The state Senate heavily amended a bill aimed at the ownership and operation of Memphis-Shelby County Schools, particularly in Germantown, but delayed further action.

State Sen. Brian Kelsey, R-Germantown, who is sponsoring the bill, hopes it can be reviewed Tuesday. The twist Monday night, April 11, means new amendments must be adopted by the state House if the Senate passes them later this week. If the two bodies adopt differing versions of the bill, members of the House and Senate will meet in a conference committee to reconcile the differences.

Senate committee passes bill moving ownership of several schools to Germantown

The legislation would codify a 2017 attorney general’s opinion stating one school district cannot operate within the boundaries of another system. Locally, MSCS operates four campuses within suburban district limits: Germantown Elementary, Germantown Middle, Germantown High and Lucy Elementary in Millington. However, state lawmakers have focused on the Germantown schools — sometimes called the 3Gs.

Lucy Elementary ‘part of the equation’ in legislation impacting Germantown schools

The bill aims to force the county system and municipal school leaders into an agreement about the ownership and operation of those schools. Under amendments presented Monday, the first agreement can last only four years and a second agreement cannot exceed eight years. The agreement can be renewed only once and the two can only add up to 12 years.

If no agreement is reached before the beginning of the 2023-24 school year, the schools transfer over to their respective suburban school boards. If the schools are transferred to the municipal districts, payment for the county campuses is also outlined.

Kelsey said the bill originally addressed transferring title but in the spirit of fairness, the payment terms were added.

The payment issue was affected by amendments adopted Monday. When the title is transferred, the municipal district must pay 25% of the fair market value. The rest must be paid in eight annual installments versus 15 as the previous amendment said.

Fair-market value is determined by the average of two separate appraisals, one from MSCS and the other from the Germantown school system.

The bill doesn’t address how the current students will be educated, but Germantown Mayor Mike Palazzolo repeatedly assured legislators the current students may finish their learning at the MSCS schools bearing the Germantown name.

Some worried that Germantown may own the buildings, but charge rent to MSCS. Therefore MSCS would help Germantown pay for the buildings if the suburban district gains ownership in the future. Under the new amendments, rent cannot be charged in the first four years but could be part of a second agreement if both parties consent.

Germantown’s namesake schools: Interpretations of 2013 deal differ

As the bill made its way through necessary reviews, some lawmakers argued passing the law interferes with the Tennessee Constitution as a 2013 federal court settlement forming the municipal schools is considered a contract, according to the state’s legal counsel. The constitution states “no retrospective law, or law impairing the obligations of contracts, shall be made.” 

Last week in the House, the bill brought forward by state Rep. Mark White, R-Memphis, passed nearly on party lines. All Democrats present voted against the bill. State Rep. Bud Hulsey, R-Kingsport, also voted against it. All other Republican representatives voted in favor of the legislation.

State House passes Germantown namesake schools bill

MSCS is expected to pursue litigation, according to its lobbyist Tony Thompson. The district issued a prepared statement throughout the process.

“The ownership and operation of the ‘3Gs’ is a settled issue,” MSCS said in a statement. “The proposed legislation seeks to resurrect all matters stemming from federal court litigation involving the demerger. However, our General Counsel is monitoring the proposed legislation and its potential impact on our District and exploring all legal remedies that may be available regarding the issue.”

State Sen. Ferrell Haile, R-Gallatin, recognized the legal ramifications Monday evening.

“We passed this this year, but I can’t say we felt good about it but I can’t say we were comfortable about it,” he said of the Senate Education Committee. “… In my opinion (court) is where this decision needs to be.”

Germantown Municipal School District said in a statement it is willing to work with the city and county district.

“The Germantown Municipal School District has always been open to working with Memphis-Shelby County Schools, the city of Germantown and our legislators in acquiring the three legacy Germantown Schools.”

Millington Municipal Schools Superintendent Bo Griffin said his district is “on the outside looking in” as it relates to Lucy Elementary.