In 2024, the Colorado General Assembly passed an overhaul of the state’s school finance formula. The new formula, which will take effect in the 2025-26 school year, will replace a 30-year-old system. Colorado was not the first state to revamp its education funding formula in recent years, however. Tennessee, for example, replaced its 1992-established Basic Education Program (BEP) with the Tennessee Investment in Student Achievement (TISA) in 2022. The primary change in the formula is a transition from the BEP’s resource-based funding to the TISA’s student-based funding.
Both Colorado and Tennessee simplified outdated, overly complex and confusing formulas and made them more effective and equitable. The previous funding formulas of both states relied on a set of calculations that emphasized school district factors over student needs. In Colorado, this created scenarios where more funding was directed to wealthier districts instead of to districts with greater numbers of students who are at-risk, English Language Learners, or who have special learning needs.
In many states, outdated school funding formulas have added to ongoing academic achievement gaps. Due to the complexity of school finance formulas and the political challenges of changing them, most states revise their systems infrequently, as seen in Tennessee and Colorado, where each state’s previous funding law lasted 30 years.
Colorado
Following recommendations from the Senate Bill 23-287 School Finance Task Force, the updated school finance formula in House Bill 24-1448 adds over $500 million to education funding in the first six years of implementation. The new formula prioritizes student needs by increasing the funding weights for at-risk students, English Language Learners, and students with disabilities. With adequate funding for different student needs, districts can focus on – and be held accountable for – improving academic outcomes.
The new formula also increases school funding for all districts; fixes the “Order of Operations” in the formula to make it simpler, which will make it easier for funding to follow the student; and rebases the Cost-of-Living factor from 1994 to 2021 levels. The bill adjusts the size factor to better target resources to districts with extra challenges due to their size and/or remoteness, which sends roughly $255 million in additional funding to rural and small rural districts.
With an 18-month runway to prepare for the new formula, Colorado lawmakers, officials, stakeholders, and advocates can look to Tennessee for lessons on effective implementation. What follows is a look at Tennessee’s old school funding formula, its replacement, and a look into the successes and challenges the state faced in the first full year of implementation of TISA.
Tennessee
Tennessee’s old school finance formula, the BEP, assessed 45 inputs and resources to determine school funding levels, whereas the new TISA formula uses a student-based approach that provides a standard amount per-pupil and adds funds for students with additional needs and other factors. The BEP had four primary funding categories: instruction, benefits, classroom, and non-classroom. These categories each had their own components specific to the needs of students, teachers, and school administrators, although student enrollment was the main determinant of funds. The BEP may have been a good solution at the time, but it was complex, inequitable, and became insufficient to address the challenges and the needs of students as the years went on.
In 2007, the BEP was revised in order to adjust local capacity funding calculations, teacher pay, and expand funding for English Language Learners. The formula lasted several more years until 2014, when then-Governor Bill Haslam established a task force to review the BEP. Within one year several school districts – both large and small – filed lawsuits asserting that Tennessee had not funded its schools adequately. While further attempts were made by the legislature to revise the BEP, the lawsuits and inadequacy of the formula persisted.
In 2018, a broad coalition of education advocates called for an overhaul of the funding formula, presenting research and polling to garner public support for such a change. When the decision was made in 2021 to move away from the BEP to a new, student-focused funding formula, there were few defenders of the old BEP. There are a variety of reasons for this, but namely, a $1 billion statewide funding increase through the TISA addressed many of the districts’ lingering funding concerns. The state also took on a higher percentage of costs in the new formula which eased districts’ financial burdens. Coupled with buy-in from lawmakers, stakeholders and advocates, the foundation for TISA was formed.
The TISA formula operates with a four-tiered structure. The first is base funding which covers the necessities of every student in the K-12 education system. Second, additional weights are added to account for student-specific needs requiring extra support. Third, direct funding provides dollars to students who need outside-the-classroom support, such as tutoring. And fourth, there are outcomes incentives in the form of bonuses to schools that have students who meet certain academic performance targets.
Implementation
While the TDOE has worked in an ongoing manner to produce resources to support TISA, there remain implementation challenges in communication, capacity-building, accountability, and data systems. A recent report from Bellwether examined the first year of the TISA and found the greatest hurdle so far to TISA’s implementation has been delayed or insufficient communication to school districts and charter schools around the new rules. Effective implementation requires addressing these challenges to ensure that the flexibility and equity of resources leads to better outcomes. Although Colorado has passed its formula overhaul, it will not begin to be phased in until 2025. Thus, Tennessee’s implementation can help provide a roadmap.
Ready Colorado was fortunate to meet recently with experts in Tennessee that worked on TISA and discussed with them its formation and implementation. In the formation stage of the new formula, top priorities included:
- Producing a student-weighted funding formula focused on students with additional learning needs,
- Leveraging a historic state investment of $1 billion in a precise and impactful way, and
- Establishing reporting requirements that strategically link funding and expenditures with student outcomes.
The TISA experts that Ready spoke with provided some recommendations from their experience with TISA’s first-year of implementation that Colorado school districts, stakeholders, and the Colorado Department of Education (CDE) should take note of:
- Clearly define the student weights so that the philosophy of the goal is understood.
- Host ongoing strategic staff training sessions for district and school staff.
Because the TISA brought with it new rules and flexibility for school districts around spending its resources, the Tennessee Department of Education (TDOE) hosted strategic staff training sessions for district and school staff to help them understand the new formula, process, and to better utilize their resources given the funding changes. While the initial training sessions were valuable, ongoing guidance and professional development remain vital.
A district leader said of the guidance and training they had received from the state, “I would describe the guidance and professional development we have gotten as fine, but late. It feels like they are still building the plane as they are flying it, and there are still a lot of unanswered or unclear questions.” The ongoing need for Tennessee state officials to provide additional training on TISA is connected to the budgeting and planning processes of local education agencies (LEAs) and conveying clearly to the local staff how the technical details align with the broader intent of the new formula.
Clear and consistent communication from state officials is essential for school districts and charter schools to understand the technical details of changes to the funding formula, their impact on budgeting practices and processes, and the broader goals of these changes in improving student academic outcomes. While Colorado has clear student weights defined in the new school funding formula, CDE must be vigorously proactive in their communication of the revised weights to districts and school staff, and provide ongoing support as the changes take effect.
A best practice would be sharing out how much each school is receiving based on the formula’s components (e.g. at-risk students, ELL, SPED etc.). That way a school leader can see that they received, for example, an additional $50,000 to support their English language learners, and hopefully direct those resources to supporting those specific students. Presenting this finance data for the next several budget years out also would be helpful for schools to plan for consistent student programming.
The goal of TISA was to make the state’s funding formula simple, equitable, and transparent. In order to move toward a successful outcome, the formula included a funding weight that holds schools accountable based on student achievement and outcomes. Each district is required to present an accountability report to both the public (i.e. local stakeholders) and the TDOE. The annual report requires:
- The district’s objectives for student achievement and their strategy for achieving it;
- A plan that increases third-grade ELA proficiency by 15% over a three year period;
- Linking the district’s budget with its plan to achieve its stated goals; and
- Explain how the previous year’s school budget contributed to achieving the school’s stated academic goals.
Revised accountability standards require data collection, which was another area that TISA sought to overhaul. Updating the data collection systems and methodologies from the BEP resource-based data to the TISA student-based data was a critical piece to changing the formula because of its implications for funding. The TISA requires more detailed data to be collected, so Tennessee created a new, solo data platform called TN PULSE that is a comprehensive data storinghouse. In order for districts and charter schools to successfully update student data into TN PULSE, the TISA legislation requires that TDOE annually publish a comprehensive “TISA Guide” that conveys all levels of administering the formula, data collection and formula calculation processes. Because of the detailed and complex data reporting requirements of TISA, schools had to update their data management systems and ensure that staff were sufficiently trained on the changes and in compliance with the law. This inevitably requires additional and ongoing guidance from TDOE.
Lessons Learned
In Tennessee, like Colorado, reforming the outdated funding system required significant efforts from policymakers and advocates who succeeded due to five critical factors: strong political alignment, a unified set of priorities among advocates, promises of new funding, robust stakeholder engagement, and a focus on evidence-based finance principles. These conditions enabled the passage of the TISA, which represents a major shift in Tennessee’s educational funding, aiming to improve outcomes for all students, especially those with the greatest needs.
As Colorado prepares to chart a new course in education funding, state leaders should look to states like Tennessee that have recently implemented a similar school funding formula overhaul and learn from their efforts. Because Colorado’s new formula will not take effect until the 2025 school year, leaders and stakeholders have ample time to put practices and systems into place to monitor and improve the new formula’s implementation, and to ensure education stakeholders are aware of all the necessary information. Because of the large amount of additional funding over the first six years included in Colorado’s new formula, lawmakers and budget writers likewise must remain steadfast in their duty to uphold the vision of HB24-1448 and ensure that putting students and education in Colorado first is not just a campaign tagline, but reality.
Both Colorado and Tennessee have embarked on major shifts to how they fund education. A departure from the status quo is always a herculean task; it is now up to state leaders and stakeholders to ensure implementation of the formulas receive proper attention so that more students in Colorado and Tennessee receive an excellent education.
Additional Reading
After the Policy Win: First-Year Implementation of Tennessee’s New School Funding Formula
From Antiquated to Equitable: How Tennessee Overhauled Its State School Funding Formula
The Tennessee The Basic Education Program
TISA 101: Student & School District Characteristics that Boost K-12 Funding
Colorado S.B. 23-287 Public School Finance Task Force Report
TN SCORE: Supporting District Leaders To Leverage TISA For Student Success
Special Thanks
To Aleah Guthrie, Peter Tang, and Madeline Price of Tennessee SCORE for being valuable resources in writing this.
