What Tennessee’s new education funding formula means for Shelby County school districts

ByElizabeth J. Bohn

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Elizabeth Edkin teaches 3rd grade English and language arts class at Sheffield Elementary School on Tuesday, Oct. 19, 2021.

Elizabeth Edkin teaches 3rd grade English and language arts class at Sheffield Elementary School on Tuesday, Oct. 19, 2021.

A new Tennessee funding formula for K-12 education is projected to generate $139 million more for students in Shelby County school districts, compared to funds generated under the current, 30-year-old formula.

The expected funding bump from the new formula won’t close the gap between what the state calculates students in Shelby County need for education and the higher amount local government spends.

Most Shelby County districts, because of additional local funding to the old formula, already receive funding beyond the amounts they are expected to see from the new formula alone, a Commercial Appeal analysis found.

Of the seven public school districts in the county, Lakeland’s growing school district is the lone district projected to gain more from the new formula alone than it will actually receive to spend toward education in 2023, the last fiscal year of the current formula.

The new formula, called the Tennessee Investment in Student Achievement, or TISA, promises to simplify the way districts are funded by providing money tied to individual students instead of resources a school district needs.

Local governments are still required to maintain education funding at previous levels under TISA, an existing requirement known as maintenance of effort. The law has existed under the current formula, called the Basic Education Program or BEP, and accounts for the regular local funding contributions boosting school district budgets beyond the figures determined by the state formula.

Gov. Bill Lee and Tennessee Education Commissioner Penny Schwinn announced the funding plan in February. The plan faced scrutiny, but ultimately passed as a final act of the Tennessee General Assembly last week.

Shelby County legislators were mixed on the formula, which did not pass on partisan lines. Some of the only Democratic votes of support came from Shelby County representatives, including state Sens. Raumesh Akbari and London Lamar and state Rep. Antonio Parkinson.

Lee signed the new formula into law Monday from his high school alma mater in Franklin.

Tennessee Gov. Bill Lee signs the Tennessee Investment in Student Achievement act, Monday, May 2, 2022 in Franklin, Tenn., in the auditorium of his alma mater, Franklin High School.

Tennessee Gov. Bill Lee signs the Tennessee Investment in Student Achievement act, Monday, May 2, 2022 in Franklin, Tenn., in the auditorium of his alma mater, Franklin High School.

Four Shelby districts receive lower share state funds

While TISA formula generates $1 billion in new education funding for Tennessee students, a new funding ratio means the increase will fall to the state, which will raise its K-12 education contribution from $5.19 billion per year to $6.26 billion.

The total required funding from all local governments across the state will remain the same. Under TISA, the local government contribution as a whole will account for 30% of total funding while the state covers 70%.

All Shelby county school districts will benefit from the TISA funding bump, but most will also get a smaller proportion of state funding under TISA than they did under BEP.

Education funding: How Tennessee’s new education plan is changing the share of the pie for school districts

In this way, Shelby county’s districts reflect what is happening across the state, where nearly two-thirds of school districts, although receiving more in actual dollars, are receiving a lower percentage of state funds than under the previous formula, an analysis by The Tennessean and The Commercial Appeal found.

The Tennessean and The Commercial Appeal conducted its analyses using numbers from the Sycamore Institute, a nonpartisan think tank, that it received from Tennessee Department of Education on March 31.

Memphis-Shelby County Schools will receive a similar share of the total state education funding under the new formula, as will Germantown. Lakeland will receive more. Arlington, Bartlett, Collierville and Millington will get a smaller share of state funding under TISA.

MSCS is funded locally by Shelby County. Municipal districts also receive most of their local funding from county revenues, but receive some funding from their respective municipal governments.

The new state-to-local ratio is key to determining how the proposed formula would shift funding responsibilities. Using a single ratio is a key departure fro
m the BEP, which relies on three different ratios of state and local funding shares depending on what’s being funded.

The single ratio means fewer calculations in the new formula, Schwinn has said. Using the proposed new ratio also lowers the amount of funding local governments contribute.

“The proposed 70/30 split under the TISA proposal simplifies the split calculations and ensures that statewide local contribution is less under the TISA than under the BEP and would remain so in future years,” the Tennessee Department of Education told The Commercial Appeal and The Tennessean.

Shelby top contributor beyond local funding requirement

What is required of local governments to chip into education funding has been a source of debate and controversy in the past and was again at issue as lawmakers considered the passage of TISA.

In a January 2020 report, the Tennessee Advisory Commission on Intergovernmental Relations found that for the 2017-18 school year, local governments paid $1.7 billion beyond the the BEP’s requirements. A similar gap is projected to exist under TISA.

In 2017-18, TACIR found, half of the $1.7 billion was paid by Davidson, Shelby, Williamson and Knox counties.

For many years, TACIR reports have suggested the state recalibrate how it determines what local governments should pay toward the local funding portion of the formula. This measurement, called fiscal capacity, is calculated based on much local counties can afford to pay based on their tax-generating bases.

As recently as December 2020, the authors of the TACIR report again said the state should consider making that calculation at the school district level, rather than at the county level, because of the number of counties in Tennessee that have multiple school systems.

Authors of the report said, “A system-level fiscal capacity model would account for these intra-county differences and essentially eliminate intra-county disparities across school systems.”

A change to a system-level fiscal capacity model would impact counties like Shelby, which has multiple school systems.

Tennessean reporter Adam Friedman contributed to this story.

Laura Testino covers education and children’s issues for the Commercial Appeal. Reach her at [email protected] or 901-512-3763. Find her on Twitter: @LDTestino

This article originally appeared on Memphis Commercial Appeal: What new education funding formula means for MSCS, municipal schools


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