Capital Outlay: Capital outlay refers to expenditures for the acquisition of, or additions to, major fixed assets such as land or buildings. Capital outlay also includes the repayment of debt related to such expenditures. Capital outlay is included in the state’s education funding formula, in the base amount under the Tennessee Investment in Student Achievement (TISA) as passed. 2
Categorical Funds/Aid: Also known as direct funding. States distribute funds based on student characteristics or program needs. Funds may be allocated using grants or reimbursements. For example, a state may provide a funding supplement for a tutoring program.3
Career and Technical (CTE) Program (TISA): A series of courses that prepare students with the academic knowledge, technical skills, and credentials to work in a particular industry. As indicated in TISA, the Tennessee Department of Education organized CTE programs into three levels based on the amount of resources required to support the programs and the wage-earning potential of students participating in the programs. Based on these levels, CTE programs are provided with different funding weights.7
- High Wage Occupations (TISA): As defined in TISA rulemaking, programs will receive a weight if they are designated “high wage occupations,” a factor determining the wage-earning potential of students in the program. High-demand occupations have entry pay that is 20% greater than the median entry state wage, as determined by the Tennessee Department of Labor and Workforce Development.7
- In-Demand Occupations (TISA): As defined in TISA rulemaking, programs will receive an assigned weight based on how in-demand they are, which will help determine the wage-earning potential of students in the program. In-demand occupations have at least 0.04% of the region’s total employment and have a median wage that is at least 80% of the local and state median wage.7
- Wage-Earning Potential (TISA): An indicator based on the calculated weights of In-Demand Occupations and High-Wage Occupations.7 As explained in TISA rulemaking, wage-earning potential is used by the Tennessee Department of Education to assign levels to different CTE programs, determining the additional weighted funding that each program receives.
Census-Based Funding: The state allocates funds to each district based on an assumed level of enrollment, regardless of the district’s actual demographics. This type of funding can be used in foundation formula model funding and resource allocation model funding.3
Cost Differential Factor (CDF) (TISA): Also known as a Cost of Living Adjustment (COLA). The cost differential factor (CDF) is used to adjust salary calculations in the state’s education funding formula, the Basic Education Program (BEP), for school districts in counties where wages in non-governmental sectors are above comparable statewide figures. The CDF was developed based on the idea that school districts in counties with generally higher wages may need to offer higher salaries to attract and retain teachers. Counties with above-average wages receive an increase in funding for salaries and retirement contributions, and counties with average or below-average wages do not receive an increase.
BEP 2.0, passed in 2007, eliminated CDF from the funding formula. Because BEP 2.0 was only partially phased in, however, counties qualifying for a CDF adjustment received 50 percent of the calculated CDF. The 2016 changes to the BEP decreased CDF adjustments to 25 percent, and the appropriations act further reduced CDF to 20 percent in fiscal years 2017-18 and 2018-19, and 16 percent in fiscal year 2019-20. In fiscal year 2019-20, 15 districts were receiving CDF adjustments. The Tennessee Investment in Student Achievement (TISA)as passed will include a CDF similar to the BEP.2