The Basic Education Program (BEP) is a formula that determines the funding level required for each school
system to provide a common, basic level of service for all students. Adopted in 1992, the formula consists
of 45 components grouped into four categories: instructional salaries and wages, instructional benefits, classroom, and non-classroom. The BEP
does not require district budgets or spending to reflect the specific funding levels of each component;
however, districts are required to meet a few spending requirements:
funds from the instructional salaries category must be spent on teachers’ salaries unless districts meet a specified salary threshold, in which case funds may be spent on salaries or benefits,
funds from the classroom category must be spent on either teachers’ salaries or benefits or classroom needs (funds from the non-classroom category can be spent at the districts’ discretion).
Thus, the BEP is generally termed a funding formula rather than a spending plan.
Total state funding of the BEP for 2016-17 was $4.4 billion. The required local share of BEP funding
in the same year totaled $2.3 billion.
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
Part 1 – Determination of Total Funding
Calculations to determine the funding level of each component are based primarily on average daily student
enrollment, also known as average daily membership, or ADM. The BEP funding formula has been classified
as a unit cost funding model, allocating a set dollar amount per unit. For example, the BEP allocates
the pre-determined unit cost of one teaching position for every 25 students in grades 4-6.
Part 2 – Division between State and Local Shares
Each of the four BEP categories is funded with a different state-local split:
- Instructional Salaries and Wages (e.g., salary unit cost for teaching positions): 70 percent state and 30 percent local
- Instructional Benefits (e.g., health insurance unit cost and retirement contribution percentage for teaching positions): 70 percent state and 30 percent local
- Classroom (unit costs for textbooks, instructional equipment, etc.): 75 percent state and 25 percent
- Non-classroom (unit costs for capital outlay, transportation, etc.): 50 percent state and 50 percent
The state and local shares are calculated on the statewide total funding levels for all districts.
The state’s total funding share for each category is allocated among the districts based on the county’s
ability to pay, known as its fiscal capacity. (A county’s fiscal capacity is determined by a 50/50 blend
of two formulas, one created by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR)
and one created by the University of Tennessee’s Boyd Center for Business and Economic Research (CBER).)
The application of the resulting fiscal capacity determinations (a process known as equalization) can
cause state and local shares of BEP funding to differ from the statewide splits bulleted above. For
example, after fiscal capacity is accounted for, one district’s instructional funding might be 57 percent
state and 43 percent local, while another district’s instructional funding might be 85 percent state
and 15 percent local. Because fiscal capacity is based on a county’s ability to generate local education
revenue, all school districts within a county, including municipal and special school districts, are
assigned the same fiscal capacity.
The local BEP share calculated is the minimum required funding a local jurisdiction must pay in order
to receive the state BEP share. This is commonly referred to as the local match. Most Tennessee jurisdictions
fund their school districts at levels that exceed the required local match.
Changes to the BEP
Revisions made to the BEP in 2007 are generally referred to as BEP 2.0 and were not fully implemented. Changes made to the BEP in 2016 revised some of the former BEP 2.0 goals and replaced them with a mix of current practice and new provisions.
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- average daily membership (ADM)
- Boyd Center for Business and Economic Research (CBER)
- fiscal capacity
- local match
- school district (or LEA)
- Tennessee Advisory Commission on Intergovernmental Relations (TACIR)