Understanding Tennessee School Funding: A Comprehensive Guide

Understanding Tennessee School Funding: A Comprehensive Guide for Citizens

By Sky Arnold | Published on June 16, 2025

Navigating the complexities of how public schools in Tennessee are funded can feel overwhelming. Yet, understanding this system is crucial for parents, educators, taxpayers, and community members who want to ensure every student has the resources they need to succeed. This guide aims to demystify Tennessee's school funding mechanisms, from historical foundations to the current landscape, and explain how these systems impact education across the Volunteer State. Our goal is to provide clear, factual information to help you engage in informed discussions about the future of education in Tennessee.

Where Does the Money Come From? Main Funding Sources

Public education in Tennessee is financed through a combination of funding sources, as outlined in state guidance documents:

  • State Funds: The largest portion of education funding comes from the state budget, appropriated annually by the Tennessee General Assembly. For the 2021-22 school year, for instance, over $5 billion was allocated to public school districts, primarily through the state's funding formula.
  • Local Funds: Local governments (counties and sometimes cities) are required to contribute to education funding, typically through revenues from property taxes, sales taxes, or other local levies. The amount of local contribution is influenced by the state's funding formula and the locality's capacity to raise revenue.
  • Federal Funds: The federal government provides grants to support specific student populations (like economically disadvantaged students or English Learners) or targeted need areas (such as teacher professional development or pandemic relief efforts).

Tennessee's School Funding Formulas: Past and Present

Tennessee has utilized different models over the years to distribute state and local funds to school districts.

The Basic Education Program (BEP): A Longstanding Foundation

For over 30 years, the Basic Education Program (BEP) was the primary funding formula for Tennessee's K-12 public schools. Generally considered a resource-based funding model, the BEP aimed to determine the funding level required for each school system to provide a common, basic level of service for all students, as detailed in primers from organizations like the EdLawCenter.

A core principle of the BEP was to adjust state funding based on a local school district's ability to raise its own revenue, known as "fiscal capacity." This was intended to promote equity, ensuring that districts with lower local wealth received a larger share of state aid. Over time, however, the BEP faced criticism for its complexity and a perceived lack of transparency, which made it difficult for the public to understand how funds were distributed and spent.

The Tennessee Investment in Student Achievement (TISA) Act: The Current Model

Effective July 1, 2023, the Tennessee Investment in Student Achievement (TISA) Act replaced the BEP as the state's primary K-12 education funding formula. TISA represents a shift towards a student-based funding model, designed to direct resources more specifically based on individual student needs. The Tennessee Department of Education (TDOE) provides numerous resources explaining this new approach.

Under TISA, funding follows the student. Each student generates a base funding amount (e.g., $6,860 for the 2023-2024 school year). In addition to the base amount, students can generate additional funding through "weighted allocations" if they have specific needs, such as being economically disadvantaged or having unique learning needs. TISA also includes direct allocations for specific state priorities and allows for potential outcomes-based funding to reward districts for improving student achievement.

Other Significant Funding Streams

Beyond the primary funding formula, Tennessee schools benefit from other sources, which you can learn more about in our guide to other key funding sources:

  • Tennessee Education Lottery Scholarships (HOPE): While primarily for postsecondary education, the lottery system's health impacts overall education discussions and perceptions of state investment.
  • Federal Grants: Programs like ESSER (Elementary and Secondary School Emergency Relief) provided significant, though temporary, funding boosts in response to the COVID-19 pandemic.
  • Education Freedom Scholarship Act: This program, funded in part by revenues from online gaming, provides scholarships for students to attend private schools. You can find official details on the TDOE's EFS Program page.

Key Challenges & Ongoing Debates in Tennessee School Funding

School funding is a perennially debated topic, with several key challenges and ongoing discussions in Tennessee:

  • Funding Adequacy: Is the overall amount of funding sufficient to meet the diverse needs of all students and provide a high-quality education?
  • Equity: Does the funding system ensure that resources are distributed fairly across all school districts, regardless of local wealth or geographic location?
  • Impact of Formula Changes: How do shifts from one funding model to another affect different types of school districts? A Comptroller's report found that while all districts received more state money in TISA's first year, the long-term impacts are still being evaluated.
  • State vs. Federal Roles: Debates sometimes arise over the balance of state and federal responsibilities in funding specific programs, as seen with discussions around summer food benefits.

How Tennesseans Can Get Involved & Find More Information

Understanding school funding is the first step toward advocating for strong public schools. Here’s how you can learn more and make your voice heard:

Dive Deeper Section

Dive Deeper into Tennessee School Funding

Explore these key aspects of how education is funded in our state for a more detailed understanding: