The opinion
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
October 14, 2009 Session
THE STATE OF TENNESSEE, ex rel. THE BOARD OF EDUCATION OF
THE MEMPHIS CITY SCHOOLS, ET AL. v. CITY OF MEMPHIS, ET AL.
Direct Appeal from the Chancery Court for Shelby County
No. CH-08-1139-3 Kenny W. Armstrong, Chancellor
No. W2009-00366-COA-R3-CV - Filed January 13, 2010
The City of Memphis and the Memphis City Council appeal the trial court’s writ of
mandamus ordering the City to restore funding to the Memphis City Schools for the 2008-09
school year in compliance with Tennessee Code Annotated § § 49-2-203 and 49-3-314. We
affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;
and Remanded
D AVID R. F ARMER, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and J. S TEVEN S TAFFORD, J., joined.
Alan J. Wade, Brandy S. Parish, Javier Michael Bailey and John Gordon Howard, Memphis,
Tennessee, for the appellant(s), City of Memphis and Memphis City Council.
Michael R. Marshall, Ernest G. Kelly, Jr., and Dorsey E. Hopson, Memphis, Tennessee, for
the appellee(s), Board of Education of the Memphis City Schools.
Richard Lee Colbert, Memphis, Tennessee, for the appellee, Memphis Education
Association.
Robert E. Cooper, Jr., Attorney General and Reporter, Michael E. Moore, Solicitor General
and Melissa Moreau, Assistant Attorney General, Amicus Curiae of the State of Tennessee.
OPINION
This appeal requires us to determine whether the statutorily mandated school funding
provisions contained in Tennessee Code Annotated § 49-3-314(c) and § 49-2-
203(a)(10)(A)(ii), the “anti-supplanting statutes,” and the Maintenance of Effort provisions,
are applicable to the City of Memphis. The facts relevant to our disposition of this appeal
are not disputed.
The City of Memphis (“Memphis” or “the City”) provided funding in the amount of
$84,731,347 to the Memphis City Schools (“MCS”) for the 2007-2008 school year. In April
2008, the Board of Education (“the Board”) of the MCS presented its 2008-2009 budget to
the Memphis City Council (“the Council”). The budget requested City funding for the MCS
in the amount of $93,532,000, or 10.68% of the total budget amount.1 The Council approved
a budget that provided City funding in the amount of $27,270,400. The reduction in funding
resulted from a reduction in the amount of the City’s ad valorem school tax.
In June 2008, the Board filed a complaint in the Chancery Court for Shelby County
seeking a writ of mandamus or injunctive relief against the City. In its complaint, the Board
asserted that the MCS was a special school district properly organized pursuant to private
acts of the General Assembly in 1866-1869, as amended; that the City was a municipality
with its own Charter; that the Charter as amended in 1951 permitted the City to levy an ad
valorem school tax to fund the MCS; and that the City’s reduction of school funding violated
the statutorily mandated Basic Education Program (“BEP”) and the anti-supplanting statutes.
The Board further asserted that it had been advised by the State Department of Education that
the State would interpret any reduction in the total amount of local funding to be in violation
of the anti-supplanting provisions contained in Tennessee Code Annotated § 49-3-314,
resulting in a loss of State funding in an amount exceeding $400,000,000.2 The Board
asserted that it would be unable to continue operating the MCS, which serves approximately
112,000 students, if the loss of funding should occur. The Board further asserted that the loss
of funding would result in a “drastically inferior opportunity for education” in violation of
the Education Clause of the Tennessee Constitution. It sought an order requiring the City to
appropriate funds in an amount that at minimum represented a maintenance of local effort
1
The total proposed MCS budget for the 2008-09 school year was $931,966,343. In addition to the
amounts requested from the City, the total budget included revenue in the amount of $423,090,550 from the
State of Tennessee (48.32% of budget amount); $252,463,570 from Shelby County (28.83% of budget);
$4,318,600 from Federal funds (.49% of budget); $8,030,000 from local funds (.92% of budget); $38,192,973
from the fund balance reserve (4.36% of budget); $8,139,610 from the BEP 2.0 fund balance reserve (.93%
of budget); $10,000,000 from additional BEP 2.0 State funds (1.07% of budget); $94,199,040 from local
sales tax (10.76% of budget).
2
We note the Attorney General’s May 4, 2009, Opinion stating that the Commissioner of Education
has permissive authority to withhold some or all of the state education finance funds if a local education
agency or local government fails to meet the requirements set-forth in Tennessee Code Annotated § 49-3-301,
et seq. The withholding of state funding is not mandatory under Tennessee Code Annotated § 49-3-314(c).
Op. Tenn. Att’y Gen. 09-70.
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(“MOE”) from the previous year. The Board also filed a motion for a preliminary injunction
requiring the City to approve and fund a budget for the MCS that preserved the local
maintenance effort of the previous year. The Memphis Education Association (“the MEA”)
filed a motion to intervene, asserting that the loss of funding alleged by the Board would
directly impact the contractual agreement between itself and the Board. The trial court
granted the motion in July 2008.3
The City answered and counter-claimed on July 15, 2008. In its answer, the City
asserted that it had no legal obligation to fund the MCS. The City asserted that it previously
had “gratuitously agreed to levy a school tax and provide other sources of funding exceeding
$27 million, despite no legal obligation to fund MCS.” It asserted that the statutory
maintenance of effort requirements were imposed on MCS and Shelby County, but not on
the City. The City counter-claimed for alleged damages in excess of $152 million, which the
City asserted resulted from ultra vires payments made by it to the MCS. The City asserted
that, for the fiscal years ending on June 30, 1998, 2001, 2002, and 2005, it had levied school
taxes in excess of the statutory limit of 85¢ per $100 of assessed property value, and that
“[s]uch levies were ultra vires and void to the extent that such levies exceeded [the] City’s
statutory limit for school taxes.”
On July 15, the Memphis City Council was added as a Defendant in the matter
(hereinafter, Defendants will be referred to, collectively, as “the City”). The trial court heard
the matter on July 17, 18 and 21, 2008. On August 15, the trial court entered an order
requiring the parties to submit post-trial briefs by August 20, 2008. On September 5, 2008,
the City moved the trial court to dismiss the intervening complaint of the MEA as moot.
On February 11, 2009, the trial court granted the City’s motion to dismiss the claim
of the MEA as moot with respect to the MEA’s contractual claim, but denied the motion with
respect to the MEA’s statutory claims for relief. On February 17, 2009, the trial court
entered a memorandum opinion finding that, although current funding for the school system
exceeded the minimum funding mandated by the State BEP formula, the City was statutorily
obligated to provide the MCS funding in the minimum amount of $84,731,347 for the 2008-
2009 school year. The trial court ordered the City to provide “additional funding for the
2008-2009 school year in the amount of $57,460,947 to meet its statutory obligation as
required by the ‘maintenance of effort’ provisions of our state’s education statutes.” On
March 2, 2009, the trial court entered final judgment on the Board’s claims and prayer for
writ of mandamus pursuant to Tennessee Rule of Civil Procedure 54.02.
3
Several charter schools also were allowed to intervene in the matter. They were dismissed without
prejudice by a consent order entered by the trial court in February 2009.
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On March 2, 2009, the City filed a motion to alter or amend or, in the alternative, to
stay the judgment pending appeal. In its motion, the City asserted that it had complied with
the mandamus by approving a budget that met the maintenance of effort requirement. It
prayed the court to modify its judgment to eliminate the mandamus and substitute a
declaratory judgment in favor of MCS. On April 21, the trial court denied the motion to alter
or amend but granted the motion to stay enforcement of the judgment pending appeal. The
trial court waived the requirement of a bond. The City filed a notice of appeal to this Court
on February 17, 2009.
Issues Presented
The City presents the following issues for our review:
1. Does the City’s Charter authorize or require the City to provide
operational funding to MCS?
2. Does any Tennessee Education Statute of general application require
the City to provide operational funding to MCS?
3. If the answer to issues I and II above is No, does Tenn. Code Ann. §
49-3-314(c)(1), Tenn. Code Ann. § 49-2-203(a)(10)(A)(ii), or the
doctrine of equitable estoppel require the City to continue any voluntary
contributions it has made to MCS in the past?
The State of Tennessee filed an amicus curiae brief presenting the issue as whether
the City of Memphis may lawfully reduce the operating budget of the Memphis City Schools
by eliminating approximately $56 million in local funding that the school system had
received from the City in the previous year.
The MEA also filed a brief presenting the following issues for review:
1. Did the City’s reduction in funding for the MCS impair the statutory
and contractual rights of the Association and the professional
employees it represents?
2. Did the Chancellor err in dismissing the Association’s contractual
claims as moot?
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Standard of Review
This appeal requires us to determine whether the requisites of Tennessee Code
Annotated § 49-3-314(c)(1) and § 49-2-203(a)(10)(A)(ii), the anti-supplanting statutes, and
the maintenance of effort provision, are applicable to the City of Memphis as a “local
government.” The construction of a statute is a question of law which we review de novo,
with no presumption of correctness attached to the determination of the trial court. Waters
v. Farr, 291 S.W.3d 873, 881 (Tenn. 2009). Our objective when construing a statute is to
effectuate the purposes of the General Assembly. Insofar as possible, the intent of the
General Assembly should be determined by the natural and ordinary meaning of the words
used in the statute, and not by a construction that is forced or which limits or extends the
meaning. When the language of a statute is clear, we must utilize the plain, accepted
meaning of the words used by the General Assembly to ascertain the statute’s purpose and
application. If the wording is ambiguous, we must look to the entire statutory scheme and
at the legislative history to ascertain the General Assembly’s intent and purpose. We must
construe statutes in their entirety, neither constricting nor expanding the General Assembly’s
intent. Id. (citations omitted). In so doing, we assume that the General Assembly chose the
words of the statute purposely, and that the words chosen “convey some intent and have a
meaning and a purpose” when considered within the context of the entire statute. Eastman
Chem. Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004) (citations omitted).
Discussion
We first observe that, although it has filed a brief and presented issues for our review,
we do not have jurisdiction to address the issues raised by the MEA. The trial court entered
its order granting a writ of mandamus in this matter pursuant to Tennessee Rule of Civil
Procedure 54.02, making only its order on the Board’s complaint for mandamus a final order
in this case. No final order has been entered by the trial court with respect to the claims filed
by the MEA as an intervening Plaintiff. Accordingly, we decline to address the issues raised
by the MEA here.
In its brief to this Court, the City asserts that neither its charter nor the general statutes
require it to levy school taxes in support of the MCS. It further argues that its past
contributions to the MCS were voluntary, and that it is not a local education agency (“LEA”)
or “local government” for purposes of the education statutes. The City asserts that, under the
taxing scheme adopted by the General Assembly in 1925, Shelby County and not the City is
required to fund the MCS. The City cites Tennessee Code Annotated § 49-2-501 for the
proposition that this scheme was reiterated in 1982, when the General Assembly reiterated
the abolition of special school districts without taxing power. The City asserts that,
“[a]lthough Shelby County is not the governing body of MCS, it is required to raise and
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appropriate revenue for the students of the City[,]” and that nothing in the statutory scheme
requires the City to fund the MCS. It submits, “MCS is an aberration under Tennessee’s
education laws. It is without any power to control its own destiny and exists only through
apathy of state and local governments.” It argues, “[h]owever, the state’s administrative
indifference regarding MCS’ legal status does not create any obligation for the City to fund
MCS.” The City further argues that the MOE statutes are limited to funds generated by the
BEP formula, and that the anti-supplanting provisions “neither expressly nor by implication
pertain to ‘additional sources’ of funds transferred to LEAs that are not required by the
Education Funding Statutes.” The City asserts “[a]lthough the BEP continued the Anti-
Supplanting Statutes without change, the statutory mechanics of the BEP all but eliminated
the need for the Anti-Supplanting Statutes.”
The Board, on the other hand, asserts that much of the City’s argument is irrelevant.
The Board asserts that the City’s charter obligates the City to approve a budget for the MCS
and allows it to fund the schools. It asserts that the “legal status” of the MCS is not an issue
in this case, that the General Assembly has amended the City’s charter since 1925, and that
the requisite contributions to the BEP are not at issue in this case. The Board contends that
the issue in this case is whether the anti-supplanting provisions, read in conjunction with the
BEP statutes, are applicable to the City such that the City cannot reduce its funding in
violation of the MOE provisions.
In its amicus curiae brief, the State asserts that the BEP and the anti-supplanting
provisions are separate funding mechanisms which achieve different goals and that the City
of Memphis is a local governing body for the purposes of the education statutes. It further
asserts that the City does not have the authority to violate the statutory scheme, and that the
City’s charter mandates City funding of the MCS.
The issues presented by this appeal, therefore, as we perceive them, are 1) whether the
Memphis City Charter authorizes the City to fund the MCS, a special school district
established by private acts of the General Assembly and 2) if so, whether the general
statutory sections contained in title 49, chapter 3, of the Tennessee Code with respect to the
maintenance of local funding efforts and the anti-supplanting provisions are applicable to
the City. With the positions of the parties and our standard of review in mind, we turn to
whether the City is required to continue to fund the MCS in accordance with the anti-
supplanting provisions of the general statutes and the MOE rule.
We turn first to the provisions of the Memphis City Charter. In its brief to this Court,
the City does not argue that the Charter does not permit it to fund the MCS. Rather, the City
asserts that the decision to provide funding to the MCS through an ad valorem school tax is
discretionary. The City submits,
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The charter does not mandate that the Council approve any budget unless it
intends to levy an ad valorem tax to fund any part of MCS’ operations. The
City charter also authorizes but does not direct the Memphis City Council to
levy and collect annually a general ad valorem tax for school purposes
consistent with the MCS budget that has been approved by the Council for
City funding. The charter specifically uses the language “authorized” and “not
in excess of” and “not exceeding” when referring to the tax levy for the
Memphis City Schools. The charter clearly makes the setting of a tax rate for
the Memphis City Schools purely discretionary when it states: “the amount of
tax to be levied for and paid to the board of education of the Memphis City
Schools . . . shall be determined and fixed by the Memphis City Council,
subject to the respective maximum (sic) hereinabove set out.” The City charter
does not establish any set or specific amount for any school tax levy, but
simply directs that any such levy, if made, shall not exceed eighty-five cents
(85¢) per $100 of assessed value. Such language is by necessity discretionary,
because it relies on the Council to determine the amount of the levy, does not
mandate any minimum amount.
Clearly, the Memphis Charter authorizes the City to provide funding to the MCS through an
ad valorem tax. The City’s argument, as we understand it, is that it is not required to provide
funding to the MCS under either its Charter or the general education statutes. We disagree.
Section 773 of the Charter is entitled “Maximum rate of general ad valorem tax; taxes
for school, park and library purposes.” The section authorizes the City to collect an ad
valorem tax upon all property within the City of Memphis, not to exceed a maximum of
$2.25 on every $100 of assessed value “for all purposes.” The section further provides that
in the event the levy as fixed hereinafter authorized for the board of education
of Memphis city schools shall exceed sixty-five cents (65¢) on every one
hundred dollars ($100.00) of assessed value, the said maximum tax rate for all
purposes shall be two dollars twenty-five cents ($2.25) plus such amount as the
levy for the board of education of Memphis city schools exceeds sixty-five
cents (65¢) on every one hundred dollars ($100.00) of assessed value. . . .
The section establishes a limit in the amount of 85¢ per $100 of assessed value on the tax
levy for the board of education. Subsection (b) of the section provides that “[o]ut of said
levy each year there shall be paid, as collected, to the board of education of Memphis city
schools, not exceeding eighty-five cents (85¢) on every hundred dollars ($100.00) of assessed
value . . .” Although, as the City asserts, section 773 does not establish a definitive funding
level, it clearly reflects the General Assembly’s intention that the City assume some
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obligation for funding of the MCS though an ad valorem tax.
The dispute regarding the City’s obligation to fund the MCS is not new. In March
2005, the Attorney General issued an opinion stating that the City is legally obligated to
provide funding to the MCS. Op. Tenn. Att’y Gen. 05-021. The Attorney General’s opinion
that the City has an obligation to provide funding for the MCS under both the City’s charter
and the general education statutes is supported by the case law. In 1959, the Board and the
City filed separate actions against Shelby County seeking declaratory judgments that
statutory provisions permitting Shelby County to divide county school funds on a basis other
than average daily attendance under the general statute were invalid and unconstitutional as
a provision for the benefit of one county.4 Bd. of Educ. of the Memphis City Schools v.
Shelby County, 339 S.W.2d 569 (Tenn. 1960). The supreme court agreed with the City and
the Board that, insofar as the statutes permitted Shelby County to divide county educational
funds in accordance with the provisions of private acts rather than the general law, the
statutes violated Article XI, Section 8, of the Tennessee Constitution.5 The court held that
“all local county school funds of Shelby County, and the proceeds of all school bond issues
in said County, will be apportioned and distributed in accordance with the general laws of
the State governing such matters.” 6 Id. at 586.
The supreme court’s examination of the history of the private acts applicable to the
funding of the MCS, and its interpretation of the philosophical underpinnings of the State’s
education statutes, are instructive here. In the 1959 action, the supreme court noted that the
legislative intent of the Education Act was to “establish and maintain a uniform system of
public education in this State[.]” Id. at 576 (emphasis in the original). The court emphasized
4
The General Education Bill of 1947, Chapter 8, Public Acts of 1947, Section 16, provided:
All local elementary school funds raised or collected by any non-equalizing county shall be
apportioned by the county trustee among the county, and the cities and special school
districts therein, in the manner provided by paragraph five of Section 2348 of the Code of
Tennessee, unless otherwise provided by Private Act. This paragraph shall not be construed
to affect Chapter 752, Private Acts of 1929, but said Act shall continue in full force and
effect.
Bd. of Educ., 339 S.W.2d at 573.
5
Under Chapter 351 of the Private Acts of 1955, Shelby County school funds were divided 50% to
the County and 50% to the City. Id. at 573.
6
As of March 31, 1959, the average daily attendance of students in the City school system was
77.37% of the total average daily attendance of students in the County and City schools. Bd. of Ed. v. Shelby
County, 339 S.W.2d 569, 575 (Tenn. 1960).
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the importance of a single, uniform method of funding public education that “gives to every
school system its proportional and fair share of . . . funds, so, in a sense, each pupil may be
afforded the same opportunity to obtain an education, regardless of place of residence.” Id.
at 578.
The court further found that the Board of the MCS was a proper party to the litigation,
and that the Board has “the plain duty . . . to exercise every legal means for the protection and
preservation of funds that may belong to the school system which it operates.” Id. at 582.
The court reaffirmed its opinion that the MCS was not exempt from the general law, stating
that it “is not a municipal corporation but is in the same class with counties and occupies the
same legal status.” Id. at 583 (quoting Barnett v. City of Memphis, 269 S.W.2d, 906, 907
(Tenn. 1954)). Significantly, the supreme court observed that the taxpayers of the City
“must” pay “an additional amount in school taxes, above the amount received from the
county school taxes” to operate the City’s schools. Id. at 583. Thus, the supreme court
clearly has taken the position that the MCS system operates in the same manner as county
school systems, that the general education statutes apply to the MCS, and that City taxpayers
are obliged to pay school taxes in order to operate the City’s schools.
We must also disagree with the City’s argument that it is not a “local government” for
the purposes of the general education statutes, and that the statutory scheme applies only to
the county governments. The Code defines a “local education agency,” or LEA, as “any
county, city, or special school district, unified school district, school district of any
metropolitan form of government or any other school system established by law[.]” Tenn.
Code Ann. § 49-3-302(11). Clearly, the MCS is a school system established by law.
Additionally, this Court has opined that the Code does not place an affirmative duty on
counties to operate a school system when all of the county’s students are served by municipal
or special school districts. City of Humboldt v. McKnight, No. M2002-02639-COA-R3-CV,
2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005), perm. app. denied (Tenn. Feb. 21, 2006).
In City of Humboldt, it is stated that, contrary to Humboldt’s assertion that the General
Assembly was required to provide educational opportunities through the county, “the General
Assembly has the broadest discretion to create or allow various entities to provide
educational services to children in the state.” Id. at *14-15. It is further stated, “the
legislature has defined LEA or local school system to mean any system authorized by the
legislature to deliver education[,]” and noted that the general statutes were applicable to those
LEAs. Id. at *15-16 (emphasis in the original). It follows that the general education statutes
are applicable not only to the county governments, but to the local governments which fund
the schools. City of Humboldt supports the proposition that “local government” may include
a municipal government. We agree with the Attorney General that the City is obligated to
contribute to the funding of the MCS as a local government.
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The City devotes considerable argument to its position that the provisions of the BEP,
which the General Assembly enacted in 1992, have rendered the anti-supplanting provisions
“superfluous.” The State, on the other hand, asserts that the BEP and the anti-supplanting
provisions are separate funding mechanisms with different goals. The State asserts that the
goal of the BEP is to equalize educational opportunities through a system whereby the State
provides greater funding to districts that are less capable of providing local funding, whereas
the anti-supplanting statutes were enacted to prohibit local governments from supplanting
or replacing local funding with State funds. The State argues that the two provisions co-
exist, and that the General Assembly reinforced the anti-supplanting provisions by modifying
the MOE rule in 1992, when it enacted the BEP.
The General Assembly enacted the BEP to remedy the constitutional deficiencies of
the prior funding formula found in the Tennessee Foundation Program (“TFP”). Tennessee
Small Sch. Sys. v. McWherter, 894 S.W. 2d 734 (Tenn. 1995); Tennessee Small Sch. Sys. v.
McWherter, 851 S.W.2d 139 (Tenn. 1993). It is well established that, when construing a
statute or statutory scheme, the courts presume that the General Assembly was aware of its
prior enactments and the state of the law when it passed subsequent legislation. Waters v.
Farr, 291 S.W.3d 873, 882 (Tenn. 2009). Thus, despite the City’s assertion that the BEP “all
but eliminated the need for the Anti-Supplanting Statutes,” we decline to disregard those
statutes where the General Assembly has not repealed them. There is no dispute in this case
that the requirements of the BEP provisions have been met. We agree with the trial court that
the City is also governed by the anti-supplanting provisions found in the Code and the MOE
rule. The Code provides, in relevant part:
(c) In order for any LEA to receive state education finance funds as set
forth in this part, the system shall meet the conditions and requirements set out
in subdivisions (c)(1) and (2). In order to enforce those conditions and
requirements, the commissioner may, in the commissioner's discretion,
withhold a portion or all of the state education finance funds that the LEA is
otherwise eligible to receive.
(1) No LEA shall use state funds to supplant total local current
operating funds, excluding capital outlay and debt service. This subdivision
(c)(1) shall not apply to a newly created LEA in any county where the county
and city schools are being combined for a period of three (3) years after the
creation of the LEA.
(2)(A) Notwithstanding any other law to the contrary, for fiscal year
1992-1993 and any subsequent fiscal year, if state funding to the county for
education is less than state funding to the county for education during the
previous fiscal year, except that a reduction in funding based on fewer students
in the county rather than actual funding cuts shall not be considered a
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reduction in funding for purposes of this provision, local funds that were
appropriated and allocated to offset state funding reductions during any
previous fiscal year are excluded from this maintenance of local funding effort
requirement.
(B) It is the intent of subdivision (c)(2)(A) to allow local governments
the option to appropriate and allocate funds to make up for state cuts without
being subject to a continuation of funding effort requirement as to those funds
for any year during which the state reinstates the funding, or restores the
previous cuts, and during any subsequent year should the state fail to restore
the funding cuts.
Tenn. Code Ann. § 49-3-314(c)(2009). It further provides:
The state shall provide seventy-five percent (75%) of the funds generated by
the Tennessee BEP formula in the classroom components and fifty percent
(50%) in the nonclassroom components as defined by the state board. Every
local government shall appropriate funds sufficient to fund the local share of
the BEP. No LEA shall commence the fall term until its share of the BEP has
been included in the budget approved by the local legislative body. From the
local portion of such revenues, there shall be a distribution of funds for
equalization purposes pursuant to a formula adopted by the state board, as
approved by the commissioners of education and finance and administration.
It is the intent of the general assembly to provide funding on a fair and
equitable basis by recognizing the differences in the ability of local
jurisdictions to raise local revenues.
Tenn. Code Ann. § 49-3-356(2009).
The MOE rule contained in the Administrative Code states:
(3) Review and Verification
(a) The budget submitted by each school system will be reviewed by the
Department of Education to ensure that state funds are not being used to
supplant local funds and that each school system has appropriated funds
sufficient to fund its local share of the BEP.
(b) Revenue derived from local sources must equal or exceed prior year actual
revenues - excluding capital outlay and debt service, and adjusted for decline
in average daily membership (ADM).
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Tenn. Comp. R. & Regs. 0520-01-02-.13(3)(a) & (b)(2009).
As the Attorney General opined in 2005, the City cannot effectively amend existing
law and legislate the MCS out of existence as a special school district by reducing funding.
There is nothing in the Memphis Charter or in the general statutory provisions to suggest that
the City is not obligated to fund the MCS or that the City is exempt from the statutory scheme
with respect to the anti-supplanting provisions or the MOE rule. Reading the case law
together with the statutes and the City’s charter, we believe the General Assembly has created
a system in Memphis whereby both Shelby County and the City are required to fund the City
schools in conformance with the BEP, the anti-supplanting statutes, and the MOE provisions.
Holding
In light of the foregoing, the judgment of the trial court is affirmed. Costs of this
appeal are taxed to the Appellants, the City of Memphis and the Memphis City Council, and
their surety, for which execution may issue if necessary.
_________________________________
DAVID R. FARMER, JUDGE
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