Over the past 30 years,
Tennessee
has built one of the most convoluted education funding formulas in the entire nation. The running joke is that eight people claim to know how the formula works and seven of them are known liars. The formula is so complicated that no one (taxpayers, parents, not even school district leaders and principals) understands why each school gets the amount of funding it does.
With such an opaque funding formula, there is no way for parents and taxpayers to hold school and district leaders accountable. As a result of the lack of transparency and accountability, just 53% of the money taxpayers
spend on education
makes its way into the classroom, far less than the national average. No wonder Tennessee schools get abysmal results for the billions we spend each year on education.
Fortunately for children in Tennessee public schools, that’s about to change. Earlier this year, Tennessee Gov. Bill Lee secured the most comprehensive overhaul of the education funding formula in three decades. Under the new Tennessee Investment in Student Achievement, education funding will now be student-centered rather than systems-based.
TISA replaces a funding model that used nearly 50 different components to determine how much schools would receive. Now, there will be just four
buckets of funding.
First, every child in the state will generate a set amount of funding (right at $7,000 a year) as a base amount. Second, children who are more costly to educate, such as those with special needs, English learners, and those belonging to low-income families, will receive additional weighted funding reflecting their individual needs.
On top of this, schools will receive direct grant funds for large one-time expenses such as creating career and technical education programs. And finally, schools will receive outcomes-based funding for the results they get, incentivizing spending in the right areas and rewarding schools that perform well. What once took volumes of books can now be explained in a few pages.
The benefits of this new approach are widespread. First, every parent can easily understand the amount of tax dollars spent on their child. This will help combat rampant misinformation, especially after a recent EdChoice survey found that 81% of parents underestimated how much was spent on their child’s education. When parents are armed with simple transparency, they can and should increase their expectations for the quality of the education their child receives.
In addition to transparency itself driving accountability, TISA provides other accountability mechanisms as well. Schools that fail to meet benchmarks can be investigated and punished for poor spending habits. And, as mentioned, schools that excel will be rewarded with additional funding to invest in what works. Eventually, we will be able to draw a line between how schools and districts are allocating resources and the results that each school gets. This information will be readily available at parents’ and taxpayers’ fingertips.
In exchange for that increased accountability, the new formula empowers school leaders in ways that the old formula never could. Because of its complexity, school leaders had little control over their own budgets. In fact, studies show that nationwide, the average principal only has a say over 8% of his or her budget. To be fair, no one can be expected to get results with such little autonomy. Under Tennessee’s new student-based approach, more money will be driven into schools and classrooms where it belongs, and less will be eaten up by bureaucrats in the central office who never set foot in the classroom.
One of the last benefits of funding students over systems is that it can give parents more choice and children greater opportunities. Now that we know how much each child receives, that funding will more quickly follow that child when he or she switches schools. The time frame for funding to follow the child currently takes many months; this will be reduced to just a couple of weeks.
This is exciting for advocates of
parental choice in education.
If the funding can more quickly and easily follow children to another public school, it should also be able to follow them to any other school of their parents’ choice, whether that be a charter school, a private school, or a virtual school. Thus, a student-centered funding model not only gives parents greater transparency and accountability, but it can truly empower them with more choice.
Student-based education funding is a win-win-win solution. It’s a win for school leaders who can better decide where to spend education dollars to get results, a win for parents and taxpayers who can better understand how that money is spent, and most importantly, a win for children who will get a better education as a result.
Justin Owen is the president & CEO of the Beacon Center of Tennessee, the state’s premier free market think tank. He was appointed by Gov. Bill Lee to lead the Fiscal Responsibility Subcommittee to study and offer recommendations for a new state education funding model.
