School building funds: revenue-sharing proposal would give Johnson City $12.5 million over 25 years

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Johnson City City Manager Pete Peterson in front of South Side School, one of several elementary schools slated for expansion.

WJHL – Washington County’s Health, Education and Welfare committee approved a proposed interlocal agreement Thursday that would send $500,000 of county money annually to Johnson City for school capital projects. The draft agreement now heads to the county budget committee and full commission for approval, after which it would be considered by the Johnson City Commission.

The draft agreement, which spans 25 years, includes a provision preventing Johnson City from taking legal action regarding the Jonesborough K-8 school project. Because the town of Jonesborough is borrowing for the roughly $32 million school project, a standard revenue sharing state law that would have netted the city schools a lump sum of about $29 million does not apply.

The Johnson City school system’s leaders are planning a grade reconfiguration to adapt to growing enrollment that includes moving fifth graders back to elementary schools. The plan comes with an overall price tag of about $40 million.

That includes expanding three existing elementary schools and replacing the aging Towne Acres Elementary with a larger school, and completing some changes at Indian Trail Intermediate and Liberty Bell Middle schools before changing both to 6-8 middle schools.

The city’s “People’s Education Fund” can absorb all the costs except the Towne Acres project, which is estimated at around $24 million. The other expansions are slated for Woodland, Lake Ridge and South Side schools.

A traditional revenue sharing approach on the Jonesborough school would have netted Johnson City about $29 million for capital projects – enough to pay for a larger replacement for Towne Acres.

Instead Johnson City City Manager Pete Peterson said last week even with $500,000 a year from the county, the city is several years away from that project unless there’s a tax increase.

“There currently isn’t funding to do a new elementary school … it would probably be in the neighborhood of 2026, 2027 before there would be adequate funding to debt service the construction of a new school,” Peterson said.

The Jonesborough project marks the second county school funding in the past several years that involved a work-around of TCA 49-3-315(a).

McMinn County won a lawsuit filed by the Athens city school district in 2014 that allowed it to avoid sharing school capital funding with Athens based on the proportion of city students within the county. That was based on the fact that McMinn did not borrow for a project but funded it through cash. Washington County did the same for the majority of its construction expenses related to the now-open Boones Creek K-8 school.

Johnson City officials and school board members have chafed at the new direction by the county, but didn’t challenge the Boones Creek project in court.

Some school board members have pushed for the draft agreement to include a provision guaranteeing that the county will abide by the standard revenue-sharing agreement in any future school building projects. Such a provision is not in the draft, and Washington County Mayor Joe Grandy said in January that future county commissions cannot be held to that type of commitment.

What the city would commit to should the draft reach commissioners in its current form is a promise not to sue. A “Covenant Not To Sue” is item VI of the agreement.

The city would promise that it hasn’t and won’t file any action against the county, “regarding matters relating to or arising out of the Jonesborough School Project, except as a result of a breach of this Agreement by the County.”

Peterson said the state, and certainly Washington County and Johnson City, are in “a new environment with school funding.” He added that the Tennessee General Assembly could tighten up the law to require proportional revenue sharing for school capital projects regardless of the funding source.

“With a fairly simple change to TCA 49-3-315 it could clarify the fact that the intent of the legislation and the law is that any time that school funding is put forward for the purpose of construction, that it be shared equitably amongst all … school systems within that county,” Peterson said.

Johnson City’s Director of Schools Steve Barnett had this to say on news of the proposal. “We appreciate the work being done by the city and county commissions to provide funding as Johnson City Schools continues to grow and space becomes limited at Indian Trail and our elementary schools. With our Board of Education’s plan to move fifth-graders back to the elementary schools, this proposed funding will help us accomplish our goals.” 

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