TISA's Impact: How the New Funding Formula is Affecting Tennessee School Districts

By Sky Arnold | Published on June 16, 2025

The Tennessee Investment in Student Achievement (TISA) Act, which replaced the long-standing Basic Education Program (BEP) in July 2023, marked a monumental shift in how Tennessee funds its K-12 public schools. With its student-based approach, TISA aims to distribute educational resources more equitably and adequately based on individual student needs. Now, with the first year of implementation complete, initial observations and data are beginning to shed light on how this new formula is affecting school districts across the Volunteer State. This article examines the early impacts, ongoing benefits, and persistent challenges districts face under TISA.

For a comprehensive overview of school funding, visit our main guide: Understanding Tennessee School Funding. For a detailed breakdown of the TISA formula itself, see: TISA Explained: A Deep Dive into Tennessee's Student-Based Funding Formula. To understand the transition, read: From BEP to TISA: Understanding the Shift in Tennessee's School Funding Approach.

An Initial Boost: Increased State Funding for All Districts

One of the most immediate and significant impacts of TISA's rollout was an increase in state funding for K-12 education. In its first year (2023-24), the General Assembly invested an additional $1.16 billion of state funding through the TISA formula. According to an evaluation by the Tennessee Comptroller's Office of Research and Education Accountability (OREA), this investment, combined with the design of TISA, resulted in all locally administered school districts receiving more state money in the first year of TISA than they did in the last year of the BEP.

This initial influx of funds was generally well-received. A June 2024 OREA survey, which had a 76% response rate from district directors, found that district leaders were "generally complimentary of the transition from the BEP to TISA, citing improvements such as increased funding and effective communication efforts by the Tennessee Department of Education (TDOE)."

How TISA Aims to Reshape District Funding and Focus

Beyond a general increase, TISA's student-based model is designed to affect districts by channeling resources more strategically:

• Focus on Student Needs: TISA allocates a base amount per student ($6,860 for 2023-24) and then adds "weighted" funding for students with specific needs, such as those who are economically disadvantaged (25% weight), have unique learning needs (15-150% weight), live in concentrated poverty (5% weight), or reside in small or sparse districts (5% weight each). This is intended to provide districts with more resources to support students who traditionally require more intensive educational services.
• Direct Funding for Priority Areas: TISA includes direct state funding (100% state-paid) to support students in five priority areas: K-3 literacy, grade 4 literacy support, career & technical education (CTE), ACT testing for grades 11 and 12, and charter school students. This ensures dedicated resources for key state educational goals.
• Outcomes Funding: The formula also incorporates outcomes-based funding, allocating additional state money to districts that achieve specific student performance targets, such as improvements in third-grade ELA TCAP scores.

Navigating the Transition: Key Provisions Affecting Districts

Several TISA provisions are specifically designed to help districts manage the transition and address unique circumstances:

• "Hold Harmless" Provision: For the first four years of TISA, a "hold harmless" provision cushions the financial impact on districts that might otherwise receive less funding under TISA than their BEP baseline. The state covers a declining percentage of this difference (100% in year one, down to 25% in year four). While some projections suggest few districts may benefit in later years if base funding increases annually, it provides crucial stability during the initial rollout.
• Fast-Growth Stipend: Districts experiencing growth in their total student-generated allocation (for non-virtual schools) exceeding 1.25% compared to the prior year are eligible for a fast-growth stipend.
• Infrastructure Stipend: An additional per-student flat dollar amount is available for districts with Average Daily Membership (ADM) growth in non-virtual schools exceeding 2% from the prior year, aimed at helping with infrastructure needs.

Real-World Impacts: A Look at District Experiences

While the Comptroller's report indicates an overall positive funding start under TISA for all districts, the new formula interacts with complex local realities. For example, Hamilton County Schools, despite TISA, faced major budget challenges for FY25 and FY26 due to local revenues not meeting approved levels and significant increases in operational costs like healthcare. This situation highlights that while TISA provides state funding, local fiscal conditions and rising expenses remain critical factors in district budgeting. The district noted that TISA is the mechanism for state funding, while local allocations are based on property and sales tax revenue, which can create gaps if local revenues fall short or costs escalate unexpectedly.

The TISA formula is also intended to particularly benefit districts with high concentrations of poverty by directing additional weighted funding to them. Reports indicate that approximately two-thirds of Tennessee students attend a school where 40% or more students live in poverty, and these districts are expected to receive a funding bump under TISA.

Ongoing Concerns and the Broader Funding Picture

Despite the initial positive funding news from TISA's first year and its targeted approach, some broader concerns about Tennessee's education funding persist:

• National Rankings: Even with the increased investment through TISA, reports indicate Tennessee continues to rank low nationally in per-student spending (around 44th) and average teacher pay (improving to 38th in 2023-24 but still lagging). Critics argue that TISA, while an improvement in structure, may not provide enough overall funding to significantly lift these rankings or address systemic underfunding.
• Teacher Pay and Shortages: Concerns remain that TISA does not directly or significantly address teacher minimum salaries or the hiring of more teachers to meet actual district needs, which some analyses suggest are underfunded by the state.
• Local Tax Burden: There are ongoing discussions about whether TISA could, over time, lead to an increased local tax burden for some communities if the state's share of funding effectively decreases for certain districts or if overall funding is still perceived as inadequate to meet all needs. State law does require "maintenance of effort" from local communities, preventing them from reducing local funding contributions year-over-year.
• Incentive to "Label" Students: Some lawmakers have expressed concern that a heavily weighted formula might incentivize schools to identify more students for certain categories (like unique learning needs) to receive more funding, rather than focusing on the most appropriate educational supports.

Accountability and the Path Forward

TISA introduces new layers of accountability. School districts are required to submit annual accountability reports to the TDOE, detailing how TISA funds are being used to support student achievement in alignment with the formula's goals. The outcomes-based funding component also ties additional dollars to district performance on specific metrics.

However, the Comptroller's Office noted that while TDOE has met most requirements in TISA law and rule, several items, such as annually convening an Outcomes Review Committee and specific professional development mandates, were either partially incomplete or not yet met in the first year. The report included recommendations for TDOE to address these areas.

Ultimately, evaluating the full effects of TISA on districts' spending decisions and, most importantly, on student achievement will require more years of data and continued analysis.

Conclusion: A System in Transition

TISA's first year has brought an overall increase in state funding to Tennessee school districts, a welcome development for many. The student-based model aims to direct resources more equitably to meet diverse student needs. However, the new formula operates within a larger context of historical funding levels, local economic realities, and ongoing debates about what constitutes truly adequate investment in public education. As districts continue to adapt to TISA, its long-term impact on educational opportunities and outcomes for Tennessee students will remain a critical area for observation and discussion.

The Tennessee Firefly is dedicated to providing ongoing coverage of TISA's implementation and its impact across the state. For more foundational information on school funding, please visit our main guide: Understanding Tennessee School Funding.