2015-16 Public Education in Tennessee: A Policymaker’s Guide | Page 10

The state of Tennessee determines how to allocate funds
to its K-12 schools with the Basic Education Program (BEP),
which was a key component of Tennessee’s Education
Improvement Act of 1992. This formula was developed as a
result of a legal challenge in which the Tennessee Supreme
Court ruled that significant school funding inequities among
Tennessee’s counties, largely attributable to differences
in local revenue capacity, resulted in an unconstitutional
system. The BEP formula calculates the cost of providing a
basic education by incorporating 45 different components
such as teachers, textbooks, and transportation. The BEP then
appropriates those funds to Tennessee’s LEAs.
The BEP includes three major categories of expenditures:
instructional, classroom, and non-classroom components.
Within the BEP formula, the primary basis for calculating this
funding for each district is student enrollment, or average
daily membership (ADM). Once those calculations are made,
the total BEP costs are split between the state and local
school district based on the county’s “fiscal capacity” – the
ability to raise local revenue. Counties with a small tax base
will have less ability to raise local revenue and thus receive
a greater share in the BEP than a county with a larger tax
base. Statutes dictate that each county must provide a
matching amount of local funds based on the county’s fiscal
capacity in order to receive state BEP dollars