Think tank says other states would likely benefit financially if Tennessee rejected federal education dollars

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Non-partisan think tank the Sycamore Institute told Tennessee lawmakers other states would likely receive most federal education dollars Tennessee chooses to reject.

Organization Deputy Director Mandy Spears provided a briefing to members of the Joint Working Group on Federal Education Funding Tuesday morning. That group is currently holding meetings to consider whether rejecting federal education dollars is a realistic option for Tennessee.

Spears says the formulas the Department of Education uses would likely benefit other states if Tennessee lawmakers decided to forego taking them.

“It’s just how the formulas work for those dollars,” said Spears. “Those funds wouldn’t result in taxpayer savings unless Congress reduced its funding amounts by that same amount. While it is possible that Congress could do that it does seem more likely that those funds would just be redistributed to other states.”

Some Republican lawmakers have expressed an interest in rejecting federal education dollars to avoid some of the requirements that come with taking them. Tennessee House Speaker Cameron Sexton, R-Crossville, and Lieutenant Governor Randy McNally, R-Oak Ridge, created the joint taskforce to undertake a comprehensive review of federal education funding and provide a report on the feasibility of rejecting it.

The Sycamore Institute says Tennessee typically receives more than a billion dollars in federal K-12 funding each year to fund around a dozen programs. This funding made up about 11 percent of revenue for Tennessee’s schools for the 2018-2019 school year.

The organization says only 13 other states were more dependent on federal dollars than Tennessee.

Despite that high dependency, the organization says Tennessee likely does have enough state dollars to make rejecting federal funding an option.

Spears says Tennessee has an estimated $2.2 billion in available state revenue that could be used to replace those federal education dollars in 2025.

“That would be more than enough to cover the 1.1 billion the state typically receives for K-12 education and then usually there’s about $1 billion in recurring needed to fund annual routine cost increases. So things like state employee salary increases and benefits, student growth, inflationary cost increases,” said Spears. “Replacing federal dollars with state dollars would be done at the expense of other potential investments. $1.1 billion is a lot of money.”

The organization says another potential concern about rejecting the money is that Tennessee’s revenue projections fell more than $300 million short in fiscal year 2023 and there are a lot of uncertainties about making such a move.

No other state has ever rejected federal education dollars and Spears says many federal requirements supporters of rejecting the funds want to avoid, could still apply to Tennessee schools because of federal and state laws and requirements. This echoed a determination the Tennessee Comptroller’s office made to the taskforce on Monday.

“Really there are more questions than definitive answers about what rejecting the dollars could mean for Tennessee’s obligations because no state has ever done it,” said Spears.

The organization additionally made the case that federal education requirements provide assurances and accountability that’s important to families of students with disabilities and those from historically disadvantaged backgrounds.

State Representative William Slater, R-Gallatin, pushed back on that concern, saying families don’t have to worry about Tennessee lawmakers passing laws that discriminate in education.

“There shouldn’t be anything scary there,” said Slater. “The state of Tennessee, we can grant more rights, more protections for our citizens than the federal government does. The U.S. Constitution only provides for us a floor, not a ceiling for the rights of our citizens so I don’t think that there needs to be really any fear that civil rights are going to be taken away. Those are guaranteed by the U.S. Constitution and then supported of course by the Tennessee State Constitution.”

The joint working group plans to provide a report to the full Tennessee General Assembly next year. Multiple Democratic lawmakers on the taskforce, including Representative Ronnie Glynn, D-Clarksville, have made it clear they don’t support rejecting federal education dollars.

“I’ll be honest up front, I think the briefing speaks for itself and says that we have no reason to be here talking about rejecting funds,” said Glynn. “This clearly states that we don’t need to do that.”