### IN THE COURT OF APP EALS OF TENNESS EE ATJAC KSON O ct obe r 14, 200 9 S es sio n
THE S TAT E OF TEN NES SEE, ex rel. THE B OAR D O F E DU CA TION OF THE MEMPHI S CIT Y SCHOO LS, ET AL 

### . v. CIT Y OF MEMPHI S, ET AL 

### .

D irec t A p p ea l f

ro m th e C h a n ce ry C o u rt fo r S h elb y C o u n ty N o. C H

- 08- 1139- 3 K enny W
. A rm s t rong, C hancel l or

N o. W 2009- 00366- C O A

- R 3- C V - F i l ed January 13, 2010

T he C i t yof M emphi s and the M emphi s C i t yC ounci l appea l t he t r i al cour t ’ s w r i tof
m andamus or der i ng t he C i t yt o r es t or e fundi ng t o t he M emphi s C i t y School s for t he 2008- 09
s c h o o l y e a ri n c o m p l i a n c e w i t h T e n n e s s e e C o d e A n n o t a t e d § § 4 9

- 2

- 2 0 3 a n d 4 9

- 3

- 3 1 4

. We
a f f i r m.
Tenn. R
. A pp. P. 3 Appeal as of R i ght ; Judg m e nt of

t he C hanc e r y C our t A f f i r m e d; and R em anded

D AV I D R. F ARMER , J

. , del i ver ed t he opi ni on of t he C our t , i n w hi ch A L AN E. H I GHERS , P .J ., W

. S

. , and J. S TEV EN S TAFF ORD , J

. , j oi ned.

A l an J. W ade, B randy S

. P ari sh, Javi er M i chael B ai l ey and John G ordon H ow ard, M em ph i s, T e n n e ss e e , fo r th e a p p e llan t(s), C ityo f M e m p h is a n d M e m p h is C ityC o u n c il.

M i chae l R

. M ar s hal l , E r nes t G

. K el l y , J r
. , and D or s eyE

. H ops on, M emphi s , T ennes s ee, for t he ap pell ee(s ), B oard of E du cat i on of the M em ph i s C i t yS cho ols

.
R i char d L ee Col ber t , M emphi s , T ennesse e, fort he appe l l ee, M emphi s E ducat i on A s s oci at i on.
R ober tE

. C ooper , J r
. , A t t or neyG ener al and R epor t er , M i chae l E

. M oor e, Sol i ci t orG ener al
a n d M e lis s a M o re a u , A s s is ta n t A tto rn e yG e n e ra l, A m i cus C ur i ae of t he S t at e of Tennes s ee.
OP I NI ON

T hi s appea l r equi r es us t o det er m i ne w het her t he st atut or i l ym andat ed s chool fundi ng pr ovi s i ons cont ai ned i n T ennes s ee C ode A nnot at ed § 49- 3- 314( c) and § 4 9

- 2-The total pro posed MCS bu dg et for the 2 008- 09 schoo l y ear w as $ 931, 966, 343. In ad dition to the 1
am ounts requeste d from

the City , th e total budg et inclu ded rev enue in the am ount of $ 423, 090, 550 from the S tate o f Tenne ss ee ( 48

. 32 % o f bu dg et am ount); $ 25 2,463,570 f ro m S he lb y C ounty ( 28

. 83 % o f bu dg et); $4, 318, 600 from

Fe deral funds (.49 % of b udg e t) ; $ 8,0 30, 000 from local funds (.92 % of b udg et); $3 8,1 92, 973 from the fund balance reserv e (4.3 6% of budg et); $8, 139, 610 from the BE P 2 .0 fund balance reserv e (. 93% of b udg et); $1 0,0 00, 000 from additional B EP 2.0 State fun ds (1 .07 % of b udg et); $9 4,1 99, 040 from local sales tax(10 .76 % of b udg et).
We no te the Attorn ey

G eneral’s May

4, 20 09, O pinion

statingthat the C om

missioner of E ducatio n 2 has p e rmi s s i v e auth o r i ty

t o w i thh o l d

s o m e o r a l l o f th e s t at e e du c at i o nf

i n an c e f un d s i f al o c a l e du cation ag ency or local g ov ernm ent fails to meet the re quirements s et- forth in Tennesse e C ode Ann otated § 4 9- 3- 301, et seq

. Th e w ithh ol di ngo f st at e fundin gis n ot man dato ry

und er Te nn es se e C od e Ann ot at ed § 4 9- 3- 31 4( c)

. Op. Tenn. Att’y

G en. 09- 70.
-2- 20 3(a) (10)( A )( i i ), t he “an t i -s up plant i ng st at utes , ” and t he M ai ntenance o f E ffo rtprovis i on s, ar e appl i cabl e t o t he C i t yof M emphi s
. T he fa ct s r el evantt o ourdi s pos i t i on of t hi s appea l
ar e notdi s put ed.

T he C i t yof M emphi s ( “M emphi s ” or“t he C i t y ”) pr ovi ded fundi ng i n t he amount of $ 8 4 ,7 3 1 ,3 4 7 to th e M e m p h is C ityS c h o o ls (“ M C S ” ) f o r th e 2 0 0 7 -2 0 0 8 sc h o o l y e a r. In A p ril 2 0 0 8 , the B o a rd o f

E d u c a tio n (“ th e B o a rd ” ) o f th e M C S p re se n ted its 2 0 0 8 -2 0 0 9 b u d g e t to t h e M e mp h i s Ci t y Co u n c i l ( “ t h e Co u n c i l ” )

. Th e b u d g e t r e q u e s t e d Ci t yf u n d i n g f o rt h e M CS i n t he amount of $93, 532, 000, or 10. 68% of t he t ot al budgetamount

. T he C ounci l appr oved 1 a budgett hatpr ovi ded C i t yfundi ng i n t he amount of $27, 270, 400. T he r educt i on i n fundi ng r es ul t ed fr om a r educt i on i n t he amount of t he C i t y ’ s ad val or em school t ax.
In Ju n e 2 0 0 8 , th e B o a rd f iled a c o m p lain t in th e C h a n c e ryC o u rt f o r S h e lb yC o u n ty
see k ing a w ri t of

m an d am u s o r i n

jun cti v e rel ief ag ains t the C ity
. In it s co m p lai n t, the B o ard
a ss e rte d th a t th e M C S w a s a sp e c ial s c h o o l d istric t p ro p e rlyo rg a n ize d p u rsu a n t to p riv a te
a c ts o f th e G e n e ra l A ss e m b lyin 1 8 6 6 -1 8 6 9 , as a m e n d e d ; th a t th e C ityw a s a m u n icip a lity w i t h i t s ow n C har t er ; t hat t he C har t er as amended i n 1951 per m i t t ed t he C i t yt o l evyan ad val or em s chool t ax t o fund t he M C S; and t hat t he C i t y ’ s r educt i on of school fundi ng vi ol at ed t he st at utor i l ym and at ed B asi c E du cat i on P rogram (“B E P ”) a nd t he an t i -s up plant i ng st at utes

. T he B oar d fur t heras s er t ed t hati thad bee n advi s ed by t he S t at e D epar t m ent of E ducat i on t hat t he St at e w oul d i nt erpr etanyr educt i on i n t he t ot al amount of l ocal fundi ng t o be i n vi ol at i on of t he ant i

- s uppl ant i ng pr ovi s i ons cont ai ned in T ennes s ee Code A nnot at ed § 49- 3- 314,
resu lt ing in a lo ss o f S tat e f u n d ing in a n a m o u n t e x ce ed ing $ 4 0 0 , 0 0 0 , 0 0 0

. T h e B o ard 2
a ss e rte d th a t itw o u ld b e u n a b le to c o n tin u e o p e ra tin g th e M C S , w h ich se rv e s a p p ro x im a tely 11 2, 00 0 st ud ents , i f t he loss of f un ding s ho uld occu r. T he B oard further asser t ed thatt he loss of fundi ng w oul d r es ul ti n a “dr as t i cal l y i nfer i or oppor tuni t yforeduca t i on” i n vi ol at i on of th e E d u c a tio n C lau se o f th e T e n n e ss e e C o n stitu tio n
. It so u g h t a n o rd e r re q u irin g th e C ityto ap p rop ri a te fu n d s in a n am o u n t th at at m inim u m rep rese n ted a m ainten an ce o f lo ca l eff o rtSev eral ch arter sch ools also w ere allo wed to interv ene in the matter. They were dismissed witho ut 3 prejudice by

a conse nt ord er entered b y the trial court in Febru ary 20 09.
-3- ( “M O E ”) fr om t he pre vi ous y ear
. T he B oar d al s o fi l ed a m ot i on fora pr el i m i nar yi nj unct i on r equ ir i ng t he C i t yt o appr ove and f und a budgetfort he M C S t hatpr es er ved t he l ocal
m ai nt enanc e ef

for tof t he pr evi ous y ear
. T he M emphi s E ducat i on A s s oci at i on ( “t he M E A ”) f iled a m o tio n to in ter v e n e , as se rtin g th a t th e lo ss o f f u n d in g a lle g e d b y t h e B o a rd w o u ld d ir ec tl yim p ac t th e c o n tr ac tual ag ree m en t betw ee n it sel f a n d the B o ard

. T h e tri al co u rt gr ant ed t he mot i on i n J ul y2008. 3

T h e C itya n sw e re d a n d c o u n ter -c laim e d o n J u ly1 5 , 2 0 0 8 . In its a n sw e r, th e C ity
a ss e rte d th a t ith a d n o leg a l o b lig a tio n to f u n d th e M C S . T h e C itya ss e rte d th a t itp re v io u sly had “gr atui t ous l yagr eed t o l evya s chool t ax and pr ovi de ot hers our ces of fundi ng exce edi ng $ 2 7 m illio n , d esp it e n o lega l ob li g ati o n to f u n d M C S

. ” It asse rt ed that the s tatu tory
m ai nt enanc e of e ffor treq u ir ement s w er e i m pos ed on M C S and Shel byC ount y , butnoton t he C i t y
. T he C i t y count er - cl ai m ed foral l eged da m ages i n exce s s of $152 m i l l i on, w hi ch t he Ci t ya s s e r t e d r e s u l t e d f

r o m ultra vi res paym ent s m ade byi tt o t he M C S. T he C i t yas s er t ed t hat , for t he fi s cal y ear s endi ng on J une 30, 1998, 2001, 2002, and 2005, i thad l evi ed s chool t axes i n exce s s of t he s t atut or yl i m i t o f 8 5 ¢ per$100 of as s es s ed pr oper t yval ue, and t hat “[s ] uch l evi es w er e ultra vi res an d v o id to the ex tent that su ch levies e x ce ed ed [th e] C ity ’s
s t atut or yl i m i tfors chool t axes
. ”

O n J ul y 15, t he M emphi s C i t y C ounci l w as added as a D efe ndant i n the m at t er (he reina fter, D ef

en d an ts w il l be re fe rred to, collecti v ely , as “ the C ity ”). T h e tr ial co u rth ea rd t he m at t er on J ul y 17, 18 and 21, 2008. O n A ugus t 15, t he t r i al cour t ent ered an o rder
r equi r i ng t he par t i es t o s ubm i tpos t

- t r i al br i efs byA ugus t 20, 2008. O n Sept ember 5, 2008, th e C itym o v e d th e trial c o u rt to d ism iss th e in ter v e n in g c o m p lain t o f th e M E A a s m o o t.
O n F e b ru a ry1 1 , 2 0 0 9 , the trial c o u rt g ra n ted th e C ity ’s m o tio n to d ism iss th e c laim
o f th e M E A a s m o o t w ith re sp e c t to th e M E A ’s c o n tra c tu a l cla im , b u t d e n ied th e m o tio n w ith resp ec t to th e M E A ’s st atuto ryclaim s fo r reli ef

. O n F eb rua ry1 7 , 2 0 0 9 , the tri al co u rt ent er ed a mem or andum opi ni on fi ndi ng t hat , al t hough cur r entfundi ng fort he s chool s y s t em e x c e e d e d th e m in im u m f u n d in g m a n d a ted b y th e S tate B E P f o rm u la, th e C ityw a s s tatu to rily obl i gat ed t o pr ovi de t he M C S f undi ng i n t he m i ni m um amount of $84, 731, 347 fort he 2008- 2009 s chool y ear
. T he t r i al cour tor der ed the C i t y to p rov ide “addi t i onal fundi ng fort he 2008- 2009 s chool y eari n t he amount of $57, 460, 947 t o m eeti t s s t at u toryobl i gat i on as r e q u i r e d b yt h e ‘ ma i n t e n a n c e o f e f f o r t ’ p r o v i s i o n s o f

o u rs t a t e ’ s e d u c a t i o n s t a tu t e s
. ” On M ar ch 2, 2009, t he t r i al cour tent er ed fi nal j udgm enton t he B oar d’ s cl ai m s and pra y erfor
w r i tof m andamus pur s uantt o T ennes s ee Rul e of Ci vi l Pr ocedur e 54. 02.-4-

O n M a rc h 2 , 2 0 0 9 , the C ityf iled a m o tio n to a lter o r a m e n d o r, in th e a ltern a tiv e , to sta yth e ju d g m e n t p e n d in g a p p e a l. In its m o tio n , th e C ity a ss e rte d th a t it h a d c o m p lied w ith the m an d am u s b y a p p rov ing a b u d g et t h at m et t h e m ainten an ce o f e ff o rtreq u ir em en t. It pr ay ed t he cour tt o m odi fyi t s j udgm entt o el i m ina t e the mandam us and s ubs t i tut e a decl ar at or yj udgm enti n favorof M C S. O n A pr i l 21, t he t r i al cour tdeni ed the mot i on t o al t er oramend but gr ant ed t he mot i on t o s t ay enfor cementof t he j udgm entpendi ng appea l

. T he tr ial co u rt w aive d the req u ir em en t o f a bo n d

. T h e C ity fil ed a no ti ce o f a p p ea l t o this C o u rt
o n F e b ru a ry 1 7 , 2 0 0 9

.
I s s ues P r es ented

T h e Ci t yp r e s e n t s t h e f

o l l o wi n g i s s u e s f

o ro u rr e v i e w:
1. D oes t he C i t y ’ s C hart er aut hor i ze orr equi r e t he C i t yt o pr ovi de op e r a t i on a l fu nd i ng t o M CS?

2. D oes anyT ennes s ee Educat i on St atut e of ge ner al appl i cat i on r equi re t he Ci t yt o p r ov i de op e r a t i on a l fu nd i ng t o M CS?

3

. If th e a n s w e r t o is s u e s I a n d II a b o v e is N o , d o e s T e n n . C o d e A n n . § 49- 3- 314( c) ( 1) , T enn. C ode A nn. § 49- 2- 203( a)(10) ( A ) ( i i ) , ort he d o ctri n e o f e q u it ab le estop p el req u ir e the C ityto co n ti n u e a nyv o lun tary
c o n trib u tio n s it h a s m a d e to M C S in th e p a st?

T he St at e of Tennes s ee f i l ed an a m i cus cur i ae br i ef pr es ent i ng t he i s s ue as w het her th e C ity o f M e m p h is m a y law f u llyre d u c e th e o p e ra tin g b u d g e t o f th e M e m p h is C ityS c h o o ls byel i m i nat i ng appr oxi m at el y$56 m i l l i on i n l ocal fundi ng t hatt he s chool s y s t em had
re c e iv e d f

ro m th e C ity in th e p re v io u s y e a r.
T h e M E A a l s o f

i l e d a b r i e f

p r e s e n t i n g t h e f

o l l o wi n g i s s u e s f

o rr e v i e w:
1

. D id the C ity ’s red u cti o n in f u n d ing fo r t h e M C S im p air th e statuto ry and contr actual r i ght s of t he A s s oci at i on and t he pr ofes s i onal
em ploy ees i trepr esent s?

2. D i d t he C hance l l orer ri n di s m i s s i ng the A ssoci at i on’ s cont r actual
c laim s a s m o o t?-5- Standard of

R eview
T hi s appea l r equires u s t o det er m i ne w het hert he r equi s i t es of Tennes s ee Code A nnot at ed § 49- 3- 314( c) ( 1) and § 49- 2- 203( a) ( 10) ( A ) ( i i ) , t he ant i

- s uppl ant i ng s t atut es , and t he ma inten an ce o f ef

for tpr ovi s i on, ar e appl i cabl e t o t he C i t yof M emphi s as a “l ocal g o v e r n me n t

. ” T h e c o n s t ru c t i o n o f a s t a tu t e i s a q u e s t i o n o f l a w wh i c h we r e v i e w de novo , w ith n o p re s u m p tio n o f c o rr e c tn e s s a tta c h e d to th e d e te rm in a tio n o f th e tr ia l c o u rt

. W

aters v. Farr , 2 9 1 S .W .3 d 8 7 3 , 8 8 1 (T e n n . 2 0 0 9 ). O u r o b jec tiv e w h e n c o n stru in g a sta tu te is to eff ectuat e t he purpos es of t he G ener al A ssem b ly

. I ns ofaras pos s i bl e, t he i nt entof t he G ener al A s s embl ys houl d be det er m i ned by t he nat ur al and or di nar ym eani ng of t he w or ds
us ed in the s t atut e, and notbya cons t ruct i on t hati s for ced orw hi ch l i m i t s orext ends t he
m eani ng. W hen t he l anguage of a s t atut e i s clea r , w e mustut i l i ze the pl ai n, acc ept ed
m eani ng of t he w or ds us ed byt he G ener al A s s embl yt o as cer t ai n t he s t atut e’ s purpos e and appl i cat i on. I f t he w or di ng i s ambi guous , w e m us tl ook t o t he ent i r e s t atut or ys cheme and att he legi sl at i ve h i st ory t o ascer t ai n t he G eneral A ssem bly ’s i ntent and pu rpose. W e m ust
co n stru e statutes in th eir en ti rety , n eit h er co n str ict ing n o r ex p an d ing the G en era l A ssem b ly ’s in te n t. Id

. ( ci t at i ons om i t t ed)

. I n s o doi ng, w e as s um e t hat t he G ener al A s s embl y chos e t he
w or ds of t he s t atut e purpos el y , and t hatt he w o rds chosen “ conveys om e i nt entand have a m e a n in g a n d a p u rp o s e ” w h e n c o n s id e re d w ith in th e c o n te x t o f th e e n tir e s ta tu te

. E as tm an C hem

. C o. v. Johns on , 1 5 1 S .W .3 d 5 0 3 , 5 0 7 (T e n n . 2 0 0 4 ) ( c ita tio n s o m itte d ).

D is cus s i on
We f i r s to b s e r v e t h a t , a l t h o u g h i th a s f i l e d a b r i e f

a n d p r e s e n t e d i s s u e s f

o ro u rr e v i e w, w e do not have j ur i s di ct i on t o addr es s t he i s s ues r ai s ed by t he M E A

. T he t r i al cour tent er ed its o rd e r g ra n tin g a w rit o f m a n d a m u s in th is m a tter p u rsu a n t to T e n n e ss e e R u le o f C iv il Pr ocedur e 54. 02, m aki ng onl y i t s or deron t he B oar d’ s compl ai ntform andamus a fi nal or der i n t hi s cas e. N o fi nal or derhas been e nt er ed byt he tr i al cour tw i t h r es pectt o t he cl ai m s fi l ed byt he M E A as an i nt er veni ng Pl ai nt i ff. A ccor di ngl y , w e dec l i ne t o addr es s t he i s s ues r ai s ed byt he M E A her e.
I n i t s br i ef t o t hi s C our t , t he C i t y as s er t s t hat nei t her i t s char t er nor t he gener al s t atut es requi re i t t o l e vys c ho ol t a xe s i n s up po r tof t he M CS. I tfu r t he ra r gu e s t ha ti t s pa st cont r i but i ons t o t he M C S w er e vol unt ary , and t hat i t i s nota l ocal educa t i on agenc y( “LE A ”)
or “l ocal gover nm ent ” for purpos es of t he educat i on s t atut es
. T he C i t yas s er t s t hat , undert he tax in g sc h e m e a d o p ted b y th e G e n e ra l A ss e m b ly in 1 9 2 5 , S h e lb yC o u n tya n d n o t th e C ityis
r equi r ed t o fund t he M C S. T he C i t yci t es T ennes s ee Code A nnot at ed § 49- 2- 501 fort he pr opos i t i on t hat t hi s s cheme w as r ei t er at ed i n 1982, w hen the G ener al A s s embl yr ei t er at ed th e a b o lit io n o f

sp e c ial s c h o o l d istric ts w ith o u t tax in g p o w e r . T h e C itya ss e rts th a t, “[a ] l t hough Shel byC ount y is nott he governi ng bodyof M C S, i ti s r equi r ed t o r ai s e and-6-

a p p r o p r i a t e r e v e n u e f

o r t h e s tu d e n t s o f t h e Ci t y [ , ] ” a n d t h a t n o t h i n g i n t h e s t a tu t o r ys c h e me req u ir es th e C ityto f

u n d the M C S

. It s u b m its , “ M C S is an ab errati o n u n d er T en n esse e’s educa t i on l aw s
. I ti s w i t houtanypow ert o cont r ol i t s ow n des t i nyand exi s t s onl yt hr ough apathyof s t at e and l ocal gover nm ent s
. ” I tar gues , “[h] ow ever , t he s t at e’ s admi ni s t r at i ve i ndi ffe r ence r egar di ng M C S’ l egal s t atus does notcr eat e any obl i gat i on for t he C i t yt o fund M C S. ” The C i t yfur t herar gues t hat t he M O E s t atut es ar e l i m i t ed t o funds gener at ed byt he B E P for m ul a, and t hat t he ant i

- s uppl ant i ng pr ovi s i ons “nei t herexpr es s l ynorbyi m pl i cat i on per t ai n t o ‘ addi t i onal s our ces ’ of funds t r ans ferr ed t o L E A s t h at ar e notr equi r ed byt he E d u c a ti o n F u n d in g S tatu tes .” T h e C itya ss e rts “ [ a ]lth o u g h th e B E P c o n tin u e d th e A n tiSuppl ant i ng St atut es w i t houtchange , t he s t atut or y m echa ni cs of t he B E P al l butel i m i nat ed t he nee d fort he A nt i

- Suppl ant i ng St atut es
. ”

T h e B o a rd , o n th e o th e r h a n d , as se rts th a t m u c h o f th e C ity ’s a rg u m e n t is irre lev a n t. Th e Bo a r d a s s e r t s t h a tt h e Ci t y ’ s c h a r t e r o b l i g a t e s t h e Ci t y t o a p p r o v e a b u d g e t f o r t h e M CS and al l ow s i tt o fund t he s chool s
. I tas s er t s t hatt he “l egal s t atus ” of t he M C S i s notan i s s ue i n t hi s cas e, t hatt he G ener al A s s embl yhas amended t he C i t y ’ s char t ers i nce 1925, and t hat t he r equi s i t e cont r i but i ons t o t he B E P a r e not at i s s ue i n t hi s cas e. T he B oar d cont ends t hat t he i s s ue i n t hi s cas e i s w het her t he ant i

- s uppl ant i ng pr ovi s i ons , r ead i n conj unct i on w i t h t he B E P st at utes , are appli cable t o the C i t ysuch thatt he C i t ycann ot r edu ce i t s fund i ng in viol at i on of the M O E provis i on s.
I n i t s am icus cur i ae br i ef, t he St at e as s er t s t hatt he B E P and t he ant i

- s uppl ant i ng p ro v isio n s a re se p a ra te f u n d in g m e c h a n ism s w h ich a c h iev e d if f e re n t g o a ls a n d th a t th e C ity of M emphi s i s a l ocal gover ni ng body for t he purpos es of t he educa t i on s t atut es
. I tfur t her
as s er t s t hatt he C i t ydoes nothave t he aut hor i t y t o vi ol at e t he s t atut or y s cheme, and t hatt he C ity’s c h a rt e r m a n d a te s C ity f u n d in g o f

th e M C S

.
T he i s s ues pr es ent ed byt hi s appea l , t her efor e, as w e per cei ve t hem, ar e 1) w het hert he M emphi s C i t y C har t er aut hor i zes t he C i t y t o fund t he M C S, a s peci al s chool di s t r i ct establ i s hed bypr i vat e ac t s of t he G ener al A s s embl yand 2) i f s o, w het hert he gene r al
s t atut or ys ect i ons cont ai ned i n t i t l e 49, chapt er 3, of t he T ennes s ee C ode w i t h r es pectt o t he
m a in ten a n c e o f

lo c a l f u n d in g e f

f o rts a n d th e a n ti-su p p lan tin g p ro v isio n s a re a p p lica b le to th e C ity . W ith th e p o sitio n s o f th e p a rties a n d o u r sta n d a rd o f re v iew in m in d , w e tu rn to
w h e th e r th e C it yis re q u ire d to c o n tin u e to f u n d th e M C S in a c c o rd a n c e w ith th e a n tis uppl ant i ng pr ovi s i ons of t he gene r al s t atut es and the M O E rul e.
W e tu rn f

irst to th e p ro v isio n s o f th e M e m p h is C ity C h a rte r. I n its b rie f to th is C o u rt, th e C ity d o e s n o t a rg u e th a t th e C h a rte r d o e s n o t p e rm it it to f u n d th e M C S . R a th e r, th e C ity
a ss e rts th a t th e d e c isio n to p ro v id e f u n d in g to th e M C S th ro u g h a n a d v a lo re m sc h o o l tax is dis cret i on ary
. T he C i t ysubm i t s,-7-

T h e c h a rte r d o e s n o t m a n d a te th a t th e C o u n c il a p p r o v e a n yb u d g e t u n les s it i nt ends t o l evyan a d

v a l o r e m t ax t o fund anypar tof M C S’ oper at i ons
. T he C ityc h a rte r a lso a u th o riz e s b u t d o e s n o t d ire c t th e M e m p h is C ityC o u n c il t o lev ya n d c o llec t an n u a llya g e n e ra l a d v a l o r e m t ax fors chool purpos es cons i s t entw i t h t he M C S bud g et th at has been a ppr oved byt he C ounci l for C i t yfundi ng. T he cha r t ers peci fi cal l yus es t he l anguage “author i zed” and “not i n e x c e s s o f

” a n d “ n o t e x c e e d i n g ” whe n r e f e r r i n g t o t h e t a x l e v y f or t he M emphi s C i t y School s
. T he char t er cl ear l ym akes t he s et t i ng of a t ax r at e for t he M emphi s C i t ySchool s pur el ydi s cr et i onar yw hen i t s t at es : “t he amount of tax to b e lev ied f

o r a n d p a id to th e b o a rd o f e d u c a tio n o f th e M e m p h is C ity S c h o o ls

. . . sh a ll b e d e ter m in e d a n d f ix e d b yth e M e m p h is C ityC o u n c il,
s ubj ectt o t he re s pect i ve m axi m um ( s i c) her ei nabove se t out

. ” T he C i t ychart er does notes t abl i s h anys etorspeci fi c amount foranys chool t ax l evy , but sim p lyd ire c ts th a t an ysu c h lev y , if m a d e , sh a ll n o t ex c e e d e ig h ty -f iv e c e n ts ( 8 5 ¢ ) p e r$ 1 0 0 o f

a s s e s s e d v a l u e
. S u c h l a n g u a g e i s b y n e c e s s i t y d i s c r e t i o n a r y, beca us e i t r el i es on t he C ounci l t o det er m i ne t he amount of t he l evy , does not
m a n d a te a n ym in im u m a m o u n t.
C l ear l y , t he M emphi s C har t eraut hor i zes t he C i t yt o pr ovi de fundi ng t o t he M C S thr ough an
a d v a lo re m tax . T h e C ity ’s a rg u m e n t, as w e u n d e rsta n d it, is th a t itis n o t r equi r ed t o pr ovi de fundi ng t o t he M C S underei t heri t s C har t er or t he gener al educa t i on s t atut es
. W e di s agr ee.
Sect i on 773 of t he C har t eri s ent i t l ed “M axi m um r at e of ge ner al ad val or em t ax; t axes fors chool , par k and l i br ar ypurpos es
. ” The se ct i on aut hor i zes the C it yt o col l ectan ad val or em tax upon al l pr oper t yw i t hi n t he C i t yof M emphi s , nott o exce ed a maxi m um of $2. 25 on every$100 of as s es s ed val ue “f oral l purpos es
. ” The se ct i on fur t herpr ovi des t hat

i n t he event t he l evy as fi xed her ei naft eraut hor i zed f ort he boar d of educ at i on of M em p h i s ci t ys chool s s hal l exce ed s i xt y - fi ve ce nt s ( 65¢) on everyone h u n d re d d o llars ($ 1 0 0 .0 0 ) o f a ss e ss e d v a lu e , the sa id m a x im u m tax ra te f o r a ll purpos es s hal l be t w o dol l ar s t w ent y - fi ve cent s ( $2. 25) pl us s uch amount as t he l evyfort he boar d of educat i on of M emphi s ci t ys chool s exce eds s i xt y - fi ve c e n ts (6 5 ¢ ) o n e v e ry o n e h u n d re d d o lla rs ($ 1 0 0 .0 0 ) o f a s s e s s e d v a lu e
. . . .
T he s ect i on es t abl i s hes a l i m i ti n t he amount of 85¢ per$100 of as s es s ed va lue on t he t ax lev yf o r th e b o a rd o f

e d u c a tio n . S u b se c tio n (b ) o f th e se c tio n p ro v id e s th a t “ [ o ] u t o f sa id lev ye a c h y e a r th e re sh a ll b e p a id , as c o llec ted , to th e b o a rd o f e d u c a tio n o f

M e m p h is c ity
s chool s , notexceed ing eigh ty -five ce n ts ( 8 5 ¢ ) on ev eryh u n d red d o ll ars ($ 1 0 0

. 0 0 ) of ass es s ed val ue .
. . ” A l t hough, as t he C i t y as s er t s , s ect i on 773 does notes t abl i s h a def i ni t i ve fundi ng l e v e l , i t c l e a r l yr e f

l e c t s t h e Ge n e r a l As s e mb l y ’ s i n t e n t i o n t h a tt h e Ci t ya s s u me s o meThe Ge neral E ducatio n B ill of 1 947, C hapter 8, Pub lic A cts of 1947 , S ection 16, pro v ided: 4
All lo cal elementary schoo l funds raised or co llected b y any no n- equaliz ingcounty

sha ll be appo rt i on e d by

the county

trustee am ongthe county , and the cities and spe cial sch ool districts th erein, in the m anner prov ided by paragraph fiv e of Section 23 48 of the C ode of Tennessee, un less o therw ise pro v ided by Priv ate A ct. This paragraph shall n ot be con strued to affec t C hapter 752, Priv ate A cts of 1929 , b ut said A ct sha ll continue in full force and ef fe ct

. Bd. of Edu c ., 339 S.W. 2d at 57 3.
Und er C ha pt er 35 1 o f th e P ri v at e A ct s of 1 95 5, S he lb y

C ounty s ch oo l f un ds w er e di v id ed

5 0% to 5 the C ounty

and 50 % to th e C ity

. Id. at 5 73.
As of M a r c h 31 , 1959, the av erag e da ily attend ance of stu dents in the C ity sch ool s y stem

w as 6 77. 37% o f the total av erag e da ily attend ance of stu dents in the C ounty and City sch ools. Bd. of

Ed. v. Sh elby C ou nt y , 3 39 S.W. 2d 569, 57 5 (Tenn. 19 60).
-8- obl i gat i on forfundi ng of t he M C S t hough an ad va l or em t ax.
T he di s put e r egar di n g the C i t y ’ s obl i gat i on t o fund t he M C S i s notnew
. I n M ar ch 2 0 0 5 , the A tto rn e yG e n e ra l issu e d a n o p in io n sta tin g th a t th e C ity is le g a ll yo b lig a ted to pr ovi de fundi ng t o t he M C S. O p. T enn. A t t ’ yG en. 05- 021. T he A t t or ney G ener al ’ s opi ni on t hatt he C i t yhas an obl i gat i on t o pr ovi de fundi ng fort he M C S underbot h t he C i t y ’ s char t er and t he gene r al educa t i on s t atut es i s s uppor t ed byt he ca s e l aw
. I n 1959, t he B oar d and t he C i t yfi l ed s eparate act i ons agai ns tShel byC ount ys eeki ng decl ar at or yj udgm ent s t hat
s t atut or ypr ovi s i ons per m i t t i ng Shel byC ount yt o di vi de county s chool funds on a basi s ot her t han ave r age da i l yat t endanc e undert he gene r al s t atut e w er e i nval i d and uncons t i tut i onal as a p r o v i s i o n f

o rt h e b e n e f

i to f o n e c o u n t y. B d. of E duc. of

the Mem

phis C i t y School s v. 4 Sh e lb y C o u n ty , 339 S. W

. 2d 569 ( T enn. 1960)

. T he s upr eme cour t agr eed w i t h t he C i t yand t he B oar d t hat , i ns ofar as t he s t atut es per m i t t ed Shel byC ount yt o di vi de countyeduca t i onal funds i n acc or dance w i t h t he pr ovi s i ons of pr i vat e ac t s r ather than the gener al l aw , t he
s t atut es vi ol at ed A r t i cl e X I , Sect i on 8, of t he Tennes s ee Const i tut i on. T he cour thel d t hat 5 “al l l ocal count ys chool funds of Shel byC ount y , and the proc eeds of al l s chool bond i s s ues i n s ai d C ount y , w i l l b e appor t i oned and di s t r i but ed i n acc or dance w i t h t he gene r al l aw s of th e S ta te g o v e rn in g s u c h m a tte rs .” I d. at586. 6

T he s upr eme cour t ’ s exami nat i on of t he hi s t or yof t he pr i vat e ac t s appl i cabl e t o t he fu n d ing o f t h e M C S , an d it s interpre tat ion o f t h e p h il o so p h ical un d erp inn ing s o f th e S tat e’s educa t i on s t atut es , ar e i ns t ruct i ve her e. I n t he 1959 act i on, t he s upr eme c our t not ed t hatt he l e g i s l a t i v e i n t e n t o f t h e Ed u c a t i o n Act was t o “ e s t a b l i s h a n d ma i n t a i n a u n i f o r m s y s t e m of publ i c educ at i on i n t hi s St at e[. ] ” I d. at 576 ( emphasi s i n t he or i gi nal )

. T he cour temphasi zed-9-

the i m p o rt an ce o f a si n g le, u n ifo rm m etho d o f fu n d ing p u b li c ed u ca ti o n that “g ives to ev ery s chool s y s t em i t s pr opor t i onal and fa i r s har e of

. . . funds , s o, i n a s ens e, eac h pupi l m aybe aff or ded t he same oppor tuni t y t o obt ai n an educ at i on, r egar dl es s of pl ace of r es i dence

. ” I d.
a t 5 7 8

.
T he cour tfur t herfound t hatt he B oar d of t he M C S w as a pr operpar t yt o t he l i t i gat i on, and t hatt he B oar d has “t he pl ai n dut y
. . . t o exer ci s e eve r yl egal m eans for t he prot ect i on and pr es er vat i on of fu n d s that m aybel ong t o t he s chool s y s t em w hi ch i toper at es
. ” I d. at582. T he cour tr eaf

fi r m ed i t s opi ni on t hatt he M C S w as notexempt fr om t he gene r al l aw , s t at i ng t hati t“i s nota muni ci pal corpor at i on but i s i n t he s ame c l as s w i t h count i es and occ upi es t he
s am e lega l sta tus
. ” I

d. at583 ( quot i ng B a rn e tt v. C ity o f Me m p h is , 269 S. W

. 2d, 906, 907 (T e n n . 1 9 5 4 )). S ig n if

ica n tly , the su p re m e c o u rt o b se rv e d th a t th e tax p a yers o f th e C ity “must ” pay“an a ddi t i onal amount i n s chool t axes , above the amount rec eived fr om t he
c o u n ty sc h o o l ta x e s ” to o p e ra t e t h e C ity’s s c h o o ls

. I d. at 58 3

. T h u s, the s u p rem e c o u rt
c lea rlyh a s ta k e n th e p o s itio n th a t th e M C S sy ste m o p e ra tes in th e sa m e m a n n e r a s c o u n ty sch o o l sy stem s, that the ge n era l ed u ca ti o n statu tes ap p lyto the M C S , an d that C itytaxp ay ers a re o b lig e d to p a ys c h o o l ta x e s in o rd e r t o o p e ra te th e C ity’s s c h o o ls

. W e mustal s o di s agr ee w i t h t he C i t y ’ s ar gum entt hati ti s nota “l ocal governm ent ” for th e p u rp o se s o f th e g e n e ra l e d u c a tio n sta tu tes , a n d th a t th e sta tu to rysc h e m e a p p lies o n lyto t he countygover nm ent s
. T he C ode def i nes a “l ocal educa t i on agenc y , ” orL E A , as “any count y , ci t y , ors peci al s chool di s t r i ct , uni fi ed s chool di s t r i ct , s chool d ist ri ct of any
m et r opol i t an form of governm ent o ranyot hers chool s y s t em est abl i s hed byl aw [. ] ” Tenn. Co d e An n
. § 4 9

- 3

- 3 0 2 ( 1 1 )

. Cl e a r l y , t h e M CS i s a s c h o o l s y s t e m e s t a b l i s h e d b yl a w. A ddi t i onal l y , t hi s C our t h as o pi ned t hatt he C ode does notpl ace an af fi r m at i ve dut yon count i es t o oper at e a s chool s y s t em w hen al l of t he county ’ s s tudent s ar e s er ved bym uni ci pal
o r s p e c ia l s c h o o l d is tr ic ts

. C i t y of H um boldtv. McKnight , No

. M 2 0 0 2

- 0 2 6 3 9

- CO A- R3

- CV , 2 0 0 5 W L 2 0 5 1 2 8 4 (T e n n . C t. A p p . A u g . 2 5 , 2 0 0 5 ), per m

. app. deni ed (T en n
. F eb

. 2 1 , 2 0 0 6 ). I n C i t y of H um boldt , i t i s s t at ed t hat , cont r ary t o H um bol dt ’ s as s er t i on t hat t he G en era l A s s embl ywas r e q u i r e d t o p r o v i d e e d ucat i onal oppor tuni t i es t hr ough t he county , “t he G ener al A s s e mbl yh a s t h e b r o a d e s td i s c r e t i o n t o c r e a t e o ra l l o w va r i o u s e n t i t i e s t o p r o vi de educa t i onal s er vi ces t o chi l dr en i n t he s t at e. ” I d. at*14- 15. I ti s fur t hers t at ed , “t he l egi slat u re h as defi ned LE A orl ocal s chool s y s t em t o m ean any s y s t em aut hor i zed byt he l egis l a tu re to d e liv e r e d u c a tio n [ ,]” a n d n o ted th a t th e g e n e ra l sta tu tes w e re a p p lica b le to th ose L E A s
. I d. at*15- 16 ( emphasi s i n t he or i gi nal )

. I tfol l ow s t hatt he gene r al educa t i on s t atut es ar e appl i cabl e notonl yt o t he countygover nm ent s , butt o t he l ocal gover nm ent s w hi ch fund th e s c h o o ls

. C ity o

f H u m b o ld t s uppor t s t he propos i t i on t hat“l ocal governm ent ” mayi ncl ude
a m u n icip a l g o v e rn m e n t. W e a g re e w ith th e A tto rn e yG e n e ra l th a t th e C ityis o b lig a ted to
c o n tr ib u te to th e f

u n d in g o f

th e M C S a s a lo c a l g o v e rn m e n t.-10-

The Ci t yde vo t e s c on s i de r a bl e a r gu ment t o i t s po s i t i on t ha t t he pr ov i s i on s of t he BE P,
w hi ch t he G ener al A s s embl y enac t ed i n 1992, have r ender ed t he ant i

- s uppl ant i ng pr ovi s i ons “s uper fl uous
. ” The St at e, on t he ot herhand, as s er t s t hatt he B E P and t he ant i

- s uppl ant i ng pr ovi s i ons ar e sepa r at e fundi ng m echa ni s m s w i t h di ffe r ent goal s
. T he St at e as s er t s t hatt he g o a l o f th e B E P is to e q u a lize e d u c a tio n a l o p p o rtu n iti e s th ro u g h a sy ste m w h e re b yth e S tate pr ovi des gr eat erfundi ng t o di s t r i ct s t hat ar e l es s capa bl e of pr ovi di ng l ocal fundi ng, w her eas t he ant i

- s uppl ant i ng s t atutes w er e ena ct ed t o pr ohi bi tl ocal gover nm ent s fr om s uppl ant i ng orr epl aci ng l ocal fundi ng w i t h St at e fu n d s. T h e St at e ar gues t hatt he t w o pr ovi s i ons coexi s t , and t hatt he G ener al As s e mbl yr ei nfor ced the ant i

- s uppl ant i ng pr ovi s i ons bym odi fy i ng t he M O E r ul e i n 1 99 2, w he n i te na c t e d the BE P.

T he G ener al A s s embl yenac t ed t he B E P t o r emedy t he cons t i tut i onal defi ci enci es of the p ri o r f

u n d ing fo rm u la f

o u n d in the T en n esse e F o u n d ati o n P rog ram (“T F P ”). Tennes s ee Sm al lSch. Sys

. v. McW her t er , 8 9 4 S

. W

. 2 d 7 3 4 (T en n
. 1 9 9 5 ); Tennes s ee Sm al lSch. Sys

. v. McW her t er , 851 S. W

. 2d 139 ( T enn. 1993)

. I ti s w el l es ta bl i s hed t hat , w hen cons t rui ng a sta tu te o r sta tu to ry sc h e m e , th e c o u rts p re su m e th a t th e G e n e ra l A ss e m b lyw a s a w a re o f its p ri o r e n a c tm e n ts a n d th e s ta te o f th e la w w h e n it p a s s e d s u b s e q u e n t le g is la tio n
. W at ers v. Farr , 2 9 1 S .W .3 d 8 7 3 , 8 8 2 (T e n n . 2 0 0 9 ). T h u s, d e sp ite the C ity ’s a ss e rtio n th a t th e B E P “ a ll bu tel i m i nated t he n eed f or t he A nti -Sup plant i n g S tatu tes, ” w e decli ne to di sr egard t ho se st at utes w here t he G eneral A ssem blyhas no t repeal ed them

. T here i s no d i spute i n thi s case t hatt he r equi r ement s of t he B E P pr ovi s i ons have been m et

. W e agr ee w i t h t he t r i al cour tt hat t h e Ci t y i s a l s o g o v e r n e d b y t h e a n t i

- s u p p l a n t i n g p r o v i s i o n s f o u n d i n t h e Co d e a n d t h e M OE
ru le. T h e C o d e p ro v id e s, in re lev a n t p a rt:

( c) I n or derforany L E A t o r ece i ve s t at e educ at i on fi nance funds as s et for t h i n t hi s par t , t he s y s t em s hal l m eet t he condi t i ons and r equi r ement s s etout i n s ubdi vi s i ons ( c) ( 1) and ( 2)

. I n o rde r to enfor ce thos e condi t i ons and
r equi r ement s , t he comm issi onerm ay , i n t he comm i s s i oner ' s di s cr et i on, w ith h o ld a p o rtio n o r a ll o f th e sta te e d u c a tio n f

in a n c e f u n d s th a t th e L E A is ot her w i s e el i gi bl e t o r ece i ve. ( 1) N o L E A s hal l us e s tat e funds t o s uppl antt ot al l ocal cur r ent oper at i ng funds , excl ud ing ca p i t al out l ayand debts er vi ce. T hi s s ubdi vi s i on (c )(1 ) sh a ll n o t a p p ly to a n e w lyc re a ted L E A in a n yc o u n tyw h e re th e c o u n ty and ci t ys chool s ar e bei ng combi ned fora per i od of th ree ( 3) y ear s aft ert he
c r e a t i o n o f

t h e L E A. ( 2) ( A ) N ot w i t hs t andi ng anyot herl aw t o t he contr ary , for fisca l y ear 1992- 1993 and anys ubs equentfi s cal y ear , i f s t at e funding t o t he countyfor educa t i on i s l es s t han s t at e fundi ng t o t he countyforeduca t i on dur i ng t he p re v io u s f

isc a l y e a r, ex c e p t th a t a r e d u c tio n in f u n d in g b a se d o n f

e w e r stu d e n ts i n t he countyr at hert han ac tual fundi ng cut s s hal l notbe consi der ed a-11-

red u cti o n in f

u n d ing fo r pu rpo ses o f th is pro v isio n , loca l fu n d s tha t w ere appro p ri at ed and a l l ocat ed t o offs ets t at e fundi ng r educt i ons dur i ng any p rev iou s fisca l y ea r a re ex clud ed fro m this m ainten an ce o f loca l f u n d ing ef

fo rt
re q u ire m e n t. (B ) It is th e in ten t o f

su b d iv isio n (c )(2 )(A ) to a llo w lo c a l g o v e rn m e n ts t he opt i on t o appr opr i at e and al l ocat e funds t o m ake up f ors t at e cut s w i t hout bei ng s ubj ectt o a cont i nuat i on of fundi ng eff or t r equi r ement as t o t hos e funds foranyy eardur i ng w hi ch the s t at e r ei ns t at es t he fundi ng, orr es t or es t he p rev iou s cu ts, an d d u ri n g an ysu b seq u en t y ea r sh o u ld th e st ate fail to restore t he fu nd i ng cuts

.
T enn
. C od e A nn
. § 4 9-3-314 (c) (2009 ). Itfurt her provides:

T he s t at e s hal l pr ovi de seve nt y - fi ve per cent ( 75% ) of t he funds gener at ed by t he Tennes s ee BE P for m ul a i n t he cl as s r oom component s and f ift yper cent (50 % ) i n the n o n cla s s ro o m co m p o n en ts as d ef ined b ythe s tat e b o ard

. E v ery l ocal gover nm ent s hal l appr opr i at e funds suff i ci ent t o fund t he l ocal s har e of t he B E P. N o L E A s hal l comm ence t he fa l l t er m unt i l i t s s har e of t he B E P has been i ncl uded i n t he budget appr oved byt he l ocal l egi s l at i ve body

. Fr om t he l ocal por t i on of s uch r evenue s , t her e sha ll b e a di s t r i but i on of funds for equal i zat i on purposes p u r s uantt o a form ul a adopt ed byt he s t at e boar d, as appr oved byt he comm i s s i oner s of educ at i on and fi nance and admi ni s t r at i on. I ti s t he i nt entof t he gene r al as s emblyt o pr ovi de fundi ng on a fa i rand equi t ab l e b a s i s b yr e c o g n i z i n g t h e d i f f e r e n c e s i n t h e a b i l i t yo f l ocal j uri sdi ct i on s t o rai se l ocal r even ues.
T en n
. C o d e A n n
. § 4 9 -3-3 5 6 (20 0 9 ).

T he M O E rul e con t ai ned i n the A dm i nis t rat i ve C od e st at es: ( 3) R evi ew and V er i fi cat i on ( a) T he budgets ubm i t t ed byeac h s chool s y s t em w i l l be r evi ew ed byt he D e p a rtm ent of E du cat i on t o ensure t hat st at e fun ds are no t being use d to
s uppl ant l ocal funds and t hat eac h s chool s y s t em has appr opr i ated fu n ds
s uf fi c i e ntt o f

un d i t s l oc a l s ha r e of

t he BE P. ( b) R evenue der i ved fr om l ocal s our ces m us t equal orexce ed pr i ory earactual
r evenue s - excl udi ng capi t al out l ay and debt s er vi ce, and adj us t ed fordecl i ne in av era g e d ail ym em b ersh ip (A D M ).-12-

T e n n . C o m p . R . & R e g s . 0 5 2 0 -0 1 -0 2 -.1 3 (3 )( a ) & (b )( 2 0 0 9 ).

A s t he A t t or neyG ener al opi ned i n 2005, t he C i t ycannoteff ect i vel y amend exi s t i ng l aw and l egi s l at e t he M C S out of exi s t ence as a s peci al s chool di s t r i ctbyr educi ng fundi ng. T her e i s not hi ng i n t he M emphi s C har t er or i n t he gener al s t atut or y pr ovi s i ons t o s ugges tt hat t h e Ci t yi s n o to b l i g a t e d t o f u n d t h e M CS o r t h a t t h e Ci t y i s e x e mp t f r o m t h e s t a tu t o r ys c h e me w i t h r esp ec t to the ant i

- s uppl ant i ng pr ovi s i ons ort he M O E rul e. R eadi ng t he ca s e l aw t oget her w i t h t he s t atut es and t he C i t y ’ s char t er , w e bel i eve t he G ener al A s s embl yhas cr eat ed
a sy ste m in M e m p h is w h e re b yb o th S h e lb y C o u n ty a n d th e C ity a re re q u ire d to f u n d th e C ity sch o o ls in c o n f

o rm a n c e w ith th e B E P , the a n ti-su p p lan tin g sta tu tes , an d th e M O E p ro v isio ns.
Hol ding
In lig h t o f

th e f o re g o in g , the ju d g m e n t o f th e tr ia l co u rt is a f f irm e d . C o sts o f

th is appea l ar e t axed t o t he A ppel l ant s , t he C i t yof M emphi s and t he M emphi s C i t yC ounci l , and th e ir s u re ty, f

o r w h ic h e x e c u tio n m a yis s u e if n e c e s s a ry.

_________________________________ DAVI D R

. F AR M E R, J UDGE