By Collin Brooks
Johnson City Schools will have to wait on the $8 million in shared bonds that was supposed to be released on June 30th, due to discrepancies in enrollment numbers that were recently uncovered. When the city does receive their check in the coming weeks, it will actually be a little less than what they were promised.
Questions arose from Washington County Mayor Dan Eldridge about how the city was accounting for Johnson City students that reside within city limits, but live in other counties, like Sullivan County and Carter County.
Eldridge said that he first noticed a possible discrepancy when he saw that bond proceeds from the Sullivan County school projects, to the tune of over $520,000, were being shared with Johnson City.
“My antenna went up when I saw that,” Eldridge said. “Because I was not aware that a significant number of Sullivan County students were attending Johnson City Schools…I knew they didn’t share operational dollars, so it didn’t make any sense that they would share capital dollars.”
The city, who admittedly was unaware of any discrepancies with their numbers, soon uncovered 431 kids (73 in Sullivan County and 358 Carter County) that don’t live in Washington County but are city residents and attend Johnson City Schools. That means they are having their education paid for by Washington County taxpayers.
“The enrollment numbers that are used to share both operational and capital dollars were never adjusted to reflect the fact that there are nearly 500 students in the Johnson City System that don’t live in Washington County,” Eldridge told the News & Neighbor. “It was never intended, never contemplated, that Washington County tax dollars would be used to pay for their education.”
He noted that he didn’t think there was any ill-intent on anyones’ part, it had simply been an oversight for a long, long time.
“This has been going on for so long. I’ll be honest with you, it’s surprising that no one in Washington County ever questioned it,” Eldridge said.
Outgoing Johnson City Schools Finance Director Pam Cox — who officially retired on June 30, but will be filling in until her replacement is fully trained — agreed with Eldridge and told the News & Neighbor that she was surprised when this was brought to the city’s attention. She said that she was under the impression that in order to receive county money — from sales tax, property tax and other county revenues — the system must physically have a local education agency within the county.
She recently learned that wasn’t the case and has been working with both systems and governments to make sure that the problem is fixed.
“No one has intentionally done this,” Cox said. “I just don’t think the right questions have been being asked. In my opinion, the state hasn’t really been asking the right questions when they ask the attendance department to report attendance. Because they are making the assumption that all students are in the county, in which the local education agency is.
“These numbers have been divided this way for years and years and years.”
The discrepancy won’t affect Johnson City much in this particular situation, they are still expected to get close to $8.3 million when you add up the shared bond monies from Sullivan County and the future dispersement from Washington County. But it could affect them down the road, when it comes to the sharing of operational costs.
Johnson City City Manager Pete Peterson asked what a 1.18 percent change in ADA ratio in dollars would mean. Because, he said, sooner or later this conversation will turn from capital funds to operating dollars.
Peterson noted that a small percentage shift just over one percent, would result in a loss of about $600,000 from Washington County for operational costs. Johnson City will in turn have to bill Sullivan County and Carter County for that same amount, but Peterson and Cox agreed that they didn’t feel like the city would be able to recoup that amount from their neighboring counties, which would result in a net loss for the city in operating.
“From this point forward, we will need to account for students differently,” Peterson said. “…I jokingly told (Kingsport Mayor) Richard Venable back in the spring, ‘Richard, just keep your money and don’t raise the issue.’ Cause I knew that we were going to lose a whole lot more than $500,000 dollars.”
The key to the mishap is that Johnson City started annexing into Carter County close to 30 years ago, but nothing was done to account for city students that reside in a neighboring county.
Eldridge said that it isn’t fair for Washington County taxpayers to pay for students that have already been covered by the bond issuance from Sullivan County.
“You don’t get paid twice,” Eldridge said. “Washington County should not be paying you again for students that Sullivan County has already shared capital dollars for.”
Currently, Tennessee uses a formula known as the BEP (Basic Education Program) to disperse county revenue to school systems in the county. That formula is complicated, but is broken down by student population, which means that Washington County receives 53 percent of the county’s revenue, while Johnson City receives 47 percent. Those numbers could slightly change, depending on what is uncovered with student populations from Washington County and Johnson City.
The next step will be for the city to update their numbers and then turn them into the state, which will then reconfigure the numbers and provide them to both entities. After that is done, the county trustee will then be allowed to release the close to $8 million in county bond proceeds that belong to the city. That should happen within the month of July. It is speculated that the city will use most, if not all, of that money to construct the new cafeteria and gymnasium at Liberty Bell, so that the school will not be dependent on the use of Freedom Hall.