, Tennessee Governor Bill Haslam found himself, and the state legislature, the commissioner of education and board of education, named as defendants in a suit attacking the state’s failure to adequately and equitably fund its school system.  The case, Hamilton County Board of Education v. Haslam, is the fourth such suit against the state in almost 25 years.

The latest litigation was initiated by seven Tennessee school districts that allege that the state has abdicated its constitutional duty to fund the state’s system of public education, and has impermissibly shifted that responsibility onto local communities.  They allege that the state has failed to fully fund the Basic Education Program (the “BEP”), an approach that the legislature enacted in 1992 while the first school funding litigation was still proceeding.  A BEP Review Committee periodically determines the actual costs of operating the public school system and is expected to ensure the equitable distribution of funds to meet these costs across the state based on school districts’ relative funding needs.  Plaintiffs had returned to court in 1995 and 2002 because of the state’s failure to ensure that the BEP fulfilled the state’s obligation to equitably fund the school system and, specifically, because adequate state funding to cover teachers’ salaries was not being provided. In 2007, the state made upward cost revisions to the BEP to account for teachers’ salaries, but, according to the current complaint, it has failed to fully fund the BEP to cover these costs in the years since.

The complaint alleges that the BEP’s current funding formula underestimates the costs of teachers’ salaries by roughly $532 million, teachers’ insurance by approximately $64 million, and classroom costs by roughly $134 million.  The plaintiff-districts allege that the state has continued to underfund education despite the numerous recommendations from the legislatively created BEP Review Committee “to fund the true costs of operating Tennessee’s system of public education.”  The districts further contend that their situation is made direr by the state’s continuing imposition of higher academic standards.  In wealthier districts, the complaint alleges, parents are asked to pay fees and support fundraisers to offset increasing educational costs, while in poorer districts, school officials lacking the means to raise sufficient funds, are forced to cut even the most basic educational services.

In September 2015, the Shelby County Board of Education filed a related complaint alleging that Governor William Haslam, legislative leaders and the State Board of Education have denied students in the predominantly low income, minority school district their rights to an adequate “free public education” and to an equal educational opportunity. Shelby Co. Bd of Educ. v Haslam.

The recently-filed Shelby County case differs from the earlier  Hamilton County  litigation in its extensive evidence on the state’s failure to provide adequate funding to meet the needs of the large numbers of students in Memphis who are immigrants, students with disabilities and students from poverty backgrounds who have extensive needs for additional services. The complaint states that the district was forced to eliminate 367 positions for the current school year. It also alleges that the district lacks funds to provide necessary interventions for its many students who are performing below state proficiency levels, to offer pre-kindergarten services to all students who need them and to adequately fund CTE programs, extracurricular programs, music, art, mandatory foreign language instruction. Plaintiffs further claim that the state has imposed a “pay to play” statute that requires students to pay fees to take part in extracurricular activities, and for supplies for CTE and other programs. Such fees, they say, violate the right to a “free public education” and equal protection of the laws.

The Kansas-based firm of Lewis Brisbois  Bisgaard & Smith, which has handled an extensive series of education funding cases in Kansas, is representing the Shelby County Board of Education in this case.

On September 1, 2016, the Metro Nashville Board of Education filed a suit in state Chancery Court alleging that the state constitution requires the Tennessee General Assembly to fully fund education under the Basic Education Program. The district is seeking full funding for its programs for English Language Learners. Barely three weeks after the suit was filed, Judge Ellen Hobbs Lyle dismissed the case. Plaintiffs appealed and oral argument was heard on February 22, 2017, in the Tennessee Court of Appeals.

In October 2017, the Metro Nashville Board of Education voted to join the Shelby County lawsuit against the governor.

In January 2020, the Davidson County Chancery Court dismissed Hamilton County Board of Education v. Haslam. The Davidson County School Board voted unanimously to dismiss the case based on advice from their legal counsel that pointed to the work state legislators have done to improve the Basic Education Plan (BEP) in recent years. However, the Metro Nashville and Shelby County suits remain slated to go to trial later this year in their own separate cases.

In March, 2021, the Tennessee School Systems for Equity,  a coalition of 84 small Tennessee school districts, filed a complaint joining the Shelby County and Metro Nashville school districts as plaintiffs.  

This was a major development in the lawsuit. By joining the case, the small school districts underscored the argument that the problem with Tennessee’s education funding is not just that it is inequitable for the urban school districts, which educate a disproportionate percentage of poor students, English-learning students and disabled students. They claim that the state’s funding formula, the basic education program (BEP), is inadequately funding all public schools, thereby burdening the finances of local governments and leaving educators vastly underpaid. The genesis of the BEP was, in fact, a lawsuit filed by the small school districts in the 1980s over the equity of education funding. The small schools claimed at the time that the state’s funding strategy was unfair for rural schools.

The Shelby County case has been gridlocked in recent months in a contentious discovery phase, including the depositions of public officials and a bevy of document requests. The lawsuit was headed for trial in October, 2021, but after her involvement in a politically charged election law ruling last year, Chancellor Ellen Hobbs Lyle recused herself from the case.  The case has been reassigned by the Supreme Court to state Senior Judge Don Ash.

As a result of a new state law enacted in the summer of 2021, the trial, instead of being heard before a single judge in Nashville — the traditional venue for constitutional challenges to Tennessee laws — will now be heard in Murfreesboro, a university town south of Nashville, by a panel of three judges representing East, Middle, and West Tennessee. Moreover, the start of the trial, that had been scheduled for October 2021, was postponed to February 2022.

The new law creates a statewide court to hear certain matters related to state government. The Republican-controlled legislature apparently adopted this statute in response to rulings from judges elected in heavily Democratic Nashville, such as recent decisions that struck down the state’s  school voucher law and expanded access to absentee voting during the pandemic. Critics have called the creation of a so-called, “super-chancery court,” an attack on Tennessee’s judiciary, while supporters have argued that the courts in these cases should better reflect the political leanings of all of the state’s voters.

Some commentators have opined that the legislature’s maneuver to empower a statewide judicial panel to hear major lawsuits may backfire on conservative legislators, at least in the school funding context, because of the involvement of the coalition of small districts. “If this case was just about two urban districts, the judicial changes could be bad news because it will be argued before jurists from different jurisdictions,” said Will Pinkston, a former Nashville school board member who pushed for the litigation. “But now you’ve got a statewide panel that’s on the cusp of adjudicating a statewide issue. In a weird way, it makes a lot of sense.”

The trial now scheduled to begin in February will likely be postponed until the late spring as all the parties filed a joint motion asking the court to delay the trial date to after the end of the legislative session. Governor  Bill Lee is expected to unveil a new plan for funding education during the  lawmakers, and that plan could have an impact on the lawsuit.

Last updated: July 2020 



A five-year-old lawsuit against the state of Tennessee over school funding brought by the Hamilton County Board of Education was ...

Tennessee Adequacy Case Readies for Trial

Davidson County Chancellor Claudia Bonnyman last month denied the state’s motion to dismiss an adequacy case filed by the school ...

After Three Years, the Fight to Spend More Money on Tennessee Schools Inches Toward Trial

After three years, the fight to spend more money on Tennessee schools inches toward trial After three years, the fight ...

Six State Legislatures Have Considered Constitutional Amendments to Curb Courts’ Powers — but None of Them Have Been Adopted

As confrontations between courts and state legislatures have increased in a number of states in recent years, state legislators in ...

TN-Poll Shows Support of Increased School Funding

Poll Shows Support of Increased School Funding Poll Shows Support Of Increased School Funding A new poll revealed a majority ...

TN-‘We still have tremendous need,’ Hopson tells state lawmakers of Memphis schools

'We still have tremendous need,' Hopson tells state lawmakers of Memphis schools ‘We still have tremendous need,’ Hopson tells state ...