The Basic Education Program (BEP): A Look Back at Tennessee's Former School Funding Formula

By Sky Arnold | Published on June 16, 2025

For more than 30 years, the Basic Education Program (BEP) was the engine of K-12 public school funding in Tennessee. Enacted in the early 1990s as part of the Education Improvement Act, this formula determined how billions of state and local dollars were distributed to school districts across the state. In 2023, the BEP was replaced by the student-centered Tennessee Investment in Student Achievement (TISA) Act. Understanding the structure, goals, and eventual limitations of the BEP is essential for grasping why this monumental shift occurred and for appreciating the context of today's education funding debates.

For a comprehensive overview of school funding, visit our main guide: Understanding Tennessee School Funding. To see how the BEP compares to the current system, read: From BEP to TISA: Understanding the Shift in Tennessee's School Funding Approach.

What Was the BEP? A Resource-Based Model

The BEP was primarily a resource-based funding model. This means its main goal was to calculate the funding level required for each school system to provide a common, "basic" level of educational resources and services for all students. Rather than allocating a specific dollar amount per student, the BEP funded schools based on the projected costs of necessary resources, such as teachers, supervisors, textbooks, and transportation.

How the BEP Worked: Key Components and Calculations

The BEP formula was complex, but it was built on several core components, which are detailed in resources like the TSBA's School Finance Notebook:

Three Main Funding Categories

The formula divided funding into three main categories, each with a different state and local cost-sharing split:

• Instructional (70% State / 30% Local): This category included funding for essential instructional staff like teachers and supervisors.
• Classroom (75% State / 25% Local): This covered classroom-level resources such as textbooks, instructional equipment, and supplies.
• Non-Classroom (50% State / 50% Local): This addressed operational needs like capital outlay for buildings and student transportation.

Average Daily Memberships (ADMs)

The formula was driven by a district's Average Daily Memberships (ADMs), a measure of student enrollment, typically from the prior school year. The number of students in a district would generate funding for a certain number of positions and resources based on state-defined ratios.

Fiscal Capacity and Equalization

A central feature of the BEP was its attempt to promote equity through an equalization mechanism based on a district's fiscal capacity. Fiscal capacity is a measure of a local government's ability to raise its own revenue for education, primarily through property and sales taxes. The BEP required districts with a higher fiscal capacity (i.e., wealthier communities) to contribute a larger local share to their education funding, while districts with lower fiscal capacity received a larger share of state aid. This was designed to ensure that students in property-poor districts were not disadvantaged.

BEP 2.0 Revisions

In 2007, the formula was updated through legislation known as BEP 2.0. These revisions were aimed at allocating additional state money for school systems with high numbers of at-risk students and those experiencing rapid growth in their student populations.

Criticisms and Limitations of the BEP

While the BEP was a long-standing system, it faced significant criticism over the years, which ultimately led to the push for a new formula:

• Lack of Transparency: A common and persistent criticism was the BEP's complexity. Its intricate calculations and numerous components made it difficult for the public, parents, and even many officials to understand how funding was distributed.
• Inadequate Focus on Student Needs: As a resource-based model, the BEP was not designed to be highly responsive to the specific, varying needs of individual students. Critics argued that it did not sufficiently fund the higher costs associated with educating students from low-income backgrounds, English Learners, or students with significant disabilities.
• Rigidity: The model of funding based on resource "units" was seen as rigid and difficult to adjust for changing educational practices and student demographics.
• Overall Inadequacy: Perhaps the most significant criticism was that while the formula determined how to split the pie, the pie itself was too small. Many advocates argued that the total amount of funding allocated through the BEP was inadequate, contributing to Tennessee's consistent low national ranking in per-student spending, a topic further explored in our article on funding debates.

Conclusion: The Legacy of a Foundational Formula

The Basic Education Program was a foundational element of Tennessee's public education system for a generation. It established a framework for state and local partnership and included mechanisms aimed at ensuring a degree of equity across the state's diverse districts. However, its perceived shortcomings in transparency, flexibility, and its ability to meet the needs of an evolving student population ultimately paved the way for its replacement. Understanding the history and mechanics of the BEP provides crucial context for why Tennessee chose to embrace a new, student-centered approach with the TISA formula.

To see how the BEP directly compares to the current system, please read our article, From BEP to TISA: Understanding the Shift in Tennessee's School Funding Approach.