Hamilton County Schools Superintendent Jim Scales, left, and Tommy Kranz, CFO of Hamilton County Schools, converse as commissioners discuss a resolution to appropriate education specific payment in lieu of taxes funds to the commission's general fund early Thursday.A battle is brewing between the Hamilton County Commission and school board as the elected bodies try to prove they know best how to spend money designated for schools.
During a commission meeting Thursday, Commissioner Joe Graham asked his colleagues to consider a resolution that would allow the county to withhold new money generated for schools by payment in lieu of taxes agreements so the county can use it to pay for new school construction.
That money, which comes mostly from new businesses such as Volkswagen, typically is given directly to the schools and added to the district's general purpose budget.
Money from Volkswagen and its suppliers should amount to $6 million in such funds in fiscal year 2011 and generate additional growth in subsequent years, said Tommy Kranz, Hamilton County Schools' chief financial officer.
Graham suggested the county set the money aside in an escrow account to build new schools, acquire property and renovate facilities -- steps necessitated by the growth the school system expects after many of the PILOT-generating industries move to town.
The school system planned to put the money in its operating budget.
"This is in no way, shape or form a slam on the school system," Graham said. "We're still going to spend 100 percent, every penny on the schools ... it's just going to have another set of eyes looking over it. We are not stopping the school system from having this money for school ... we are securing the money."
Hamilton County Schools Superintendent Jim Scales, who attended Thursday's meeting with several members of his staff and school board members, disagreed.
"This is a power play," he said after the meeting. "The school board is the governing body of the school system. You're going to usurp their authority? That needs to be a real deep conversation."
During the meeting, Scales told the commission his administration has done everything that has been asked of it. He gave examples:
* Presenting a balanced budget without asking for a tax increase;
* Providing programs such as the German school, which the county agreed to provide Volkswagen employees without asking the school system;
* Using $4.5 million in reserve funds to equip schools the County Commission built.
"We are good stewards of county dollars," Scales said. "I hope that our school board has equal voice in this decision."
Board of Education Chairman Everett Fairchild asked commissioners to allow the board a chance to make a more specific plan on how to use the PILOT money.
He said enrollment growth creates the need not only for "bricks and mortar" but for more personnel and equipment.
Graham showed a letter from the University of Tennessee's County Technical Assistance Service and Support Services that he said indicated the commission legally could keep the money as long as it is used for schools.
But at a school board Finance Committee meeting later Thursday, board attorney Scott Bennett said he believes the letter is inaccurate.
"I think they've made an incorrect assumption," he said. "If these funds were treated as tax revenue, they'd come into the school fund in appropriation. Ultimately, I believe these are [the board's] funds."Most commissioners agreed with Graham that they should control the money, but several suggested holding joint meetings with the school board before making a final decision. Any PILOT money that comes to the county before that joint meeting will be placed in a holding account.
"We absolutely have full respect for the school board," said commission Chairman Larry Henry. "The school board will have a voice and a say-so."
Commissioner Fred Skillern said he "wholly support[ed] this concept" of keeping the money in the commission's budget, but agreed the school board should be involved in the decision.
"I want to work with the school board to come to an agreement we can all live with," he said. "This money shall not be spent until the commission and the Hamilton County school board can come to an agreement."