Recapping Tennessee’s historic school finance reform
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Recapping Tennessee’s historic school finance reform

The 2022 reform was a major positive shift in how Tennessee funds public education.

In Oct. 2021, Tennessee Gov. Bill Lee and Education Commissioner Penny Schwinn kicked off a 90-day public engagement process to study and replace the state’s 30-year-old education funding system. Six months later, Gov. Lee signed the Tennessee Investment in Student Achievement (TISA) act into law. 

Before the spring of 2022, 1992 marked the last time Tennessee had implemented a major K-12 education finance overhaul when the state adopted the Basic Education Program (BEP) funding formula. The BEP employed a complex formula with 47 funding components and was a resource-based formula, meaning it mainly allocated education dollars to school districts based on staffing positions and student-teacher ratios.

The TISA reform was a major positive shift in how Tennessee funds public education. Other states considering updating their funding systems should take notice of the legislative process that moved TISA across the finish line.

Tennessee Investment in Student Achievement Timeline

Before the 2021 Tennessee education funding review process started, Gov. Lee’s administration could rely on previously issued annual BEP reports that highlighted the shortcomings of the old formula over the last few decades. Through the years, members of the state’s BEP Review Committee—which produces the annual reports — had separately noted that the formula was outdated and complex.

“It is antiquated,” said BEP Review Committee member Chris Henson to the Tennessean, “The current version of it might be fully funded, but that doesn’t mean it funds everything it should and at the level that it should.”

Decades of tweaks and attempts to update the formula were all rooted in a compliance mindset from the state’s school districts, which relied on updates from state officials to the formula’s staffing and cost assumptions to meet student needs.

When the 90-day review process began in late 2021, the governor sought a new approach to school funding that was student-centered and a funding plan rather than a spending plan for school districts. In his opening press conference about the effort, Gov. Lee said, “K-12 funding is complicated. It’s bureaucratic. Everyone recognizes that our BEP formula is one that few understand, or many do not understand, and many do not like.” 

To meet these challenges, the administration appointed 18 different subcommittees, each focusing on different stakeholder groups including school principals and English learners, to hear thousands of public comments across the state. Their feedback was then relayed to the Funding Review Steering Committee, which used the comments to craft legislation.

Some of the most frequently mentioned items during the feedback period included covering most core staffing needs under an unrestricted base per-student allotment and adopting weights for high-need students such as students with disabilities and low-income students. Additionally, school district leaders and residents wanted assurances that they wouldn’t lose any state funding under the reform and that local taxes wouldn’t increase in the years following any reform. Finally, there were requests for specialized funding outside the core formula, such as direct funding for career and technical education.

In February 2022, Gov. Lee unveiled the Tennessee Investment in Student Achievement plan. The proposal featured a funding pyramid with four tiers:

Source: Tennessee Department of Education

Though imperfect, the TISA proposal was a substantial improvement from the BEP because it was more streamlined, flexible, and student-centered. The administration’s TISA proposal also outlined a procedural plan for the legislation with the goal that a bill would be introduced, evaluated by at least seven legislative committees, voted on by the state House and Senate, and signed by the governor. By the time the bill was signed into law, all these objectives were met. The new formula will take effect in the 2023-2024 school year. 

Key Elements That Helped TISA Pass

Achieving school finance reform is a politically difficult undertaking, as evidenced by the fact that most states utilize school funding formulas that are 15 to 30 years old. Moreover, K-12 education spending typically comprises about a third of any state’s total budget, and it is often the single largest state budget item. 

Because of this, changing how education dollars are allocated involves many stakeholders, such as school professional associations and school district officials—all of which have varied interests and proceed cautiously because they are concerned about losing funds or being treated unfairly by a new formula. Four key elements allowed Tennessee leaders to successfully navigate these challenges and pass the Tennessee Investment in Student Achievement.

1. Vision: As they began the public review of the BEP, Gov. Lee and Commissioner Schwinn set a clear vision for the reform. They highlighted a desire to adopt a more student-centered funding formula and prepared review committees ahead of time. Interestingly, the review committees were largely comprised of nonprofit, community, and business leaders—not just state policymakers. That clarity of direction was also evident when the governor released a funding proposal that was easily understandable and actionable.

2. Time Efficiency: From start to finish, the TISA reform took about six months. According to Education Commissioner Penny Schwinn, that timeline was intentionally short. In one of the first funding review subcommittee meetings, she made this important observation:

“States who have gotten something passed that is productive, (and) actually closer to the idea of what they wanted to accomplish have taken 2-6 months… The longer you draw out a process, the more people get stuck in their ways and are not as flexible. People are not willing to compromise on topics. And we’ve seen states who just kick the can down the road, year after year after year.”

3. Simplicity: While Gov. Lee’s administration was responsive to public comments and testimony offered during the review period, policymakers didn’t use the feedback to add complexities or restrictions to the TISA proposal. Instead, about 95 percent of the proposal’s funds remained in the base student amount and the individual student weights.

4. Transparency: Many school district leaders, advocacy organizations, and other stakeholder groups endorsed the school finance proposal because state leaders released financial projections addressing stakeholders’ most pressing concerns—namely, how school district budgets would be affected and whether local taxes would increase. Groups that endorsed the TISA included the NAACP and the Tennessee Educators of Color Alliance. While some of the details of TISA’s smaller funding streams will be solidified by education department rules during the 2022-2023 school year, school district leaders were not left in the dark to wonder how the reform would affect them.

“People can argue the fine points of TISA forever, but at the end of the day, TISA is a more equitable funding approach and cuts across demographics and circumstance to give each student in our state a better opportunity to succeed than they had under the old formula,” said Tennessee Chamber of Commerce & Industry Senior Advisor Jared Bigham to Chalkbeat. 

There are different pathways states can take to accomplish K-12 finance reform, but Tennessee’s example illustrates how robust public engagement, stakeholder buy-in, and planning can get it done. 

While researchers should continue following TISA’s implementation in the coming years, the new formula is a positive education finance reform because it bases funding on individual students, improves transparency, and gives school districts flexibility to customize budgets based on local needs.

Borrowing from Tennessee’s playbook, policymakers in other states who are considering school finance reforms should start the process early with a unified vision. The funding reform needs to be a central priority for the legislative session and should be supplemented with robust public engagement and reliable financial projections.

Finally, while the legislative timeline doesn’t necessarily have to be as brief as Tennessee’s, state leaders should avoid getting bogged down in analyzing whether the funding formula addresses every possible education need upfront—because ultimately, simple formulas that leave budgeting decisions to local leaders and families are better for students.