K-12 School Finance Glossary
LAST UPDATED: JUNE 2022
A
Adequacy An approach to school funding based on the idea that the amount of funding schools receive should be based on some estimate of the cost of achieving the state’s educational goals. It tries to answer two questions: How much money would be enough to achieve those goals and where would it best be spent?1
Ancillary Special Education Direct Services (TISA): See ULN 8 below.
Appropriations: Funds set aside or budgeted by the state or local school district boards for a specific time period and specific purpose. The TN General Assembly and local school boards must vote every year on appropriations.1
Average Daily Attendance (ADA): The average number of students present at a school during the time it is in session. ADA differs from average daily membership, or ADM, which represents how many students are enrolled in school. Because of factors that may result in a student missing school, such as truancy or sick days, ADA results in an overall lower student count than ADM. When per-pupil revenues or expenditures are divided by a district’s ADA, it results in a higher figure than if divided by a district’s ADM.2
Average Daily Membership (ADM): A measure of student enrollment. ADM represents how many students are enrolled in school and is commonly used for per-pupil funding calculations. ADM is also the primary driver of funds generated by the state’s education funding formula, the Basic Education Program (BEP). A district’s ADM generates funding calculated by the BEP formula for a variety of components, including positions, supplies, equipment, and textbooks. ADM is different from average daily attendance (ADA), which calculates the average number of students present at school during the time it is in session. Because of factors that may result in a student missing school, such as truancy or sick days, ADA results in an overall lower student count than ADM.2
B
Base Amount: The minimum guaranteed dollar amount that the state allocates through a student-weighted funding formula to each district per student.3
Baseline Funding Amount (TISA): Based on TISA rulemaking, this is the total amount of education funding that a district receives in the 2022-2023 school year, including school health, family resource, and school safety grant funding. For the first four years that Tennessee transitions to TISA allocations, if a district receives TISA funding that is less than their Baseline Funding Amount, the Department of Education will fund a percentage of the difference to the district.7
Basic Education Program (BEP): A formula that determines the funding level required for each school district to provide a common, basic level of service for all students in Tennessee, but will be phased out for the Tennessee Investment in Student Achievement (TISA) in the 2023-2024 school year. Adopted in 1992, the formula consists of 46 components grouped into four categories: Instructional Salaries and Wages, Instructional Benefits, Classroom, and Non-classroom … Thus, the BEP is generally termed a funding formula rather than a spending plan.Calculations using the BEP formula are performed as a two-step process: (1) determination of total funding levels, and (2) division between state and local shares, with adjustments for local jurisdictions’ ability to pay.2
BEP Review Committee: State law requires the State Board of Education to establish a review committee for the Tennessee K-12 education funding formula, the Basic Education Program (BEP). The committee is directed to meet at least four times a year and regularly review the BEP components. The committee is to provide an annual report on or before November 1 of each year to the Governor, the State Board of Education (SBE), and the education committees of the Senate and the House of Representatives. The report is to include recommendations on needed revisions, additions, and deletions to the formula, as well as an analysis of instructional salary disparity among school districts, including an analysis of disparity in benefits and other compensation among districts. The Tennessee Investment in Student Achievement (TISA) as passed directs the Tennessee State Board of Education to create TISA Review Committee to take over the BEP Review Committee’s role and responsibilities. 2
C
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
D
Direct English as a Second Language (ESL) Services (TISA): Services for English Learners, based on an Individual Learning Plan (ILP), from a teacher with an ESL Endorsement.7 For more information, see Unique Learning Needs (ULN), defined below.
Dyslexia Individual Learning Plan (or “DILP”) (TISA): As indicated in TISA rulemaking, a new learning plan developed by school districts for students with dyslexia that lays out the learning goals, supports, and accommodations that a student might need in the classroom.7 For more information, see Unique Learning Needs (ULN), defined below.
Early Warning System (TISA): As defined in TISA rulemaking, a tool used by high school educator teams to gather data on risk factors and academics, including characteristics of dyslexia, of their high school students.7
E
Economically Disadvantaged Students (TISA): Economically disadvantaged students are identified for multiple purposes, including an additional allocation in TISA/BEP funding for school districts to meet their educational needs. Beginning in the 2016-17 school year, economically disadvantaged students (or “at risk” students) are defined – for purposes of school accountability and TISA/BEP funding – as those who are directly certified for specific state and federal assistance programs, and those who are identified as homeless, migrants, or runaways as well as students in foster care. Students who are directly certified are those whose families are participating in the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) program, or Head Start. The Tennessee Investment in Student Achievement (TISA) as passed will include additional funding for economically disadvantaged students. 2
Note: The Education Trust uses students from low-income backgrounds to identify economically disadvantaged students.
English Learner (TISA): A student without an English-speaking background that qualifies for English as a Second Language Services.7 For more information, see Unique Learning Needs (ULN), defined below.
- Long-Term English Learners (TISA): As defined by TISA rulemaking, English Learners that are in their 7th year of an English as a Second Language program but have not met the program’s exit criteria.7 For more information, see Unique Learning Need 2 (ULN 2).
Expenditure: The dollars actually spent (as opposed to planned) at a school or district. These should consistently be compared to total funding (revenue) and the annual plan for spending (budget).4
F
Fiscal Capacity: A statistical estimate of a county’s relative ability to raise revenue. When applied to the Basic Education Program (BEP) and Tennessee Investment in Student Achievement (TISA), the state’s K-12 education funding formula, fiscal capacity estimates result in the state directing a higher proportion of state funds to districts with less ability to raise local revenue, a process known as equalization.4
Under the BEP, the state funds 70 percent of both instructional components (i.e., instructional salaries and wages, and instructional benefits), 75 percent of classroom components, and 50 percent of non-classroom components on a statewide basis. The level of state funding for individual districts varies considerably, however. For example, a district with higher fiscal capacity has been determined through the BEP formula to possess a greater ability to raise revenue through local sources and may receive state funds of 50 percent for classroom components, while a district with lower fiscal capacity has been determined through the BEP formula to possess less ability to raise local revenues, and as a result may receive state funds of 75 percent for the same classroom components. The Tennessee Investment in Student Achievement (TISA) as passed will use a hybrid model that includes the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) and Boyd Center for Business and Economic Research (CBER) fiscal capacity measures, the same as the BEP, but will use a 70/30 split between the base and weight funding amounts. 2
Flat Weight: A single weight or dollar amount allocated by the state for students or districts that qualify based on certain factors or student needs. Allocations determined by flat weights do not vary based on specific program needs or student characteristics. For example, a state may provide a fixed dollar amount for each student whose family qualifies as low income to help fund additional programs to support the needs of those students as they do under the Basic Education Program (BEP) and Tennessee Investment in Student Achievement (TISA).3
Full-Time Equivalent (FTE): Often misunderstood to mean Full-Time Employees, in school finance FTE stands for Full-Time Equivalent. Regarding the people employed at a district, FTE is the ratio a person works out of the 40 possible hours in a workweek. Someone working 60 hours a week would be 1.5 FTE, and someone working 10 hours a week would be .25 FTE. In reference to higher education, FTE relates to a student’s class load, where full time may be 14 hours of classwork per week and a student enrolled ½ time would be considered .5 FTE.4
G
Grant: The state allocates funds to districts that demonstrate eligibility and/or a need for funding.3
Guaranteed Tax Base: Sometimes referred to as Tax-Levy Equalization or School Finance Equalization, funding levels are determined by a formula that equalizes the taxes paid on the base amount of property within the district. The state provides higher levels of funding to districts with lower-property wealth than to higher property wealth districts.3
H
High-Cost Services Funding: This type of funding is often coupled with other funding distribution methods, and funds can be distributed as grants or reimbursements. For example, a district may be responsible for the cost of special education services up to a certain threshold, but if costs exceed that threshold, a state may provide additional funding to the district.3
High Wage Occupations (TISA): See Career and Technical Program.
Hybrid Model: Hybrid models often combine aspects of foundation formula models, resource allocation models, and various cost factors.3
I
Instructional Components: The state allocates funding based on the cost of resources, such as staffing, classroom supplies, or other educational materials. Funding is sometimes provided for a bundle of resources. Funding for resources is often allocated based on the size of the student population with some references to student characteristics like English learner status.3
In-Demand Occupations (TISA): See Career and Technical Program.
Indirect English as a Second Language (ESL) Services: As defined in TISA rulemaking, English language accommodations and learning materials provided by a general education teacher that meet the expectations of a students’ Individual Learning Plan (ILP).7 For more information, see Unique Learning Needs (ULN) defined below.
Individualized Learning Plan (ILP): As defined in TISA rulemaking, a document outlining the academic goals, supports, and/or accommodations for English learners to access classroom instruction.7 For more information, see Unique Learning Needs (ULN) defined below.
L
Local Match: The required share of total Basic Education Program (BEP) funds that local jurisdictions must allocate to schools in order for each school district to receive its state-funded share of BEP dollars. The Tennessee Department of Education uses the local fiscal capacity formula to calculate a total dollar amount for each public school district, which is then funded on a shared basis between the state and each local jurisdiction that operates a school system (county, municipal, or special school district). The majority of districts are funded by their local jurisdictions at levels above their required BEP/TISA local match.2
M
Maintenance of Effort: These are laws that require local funding bodies to allocate at least the same amount of funding to school districts as was budgeted the previous year for operating expenditures, excluding capital outlay and debt service, unless there is a decline in student enrollment. Maintenance of effort laws ensure that financial contributions by one funding body are used to enhance existing financial support from another. For example, these laws ensure that new or increased state funding provides additional support to schools, and does not result in simply replacing existing local funding, also known as supplanting.2
Multiple Weights: More than one weight or dollar amount can be allocated by the state based on certain factors or student needs. States may vary the amount allocated based on student need. For example, some states vary funding for students learning English as a second language, allocating more funds to students who are less fluent in English.3
O
Outcomes-Based Funding: Also known as performance-based funding. Used primarily in post-secondary policy, outcomes-based funding allocates a portion of a funding formula based on performance-based on specific indicators. Additionally, they may more heavily weigh students from low-income backgrounds, students with disabilities, English learners, and other groups. 5
P
Per-Pupil Expenditures: The dollars a school district spends in one fiscal year divided by the number of students the district is responsible for educating. This differs from per-pupil revenue because districts can contribute and withdraw money from “rainy day” funds (see Fund Balance) so revenues will not always reflect expenditures. The Every Student Succeeds Act requires that districts report per-pupil actual expenditures at the school level broken down by federal and state and local fund sources.4
Per-Pupil Revenue: The dollars a school district receives from all funding sources in one fiscal year divided by the number of students the district is responsible for educating.4
Primary Funding Model: Money provided for general purposes to cover basic costs of education such as teacher salaries and instructional materials.3
R
Reimbursement System: Districts submit receipts of eligible expenditures to the state, and the state reimburses districts for all or a portion of those expenditures.3
Related Services (TISA): See Unique Learning Needs.
Resource-Based Allocation: All districts receive a minimum base amount of resources. Resources could be staffing, services, or programs, and are often based on a ratio of staffing to students like the Basic Education Program (BEP).3
Revenue Sources: Funding for school districts include those from federal, state, and local government funding. In fiscal year 2018-19, Tennessee’s districts overall received 48 percent of current revenues from state funds, primarily through the Basic Education Program (BEP). The state’s BEP funding comes from state sales taxes, and mixed drink and cigarette taxes. Districts received another 41 percent of their revenues from local sources, primarily from property taxes or payments in lieu of property taxes, local option sales taxes, and − for municipal districts − appropriations from city general funds. The remaining 11 percent of districts’ revenue came from federal funding, primarily from grants passed through the state for school breakfast and lunch programs, Title I programs that serve low-income students, and IDEA programs for students with disabilities.2
Rulemaking: Adds definition to existing laws and must be aligned with the existing, passed language. The process may involve multiple government bodies and agencies, including the TN General Assembly, Secretary of State, and more, depending on the law.6
S
Student-Based Budgeting (SBB): A system in which the funding available to a school is based on the overall enrollment of the school. In its simplest form it is an assigned dollar amount allocated per-pupil and multiplied by enrollment to determine a total budget allocation.4
Student-Based Foundation: Districts receive a base amount of funding per student, with additional money or weights added to provide additional supports to students with a higher need. See also Base Amount above.3
T
Teacher or Instructional Unit: Funding is distributed by setting the number, or target number, of teachers or instructional support staff that state funds will support based on a ratio. Teacher or instructional unit funding is often calculated based on the number of students enrolled.3
Tennessee Investment in Student Achievement (TISA): Passed during the 2022 TN General Assesmbly Legislative Session, TISA is a student-weighted funding formula that allocates $6860 base amount to all students and allocates additional funding through weights based on need. For more information, see our TISA Evaluation Tool.
U
Unique Learning Needs (ULN) (TISA): Additional funding through weights for students with disabilities, students identified for gifted and dyslexia characteristics. The Tennessee Department of Education is in the process of organizing these different types of learning needs into ten overarching categories of ULNs, based on the level of resources each learning need will require. Different learning needs receive different weights of funding based on TISA legislation. ULNs have been defined below, as indicated by TISA rulemaking.7
- Related Services (TISA): As indicated in TISA rulemaking, these are services that students with special needs require, related to transportation, developmental, and other supportive services. For example, these can include, among others, speech-language services, interpreting services, physical therapy, or psychological services.7
- Special Education Direct Services (TISA): Services that qualifying special education students receive in general or special education settings by certified or non-certified staff. These services may include speech and language therapy, general instruction teachers collaborating with special education teachers, paraprofessional support in the general education setting, and more.7
Unique Learning Need 1 (ULN 1) (TISA): Receive a 15% weight
- Special Education Consultation Services: These services include less than one hour of Direct Services and less than one hour of Related Services per week, but a minimum of 2 consultation contacts per month between school district personnel related to the students’ needs and a minimum of 3 physical therapy consultations a year between the students’ service provider and school district personnel.7
Unique Learning Need 2 (ULN 2) (TISA): Receive a 20% weight
- Characteristics of Dyslexia: This ULN refers to learning needs related dyslexia that are identified through the universal reading screening process or Early Warning System.7
- English Learner Tier I Services: These are indirect English as a Second Language (ESL) services for English Learners whose parents have waived Direct ESL services, or ESL services for Long-Term English Learners, or the transition supports for English Language Learners who have successfully graduated from the English as a Second Language (ESL) program.7
- Minimal Special Education Direct Services: 1-4 hours of special education Direct and/or Related Services per week that special education students receive, in general or special education settings, from certified or non-certified staff.7
Unique Learning Need 3 (ULN 3) (TISA): Receive a 40% weight
- Limited Special Education Direct Services: 4-9 hours of special education Direct and/or Related Services per week that special education students receive, in general or special education settings, from certified or non-certified staff.7
Unique Learning Need 4 (ULN 4) (TISA): Receive a 60% weight
- English Learner Tier II Services: These are Direct English as a Second Language (ESL) services outlined in students’ Individual Learning Plans (ILPs), including academic and career-readiness support for English Learners in grades 4-12.7
Unique Learning Need 5 (ULN 5) (TISA): Receive a 70% weight
- English Learner Tier III Services: These are Direct English as a Second Language (ESL) services and language-focused supports outlined in Individual Learning Plans (ILPs) for English Learners grades K-3.7
Unique Learning Need 6 (ULN 6) (TISA): Receive a 75% weight
- Moderate Special Education Direct Services: 9-14 hours of special education Direct and/or Related Services per week that special education students receive, in general or special education settings, from certified or non-certified staff.7
Unique Learning Need 7 (ULN 7) (TISA): Receive a 80% weight
- High-Support Special Education Direct Services: 14-23 hours of services per week that special education students receive, in general or special education settings, from certified or non-certified staff.7
Unique Learning Need 8 (ULN 8) (TISA): Receive a 100% weight
- Ancillary Special Education Direct Services: At least 4 hours of services that special education students receive from individuals that are not licensed or certified educators, such as interpreters or instructional assistants.7
Unique Learning Need 9 (ULN 9) (TISA): Receive a 125% weight
- Most Intensive Special Education Support Direct Services: These are 23 or more hours per week of Direct and/or Related Services that students receive in a general or special education setting, or 32.5 or more hours per week of Direct and/or Related Services in a comprehensive development or self-contained setting.7
Unique Learning Need 10 (ULN 10) (TISA): Receive a 150% weight
- Special Education Residential/Homebound/Hospital Services: Direct and Related services provided in a home, hospital, or related site for 3 or more hours a week, or residential services that are provided 24 hours a day.7
W
Weighted Student Funding (WSF): A student-based funding system by which individual students, based on their characteristics (e.g., low income, ELL, or SPED status, or rurality), are given additional funding in the form of a “weight,” suggesting they need a percent of funding over the base level of funding. For example, a low-income student may have a weight of .4, meaning the funding for that student will be 1.4 times the base level of funding.4
Endnotes
- EdSource. (2004). A Glossary of School Finance Terms. https://edsource.org/wp-content/publications/SchFinGlossary04.pdf
- Tennessee Comptroller of the Treasury: Office of Research and Education Accountability. (n.d.). Defining Tennessee Education: A Glossary of Education Terms. Collections. https://comptroller.tn.gov/office-functions/research-and-education-accountability/collections/glossary.html
- Education Commission of the States. (2021). Glossary of K-12 Education Funding. https://www.ecs.org/glossary-of-k-12-education-funding/
- Allovue. (n.d.). Education Finance Glossary. Alloversity. https://blog.allovue.com/alloversity/education-finance-glossary
- Dougherty, K. J., & Vikash, R. (2011). The impacts of state performance funding systems on higher education institutions: Research literature review and policy recommendations. Community College Research Center at Teachers College Columbia University. https://ccrc-tc-columbia-edu.proxy.library.vanderbilt.edu/media/k2/attachments/impacts-state-funding-higher-education.pdf
- Tennessee Secretary of State. (2019). Rulemaking Guidelines. Tennessee Government. https://sos-tn-gov-files.tnsosfiles.com/forms/Rulemaking%20Guidelines_August2019.pdf?izxwLdyjMtzfjfqtOJ40PgJLSBch0vna
- Tennessee Department of Education. (2022). Rules of the Tennessee Department of Education: Chapter 0520-12-05 Tennessee Investment in Student Achievement (TISA). https://www.tn.gov/content/dam/tn/education/legal/TISA_Rules_Final_Draft-6-6-2022.pdf