The Tennessee Attorney General’s office has handed down an opinion stating local school board’s do not have the authority to donate money to non-profit organizations.

In Loudon County this ruling by the office of Attorney General Robert E. Cooper, Jr., could spell trouble for the Loudon County Education Foundation (LCEF). 

During last year’s tense school board budget debates, a $16,000 donation to the Education Foundation was cut from the county school’s budget. Last fall the board voted in favor of reinstating the donation to the foundation. Board members Van Shaver and Lisa Russell, while expressing admiration for the foundation, said they did not think giving money to a nonprofit organization was appropriate when other programs had to be cut from the budget. 

Russell followed up on her objection by contacting the state attorney general’s office and asking if a donations can be made from a school board to non-profit organizations. According to the attorney general’s opinion, school boards do not have the power to donate funds to non-profit organizations. 

The opinion reads, in part, “Tennessee Code Annotated § 49-2-203 defines the powers and duties of local school boards. Local school boards do not have the power to donate from their general fund budget to a 501(c)(3) non-profit organization pursuant to a local school board’s enumerated powers.” The opinion also says, “the Tennessee legislature has expressly provided authority to county and municipal legislative bodies to make charitable contributions under certain conditions. If the Tennessee legislature had intended to provide authority to local school boards to make charitable contributions, it would have expressly provided such authority.”

Susan Fox, chairwoman of the Loudon County Education Foundation sees the opinion as a potential problem. “We are still digesting the information. We do not consider as a board and a foundation that it is a donation. We always considered our relationship with Lenoir City Schools and Loudon County Schools as more of a partnership. We provide services and programs to the students and the teachers,” Fox said.  While she said she can’t speak for the LCEF board she added, “We would like clarification of the opinion.”

Superintendent of Lenoir City Schools Wayne Miller talked about the situation as he was returning from meetings at the state capitol on Thursday. He said this was the first time anyone had questioned the LCEF receiving funds from the schools.

Lenoir City Schools is a separate system from the county, though they also benefit from the Education Foundation.

“I checked on numerous occasions over several years. I’ve always been told it was fine by attorney’s and even at one point by the State Comptroller’s office,” he said. Miller thinks this opinion might not be the last word on the subject. “I’m not so sure that this doesn’t need to be reevaluated because if it strikes a blow to the Education Foundation that we can’t recover from, then we’ve done a real disservice to a lot of students and teachers in the community.”  

Miller said he also feels there can be no objection to the work the foundation does. He cited leadership classes, the scholarship program, the Young Achiever’s banquet and the Teacher’s Resource Center as examples of the foundation’s work. 

“None of those things would be possible, and we can’t sustain them as a school system without their support,” he said adding, “100 percent of the two people who are employed, their time is dedicated to preparing or administering a program.” 

Miller said if a lack of funding leads to the loss of the Education Foundation, there could be other problems such as losing the county’s state designation as a “Three Star Community.” The designation is awarded by the state and is much sought after by the Loudon County Chamber of Commerce.

“The Education Foundation was a key component of Loudon County being classified as a Three Star Community,” Miller said.

“It would be a huge loss of service. Given that the County Commission is contemplating keeping growth money again and in an environment when state money is not growing at all we can’t fill that void,” Miller said adding that “teachers and administrators do themselves a disservice when they are so frugal that people don’t realize they are operating in a financial crisis.” 

Shaver, who said the issue will be discussed at the May 7 school board workshop, has been quoted as saying the foundation should pay back the money they received from the school board but he said he realizes that is not a realistic expectation since he assumes the funds have long been spent.

“I think they should (pay back the money), but they don’t have it so they can’t,” Shaver acknowledged. He said he feels the legal opinion should settle the question for the upcoming budget debate. “There’s no choice we cannot do it,” he said. While Shaver said he feels the school board cannot contribute to the foundation, the organization will get the funds from the county.

“I’m sure they will go to county commission and county commission will give it to them. They’ll get their money from somewhere but legally the schools cannot give money to non-profits, we’ve got that clear and concise now,” Shaver said.

Lenoir City School Board member Rosemary Quillen didn’t mince words in her support of the LCEF. “We could not do without the education foundation. I know what the Education Foundation does for our schools and I know they are struggling like everyone else with money. I feel pulling $16,000 from them will be detrimental to what they do for kids. I know they have a lot of support from businesses and corporations but $16,000 is a big chunk of money. They do wonderful things for kids,” she said citing the groups, the leadership classes, Young Achievers and essay contests as just some of the ways the foundation enriches education in the Lenoir City Schools.   

Russell said until the attorney general issued this opinion, Director of Loudon County Schools Wayne Honeycutt was correct in going with the school board’s attorney’s opinion that the donation was legal.

“At that point no one knew that was the case,” Russell said adding that the recent ruling should put the debate to rest. She also has heard that the county may step into the void to help the foundation out with county funds. 

“I did hear that yesterday, I was informed that Tracy (Blair, Loudon County’s director of accounts and budgets) was looking into that,” she said.

Russell acknowledged the LCEF provides great service to Loudon County and Lenoir City students and teachers.

“I know it’s a wonderful program and I do appreciate all they do but I do not feel it’s up to us to fund them,” she concluded.