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Former mayor, local attorney: City should stand strong on school funding issue

David Floyd • Mar 11, 2020 at 8:00 AM

When it comes to school funding, some Johnson City residents aren’t convinced by the argument that “something is better than nothing.”

Attorney John Wood of Wood Patent Law in Johnson City said city commissioners have a strong negotiating position as they get ready to vote on a controversial $12.5 million school funding agreement with Washington County, a deal that one city school board official has described as “capitulation” and some parents and teachers have urged officials to deny.

Critics have said the $12.5 million deal, which would allocate $500,000 annually to the city over a 25-year period for school construction, is short of the roughly $30 million the city would receive by law if the county borrowed money to pay for a $32.75 million K-8 school and recreational facility in Jonesborough. The City Commission will be voting on the $12.5 million agreement at 4:30 p.m. Thursday at City Hall.

Former Johnson City Mayor Pete Paduch said the deal isn’t worthy of consideration, noting that he believes the county is circumventing state law.

He said approving the deal would have a “catastrophic” impact on the school system and Johnson City taxpayers, setting a precedent that forces the city to pick up expenses (beyond the $12.5 million) that would normally be handled by the county.

“At some point in time you have to draw a line in the sand and go to battle, and the outcome will be what it is,” Paduch said. “You can’t run from it. It’s like a bully coming down the street. If you’re constantly crossing to the other side, do you think he’s ever going to quit being a bully? No.”

City officials have been weighing the advantages and disadvantages of pursuing a lawsuit against the county, and Staff Attorney Sunny Sandos told commissioners last week that if the city did file litigation, it would not be seeking money. The city would be questioning the legality of the mechanism being used to fund the project, a model that involves Jonesborough paying for the project and recouping the cost through a lease-to-own agreement with the county.

Sandos said a lawsuit would put the project on hold, meaning the Jonesborough school would not be built on the originally anticipated timeline. The agreement city commissioners will be voting on includes the condition that Johnson City refrain from suing the county.

“If I’m Washington County,” Wood said, “I’m worried I’m about to blow this deal because I didn’t get the needed sign-offs beforehand and then I lowballed Johnson City and crashed the deal. Yes, Johnson City is in a rather strong negotiating position and does not need to accept crumbs thinking it’s better than nothing.”

In a statement issued last week, Sandos said the city explored the idea of challenging the county on the grounds that their school funding plan circumvents the intent of the law, a question that she said was already addressed by the Tennessee Appellate Court in a lawsuit filed by the City of Athens Board of Education against McMinn County. In that case, the court ruled in favor of McMinn County.

From 1996 to 2011, according to a December 2014 ruling, McMinn County distributed funds from its “general purpose school fund” to the city school boards but did not distribute funding from its “educational capital projects fund.” The court ruled the county followed the letter of the law.

During a city commission meeting last Thursday, Vice Mayor Joe Wise called the McMinn case a “time bomb,” which the city would be left sitting on if commissioners don’t take the $12.5 million deal. Over a period of years, Wise said the county could eventually bank enough cash to build the school.

“I don’t think if we fight on this particular point they all of a sudden become open to discussing it further with us,” Wise said last Thursday. “I think what happens is we end up a situation where they have a scapegoat. Its name is Johnson City, and they (the county) have three to five years to build up cash, and eventually Jonesborough gets its school and we get zero.”

Wood argues that a lot can happen in the years it takes to save that money, and taking into account elections and changing priorities, there isn’t a guarantee money banked in a cash fund would be ultimately spent on a school.

“It’s far from a done deal that, if the Washington County Commission decides to use the tax apportionment loophole, that Jonesborough gets a new school in five years,” Wood said. “Alternatively the Washington County Commission can move forward with the new school and keep the wheels on the bus by bonding the new school build and Johnson City schools get their equitable share.”

City Manager Pete Peterson said in February that the only way Washington County would only be able to afford bonding $60 million is if the county raised taxes. He estimated that Johnson City residents would pay about 63% of that increase, which is not proportionate with the amount of capital funding the city would receive if the county issued bonds.

Anything the city spends beyond the $12.5 million contribution would come 100% from city taxpayers, however, as opposed to the shared burden with the county.

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