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    Tennessee's Student-Based K-12 Funding Formula

    As a student-based education funding model, TISA will provide TN school districts with more tools to meet their students’ diverse needs.

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    The Tennessee Investment in Student Achievement Act (TISA) will provide Tennessee districts with more customized funding to meet their students’ diverse range of needs. And because TISA is calculated according to a specific set of criteria, districts will be able to anticipate their resource allocations for upcoming years more accurately, which will help their medium- and long-term financial planning.

     

    Out with the Old — Bye, BEP!

     

    Since 1992, Tennessee has relied on a resource-based funding model called the Basic Education Program (BEP), which calculated allotments based on 47 different components. BEP used a district’s average daily student membership, plus the average costs for resources, to calculate the amount of funds that districts would receive to spend on instructional salaries and benefits, as well as classroom and non-classroom resources.

     

    Like many resource-based formulas, BEP was extremely complicated. In addition to calculations based on average daily membership, some of the formula’s 47 components further depended on grade bands, school size, and even square footage for capital outlays and maintenance allocations. In 2015, BEP spurred a multi-district lawsuit purporting state-wide funding inequities. 

     

    On May 2, 2022, Governor Bill Lee signed TISA into law. It presents a much more straightforward model than BEP and gives districts wider latitude in the educational resources they choose to invest in. TISA allocates funding according to student enrollments and characteristics. It is designed to increase funding transparency and give districts more money to support their highest-need students.

     

    Starting in the 2023-24 academic year, Tennessee will join 39 other states that partially or fully finance their schools through student-based funding.

     

     

    In with the New — Welcome, TISA!

     

    • TISA will provide districts a base amount for each student they enroll—$6,860 per pupil for the 2023-24 school year.

    • Districts will receive supplemental funds in the following categories: weighted allocations, direct allocations, outcome bonuses, and enrollment-based adjustments (see Table 1).

    • The state may also award additional grants to Local Education Agencies (LEAs) in distressed or at-risk communities, or where the cost of living is higher than the statewide average. 

    Here are a few things district leaders may want to keep in mind.

     

    • Local Contributions - The state will calculate the amount each district should have based on all components of the formula based on their enrollments, student learning needs, and outcome bonuses. They then take 30% of that amount and adjust for the county’s fiscal capacity to factor in a county’s service burden, ability to pay, and ability to export its tax burden (with additional adjustments for counties that serve multiple LEAs). The result is the share of the funding the county is responsible for.

     

    • Data Requirements - The state will continue to collect extensive student data in order to calculate the amount of funding for each LEA. Determining funding levels requires specific information such as: English language learners’ levels of English proficiency, how many students improved their test scores from “below” or “approaching” to “on target” or “mastered” on both the state ELA and math exams, high schoolers’ ACT scores, career and technical program offerings and enrollments, average daily membership, and more. LEAs are required to certify their data at different points throughout the year. Because some of these requirements use potentially identifiable student-level data, strong security measures for data systems will be crucial.

    • Potential Funding Decreases - Under TISA, some districts may stand to have lower funding than under the BEP. In the first year, these districts will not have lower funding—the state will make up the full difference. In the second year, if the district’s calculated TISA funding is lower than it was under BEP, the state will supply 75% of the difference, 50% in the third year, and 25% in the fourth year. Additionally, TISA stipulates that no district’s education funding will decrease more than 5% from one year to the next. In cases where the TISA formula would lead to a decrease larger than 5%, the state will provide funds to limit the drop in funding to 5% of the prior year’s funding amount.

     

    For more info, check out the state’s FAQ and another FAQ from the Tennessee Alliance for Equity in Education.

     

    Table 1: TISA Supplemental Funds

    Weighted
    • For economically disadvantaged students and/or students with unique learning needs.
    • Calculated according to set percentage weights of the base funding amount.
    • Stackable – a student who has multiple needs (e.g., from a low-income family and learning English) will receive both allocations.
    Direct
    • For students with diverse needs.
    • Given to districts as dollar amounts, not percentages.
    • Intended to support state education goals, such as improving third-grade reading proficiency.
    Outcome Bonuses
    • Designed to reward schools whose students score “on-track” or “mastered” on the TN Comprehensive Assessment Program.
    Enrollment-Based
    • Given to districts that experience substantial increases in their enrollments, have very small enrollments, or serve sparsely populated areas.

     

    TL;DR

     

    TISA will give Tennessee districts more tools to meet their students' needs, and it will help districts better anticipate their levels of funding for upcoming years.

     

    In this current budget season and beyond, we suggest you:

     

    • Make sure data systems are secure and equipped to collect and report the detailed student- and school-level data the state requires for formula calculations.

    • Look ahead to see how your district’s financial picture will change under TISA.

    • Collaborate with and seek input from school-based employees about where to direct supplemental resources.

     


    Discover how Allovue’s products can help your district organize efficiently and effectively during this transition.     Request a Live Demo with our ed finance experts!
    Nell Williams & Sam Moore
    ABOUT THE AUTHOR

    Nell worked as a middle school science teacher for six years before enrolling as a doctoral student in Education Policy at the University of Pennsylvania, where she studies education finance and resource equity. Sam has been a writer, editor, and creator since elementary school. Before joining Allovue in 2023, Sam worked in fundraising at Penn State. She also freelanced for magazines and Comedy Central Digital.

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