Oak Ridge City Council voted to approve a one-time payment of $250,000 to the Oak Ridge School System in an effort to avert the threat of a system-wide shutdown on October 1st.
This latest budget battle began during budget discussions for fiscal year 2013.
According to both the city manager and documents provided to 10News by the superintendent, the City of Oak Ridge reduced their contribution to the school system by more than $760,000.
City Manager Mark Watson's rationale for the reduction stems from a formula derived for paying for the new Oak Ridge High School built five years ago, but the immediate impact was that the Tennessee Department of Education contacted Oak Ridge to notify them the decrease in city funding would trigger a decrease in state funding as well.
Superintendent Dr. Bruce Borchers says the funding cut would effectively shut down the school system starting October 1st.According to a state funding formula commonly referred to as 'maintenance of effort' (MOE), municipalities must continue to fund school districts at the same, or greater, level than the year before, barring a decline in attendance.
According to a letter sent from the state to Oak Ridge officials, the city had until September 30th to provide an extra $250,000 to the school system, or risk triggering a cut in state funding to the tune of nearly $2 million a month.
How the city has arrived at this point depends on who you ask.
Watson says problems began two years ago when the Board of Education stopped using their cut of county sales tax to pay down the debt on the new high school, electing instead to only contribute from city sales tax.
He says that decision, coupled with already declining sales tax revenue, meant that Oak Ridge had to make up for a double shortfall to cover the $750,000 annual debt payment for the construction of Oak Ridge High School.
According to School Board Chairman Keys Fillaeur, the schools contributed those county sales tax dollars for the agreed upon number of years, and then stopped when those dollars started being collected by Anderson County. He says once that change took effect, it was no longer legal for the system to use the money to pay for the high school.
In response, Watson says the city took money originally earmarked for the school system in the FY 13 budget and put it towards paying down the high school debt—an expense he still considers school related, and therefore dollars that should go toward fulfilling the MOE standard.
Watson says the school system's decision to decrease their contribution toward paying for Oak Ridge High School has backed the city into a corner.
"When you put people into a corner and box them in because of regulation or because of time deadlines it really gets confusing out there to the public to understand what's going on," said Watson.
Tuesday's vote may fix the problem for now—though the school board will still need to adopt the money into their budget during a special-called meeting next week and report it to the state.
However, Watson says it's the equivalent of "kicking the can down the road," when it comes to the real issue; how much the City of Oak Ridge can afford to contribute to the rising costs of MOE funding.