Coffee County Board of Education v. City of Tullahoma, 574 S.W.3d 832

Coffee County Board of Education sued the City of Tullahoma alleging the City wrongly retained the education portion of liquor-by-the-drink (LBD) tax proceeds rather than sharing them with the county school fund.
Under pre-July 2014 Tenn. Code Ann. § 57-4-306, the Commissioner distributed 50% of LBD tax to the state (education) and 50% to the local political subdivision; half of that local share "shall be expended and distributed in the same manner as the county property tax for schools is expended and distributed."
Tullahoma has operated its own municipal (city) school system and historically kept half of its local LBD share for its own schools; Coffee County never approved LBD sales county-wide.
Tennessee Attorney General opinions (1980–1983) advised that municipalities with separate school systems could retain the education portion, while municipalities without city schools must remit their share to the county school fund; the Legislature adopted a 1982 proviso reflecting that distinction.
The trial court granted summary judgment for the City; the Court of Appeals (Middle Section) reversed, reading the statute to require pro rata remittal to county schools; other Court of Appeals panels reached the opposite view, creating a split.
The Tennessee Supreme Court granted review and held the pre-July 2014 statute permitted a municipality with its own school system to use the education portion for its city schools without remitting it to the county.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether pre‑July 2014 § 57‑4‑306(a)(2)(A) required a city operating its own schools to distribute the LBD education share pro rata to all county LEAs	County: "same manner as the county property tax" means the city must distribute pro rata among all county LEAs (ADA formula)	City: "same manner" refers to how county property taxes are expended within the city, i.e., for the city’s own school system; municipalities with city schools may keep the funds	Court held for City: statute required municipalities with separate city school systems to expend the LBD education portion for their own schools; no remittance to county required
Whether courts should resolve the meaning from text alone or consider statutory history, AG opinions, and legislative inaction	County: text is unambiguous; interpret statute by its plain language	City: text is indeterminate; historical AG opinions, legislative amendment (1982 proviso), and long practice support City’s reading	Court held that contextual tools (history, AG opinions, legislative inaction, statutory scheme) were appropriate and dispositive in favor of City

City of Chattanooga v. Tennessee Alcoholic Beverage Comm’n, 525 S.W.2d 470 (Tenn. 1975) (background on Tennessee local option and prohibition-era law)
Aetna Cas. & Sur. Co. v. Woods, 565 S.W.2d 861 (Tenn. 1978) (describing scope of LBD Act)
Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (standard for de novo review of summary judgment)
Spires v. Simpson, 539 S.W.3d 134 (Tenn. 2017) (interpretive principles: effectuate legislative intent, consider subject matter and purpose)
Browder v. Morris, 975 S.W.2d 308 (Tenn. 1998) (cardinal rule of statutory construction referenced by the Court)