Tennessee's K-12 Funding Model

The Tennessee Investment in Student Achievement Act (TISA) provides Tennessee districts with more customized funding to meet their students' diverse range of needs.

Summary

First implemented in the 2023-24 school year, TISA gives Tennessee districts more tools to meet their students' needs, and it will help districts better anticipate their levels of funding for upcoming years.

Moving forward, K-12 budget leaders should continue to:

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

Out with the Old

Between 1992 and 2022, Tennessee 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.

In the 2023-24 academic year, Tennessee joined 39 other states that partially or fully finance their schools through student-based funding.

In with the New

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

Districts received supplemental funds in the following categories: weighted allocations, direct allocations, outcome bonuses, and enrollment-based adjustments (see table below)*

The state was also able to 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.

The state calculates the amount each district should have based on all components of the formula--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 added adjustments for counties that serve multiple LEAs). The result is the share of the funding the county is responsible for.

What Districts Can Expect

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: multilingual learners’ levels of 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 BEP.

In the first year, however, these districts did not have lower funding—the state made up the full difference. In 2024-25, 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 this FAQ from the Tennessee Alliance for Equity in Education.

Table: TISA Supplemental Funds