published Tuesday, February 22nd, 2011

Schools sound warning on funds

by Dan Whisenhunt


PDF: PILOT funds

Hamilton County Schools Superintendent Jim Scales and School Board attorney Scott Bennett are warning county officials that they will be committing an "illegal" act if they withhold tax money from schools.

School district leaders disagree with the county about who should ultimately decide how the money generated from payment in lieu of taxes agreements is spent, Scales said. The county wants to use the millions generated from such agreements, known as PILOTs, to pay for school construction, but the school system wants to put the money in its general budget.

Such agreements are given to new businesses such as Volkswagen and Amazon to lure them to the area. Under the agreements, businesses don't have to pay full property taxes for a certain number of years, but they must pay the share of property tax that is slated for schools.

Results of future meetings between Board of Education members and county commissioners could determine whether the disagreement over who controls this money ends up in court, Scales said.

"I would think at some point cooler heads are going to prevail and the County Commission and the county school board will come to an agreement based upon the law," Scales said.

Scales last week wrote Patrick Smith, the acting commissioner of education for Tennessee, Commission Chairman Larry Henry and County Mayor Jim Coppinger about the PILOT money.

"In our opinion, this decision is illegal since it both deprives the Board of Education of its rightful revenue and invades the Board of Education's statutory authority to establish fiscal goals for the school system," Scales wrote.

Bennett also wrote Hamilton County Trustee Bill Hullander, according to copies of the letters obtained by the Chattanooga Times Free Press. Bennett warned Hullander that the school board would report any failure to turn over the tax funds to the state Comptroller of the Treasury as an "unlawful and unauthorized taking of public money."

Hullander has said he will abide by the County Commission's decision to keep the money for new schools and will turn the funds over to county general government.

County officials believe they are on solid legal footing. Henry said Bennett's interpretation of the law is incorrect.

"This money is going to be distributed to the Department of Education," Henry said. "We just want it to be earmarked. They want to put it into their general fund and use it for other purposes."

County Attorney Rheubin Taylor also said the county has the right to set aside the money.

"The money is earmarked for education, and right now the county is wanting to withhold it for capital improvements to education," Taylor said.

Scales and Bennett sent their letters at the end of last week, following a Feb. 14 meeting between county commissioners and school officials about who will control the millions generated by PILOT agreements.

Scales said losing the PILOT money would gash a $7.5 million hole in the next school budget and would require reducing school services, though he didn't say what those would be.

Earlier this month, commissioners decided to keep the money so it could be earmarked for school construction, an idea first proposed by Commissioner Joe Graham. He produced a letter from the University of Tennessee's County Technical Assistance, which said the county could earmark the money.

"The local governing body must provide funding for school budgets," wrote Stephen Austin, a County Technical Assistance legal consultant. "Accordingly, it is the entity that decides what revenue sources will be used to fund a school budget."

Austin also attached a state attorney general opinion from June 2004 which he said supports this position.

Graham said he had not seen the letters sent by Bennett and Scales.

School board Chairman Everett Fairchild said Bennett has asked for an attorney general opinion on the issue.

about Dan Whisenhunt...

Dan Whisenhunt covers Hamilton County government for the Times Free Press. A native of Mobile, Ala., Dan earned a degree in broadcast journalism from the University of Alabama. He won first place for best in-depth news coverage in the 2010 Alabama Press Association contest; the FOI-First Amendment Award in the 2007 Alabama Press Association contest; first place for best public service story in the Alabama AP Managing Editors contest in 2009 for economic coverage; and ...

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dendod said...

I find it humorous how we don't hear much from Dr. "Can't teach a dog to fetch a stick" Scales until a dollar is in question. He should spend more time addressing the issue of children with mental issues in the schools being denied what the Americans with Disabilities Act says they are due. He's going to end up with a lawsuit that will take his precious dollars as in Zachery Deal vs. Hamilton County Board of Education. That case cost Hamilton County Schools over $1,000,000. It also labeled the school system as liars and incompetents. I personally don't think the school system here has changed much at all since that case. Show Scales the road and save millions going forward.

February 22, 2011 at 5:53 a.m.
BOOBOO99 said...

Dr. Scales is the biggest con artist in Hamilton County..He should be fired from his job, if the county wants to use money to build schools they should. Dr Scales wants money so he can give hisself a raise and to extort money from the school system for his benefit..County Officals know this! Thats why they want to do right thing and build schools for the kids not to the city corrupted school system where the money fall in the pockets of the already overpaid management. Dr Scales ia an village idiot!!!

February 22, 2011 at 8:13 a.m.
4thekids said...

My child attends a school where when it rains , buckets are placed in classrooms and the halls to catch the water. The paint around the outside of the windows is peeling badly. They have trouble with the boiler , no gym , no room outside for the kids to practice for the cross country races , no parking for parents , and so many other issues with the building that it is alarming ! Our children are in need of a new school. Frankly, I don't trust either side to spend the money where it is most needed. It would be great if we could create a panel of parents and teachers ( the people who really know, and care) to vote on the spending of the funds. This may also prevent these officials from using the funds to benefit themselves. Its sad they are fighting over money instead of agreeing it needs to be used in the best interest of the kids whatever that may be.

February 23, 2011 at 2:59 a.m.
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