With about $2 billion in extra revenue this year, Tennessee is flush with cash.

But it may not last, which is why Gov. Bill Haslam is reticent to invest too much of the state’s surplus in public schools in need ongoing funding.

Now two state lawmakers have an idea that could both benefit public education and satisfy fiscal conservatives.

Rep. Craig Fitzhugh of Ripley and Sen. Jeff Yarbro of Nashville propose using $250 million of this year’s surplus to create a public education fund akin to a college endowment. Money that grows out of the one-time investment could be used to help schools with extras that aren’t already covered by the state’s school funding formula.

In the first year alone, the fund could produce about $10 million in revenue for Tennessee schools, according to Fitzhugh’s estimate. Then, in other boom times, the state could add money to the fund if lawmakers see fit.

The idea was inspired by Tennessee Promise, which invests state lottery money in a separate fund used to cover students’ tuition to community college.

Why not use a similar approach for K-12 education? ask Fitzhugh and Yarbro, both Democrats.

“Tennessee is doing pretty well,” Fitzhugh said. “We could come up with a sizeable fund to put up in a separate fund, a separate endowment for primary and secondary education. This year is unique to do that.”

The level of funding for public schools has been the source of several lawsuits against the state by local districts that say Tennessee isn’t fulfilling its obligation to provide all students with an adequate education.

The Fitzhugh-Yarbro bill would help address that concern by allocating the fund’s additional revenue to districts based on student enrollment. Districts couldn’t use the money to cover basic necessities like teacher salaries — just extras that aren’t covered by Tennessee’s Basic Education Program.

“We had in mind reading courses, some additional money for dual enrollment — things that would get students ready to take on the Tennessee Promise,” Fitzhugh said.

The fund also could provide a buffer during lean times.

“These good times are probably not going to last forever,” Fitzhugh said. “If we needed some operating money to make it through the year, the legislature could authorize that some of this fund could be used for that purpose.”

While proposed by two Democrats in a state with a Republican supermajority, the bill is getting a serious look from lawmakers. The measure sailed through education committees in both chambers.

PHOTO: TN.gov
Gov. Bill Haslam leads a 2015 budget hearing.

But it may be a tougher sell beginning this week in legislative finance committees, which also are looking at Haslam’s proposed budget. Haslam spokeswoman Jennifer Donnals said the bill has a “fiscal flag” because it’s price tag is not reflected in the governor’s spending plan, which already includes a $230 million increase for schools. Haslam wants to use part of the surplus to boost Tennessee’s “rainy day” fund to about $800 million.

“It’s sort of in his court right now,” Fitzhugh said of the governor. “It’s not a partisan bill. It’s totally something that could benefit the No. 1 thing, which is education.”