Special Report


January 04, 2005 1 min read

Tennessee’s school finance system was ruled unconstitutional based on the state’s equal-protection clause in 1993. In anticipation, the state passed the Educational Improvement Act in 1992. The legislation allocates money to districts based on a costing-out formula that is reviewed annually. The formula is divided into three components: instructional positions, classroom materials and supplies, and nonclassroom costs. Those components are funded by state shares of 65 percent, 75 percent, and 50 percent, respectively, although the actual percentage reimbursed varies from district to district, depending on local fiscal capacity. Districts are required to contribute a local share to receive state aid. Although the formula can be categorized as a foundation formula, the amount of money guaranteed to each district varies. Adjustments for some district characteristics are made through the allocation of money for additional instructional positions. For example, 33 percent of a district’s at-risk student population in kindergarten through 3rd grade is double-counted. Additional instructional positions also are generated for special education students, English-language learners, vocational education students, and grade level. Funding is adjusted further for districts with a cost of living higher than the state average. Tennessee does not provide any money through categorical programs.