A Guide For Policymakers 2016 - 17 | Page 13

Each year , nearly $ 10 billion is spent on public K-12 education in Tennessee . These funds come from three sources : 12.3 percent from the federal government , primarily through Title I ; 47.4 percent from the state ; and 40.3 percent from local governments ( Figure 1 ). 4

Figure 1

The state of Tennessee determines how to allocate funds to its K-12 schools with the Basic Education Program ( BEP ), a key component of the 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 .

Key facts about the BEP :

• The BEP is neither a spending plan nor a budget document ; it is strictly a funding formula . Each school system has flexibility in determining the most appropriate use of state funds to best meet the needs of the local system and the requirements of state laws and regulations .

• The BEP formula calculates the cost of providing a basic education by incorporating 45 different elements , including at risk populations , English language learners , textbook costs , and transportation .

• All state education dollars , from teacher salaries to funding for academic materials , flow through the BEP .

• The BEP appropriates funds for Tennessee ’ s LEAs in 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 .

• Each year , adjustments are made to the base costs of items in the BEP to accommodate for increases resulting from inflation . This is the reason the state budget contains an increase in BEP funding each year regardless of shifts in enrollment . Systems are able to raise additional money to support their schools and most do .

In the 2015 legislative session , Public Chapter 1020 made enhancements to the BEP , including $ 100 million for teacher salaries , $ 30 million to fund the twelfth month of insurance for teachers , $ 15 million for recurring technology funds ( doubling previous investment ), $ 20 million to serve highneeds students , and $ 50 million to address enrollment growth and inflationary costs . This initiative represents the largest education investment without a tax increase in state history .

A GUIDE FOR POLICYMAKERS / 2016-17 | 12