TASBO Breakout Session Murfreesboro, Tennessee November 16,
2011 Understanding the BEP
Slide 2
History of the BEP 2 1977enactment of Tennessee Foundation
Program funding formula that increased states contribution and used
local property value to determine a countys ability to pay. Late
1980sTennessee Foundation Program (TFP) State Board of Education
began working with various groups to reform education funding TFP
appropriations were around $900 million Weaknesses in the TFP:
Inadequate No adjustment for inflation Targeted formulainflexible
funding Insignificant amount of funding for consideration of local
ability to pay
Slide 3
History of the BEP 3 198877 Small school systems sued the
state, claiming TNs funding formula was inequitable. TN Supreme
Court agreed and ordered the state to develop a plan to correct the
school funding program. 1992passage of the Education Improvement
Act, which implemented a new funding formula, called the Basic
Education Program (BEP). Funding mechanism with components
necessary for funding a basic education No targeted funding.
Funding is flexible: BEP is a funding formula not a spending plan.
Formula considers local ability to pay at a more significant
level.
Slide 4
History of the BEP 4 2007BEP 2.0 passed Largest increase in
state funding for education--$280 million Not fully implemented.
Cost to fully implement-$205 million BEP (Old Model)BEP 2.0
currentBEP 2.0 full implementation $36,515 Salary Unit Cost$38,000
Salary Unit Cost$40,000 Salary Unit Cost 100% TACIR50% TACIR, 50%
CBER100% CBER 100% CDF50% CDFEliminate CDF 38.5% At Risk
Funding100% At Risk Funding 1:45 ELL, 1:450 Translators1:30 ELL,
1:300 Translators1:20 ELL, 1:200 Translators 65% State Share
Instructional 70% State Share Instructional75% State Share
Instructional
FY12 BEP--By the Numbers 6 950,244Total funded ADMs
$3,754,398,000State Cost of BEP 62,370Professional positions
generated $76.75Unit cost for Textbooks $38,700Teacher Salary Unit
Cost 560,000At Risk Students
Slide 7
BEPmany inputs 7 BEP Unit Costs ADMs CDF Fiscal Capacity
Salaries, Retirement, Insurance
Slide 8
How Does the BEP Work? 8 Two Separate Parts: FundingDepartment
of Education determines need. Local Ability to Pay or Fiscal
Capacity Tennessee Advisory Commission on Intergovernmental
Relations (TACIR) and UT Center for Business and Economic Research
(CBER) provide fiscal capacity indices.
Slide 9
Determining Need--ADMs 9 ADMs (average daily membership) drive
the Formula funded on prior years ADMs Regular ADMs, Special Ed
Identified and Served, Vocational WFTEADM Funding months and
weighting Funding months and weighting month 2 - 12.5%month 6 -
35.0% month 2 - 12.5%month 6 - 35.0% month 3 - 17.5%month 7 - 35.0%
month 3 - 17.5%month 7 - 35.0% ADMs generate: ADMs generate:
Positionsteachers, supervisors, assistants Positionsteachers,
supervisors, assistants Funding dollarsADMs are multiplied times a
Unit Cost Funding dollarsADMs are multiplied times a Unit Cost
Supplies, equipment, textbooks, travel, capital outlay, etc.
Supplies, equipment, textbooks, travel, capital outlay, etc.
Slide 10
Unit Costssource and calculation 10 Equipment, supplies,
travel, substitute teachersactual costs from E-reporting. 3 year
average average is inflated up two fiscal years Textbooksprojected
current year cost obtained from Office of Textbook Services 3 year
average average is inflated up one year Alternative Schools, Duty
Free Lunch, Maintenance and Operations Prior year value inflated up
one year Capital Outlay Square footage cost obtained from RS Means
publication Formula each ADM generates square footage, multiply
times cost, include architect fees and equipment. Then amortize to
arrive at yearly cost.
Slide 11
BEP Components by Category (45)
InstructionalClassroomNon-classroom Regular Education Vocational
Education Special Education Elementary Guidance Secondary Guidance
Elementary Art Elementary Music Elementary Physical Education
Elementary Librarians (K-8) Secondary Librarians (9-12) ELL
Instructors ELL Translators Principals Assistant Principals
Elementary Assistant Principals Secondary System-wide Instructional
Supervisors Special Education Supervisors Vocational Education
Supervisors Special Education Assessment Personnel Social Workers
Psychologists Staff Benefits and Insurance K-12 At-risk Class Size
Reduction Duty-free Lunch Textbooks Classroom Materials and
Supplies Instructional Equipment Classroom Related Travel
Vocational Center Transportation Technology Nurses Instructional
Assistants Special Education Assistants Library Assistants Staff
Benefits and Insurance Substitute Teachers Alternative schools Exit
Exams Superintendent System Secretarial Support Technology
Coordinators School Secretaries Maintenance and Operations
Custodians Non-instructional Equipment Pupil Transportation Staff
Benefits and Insurance Capital Outlay
Slide 12
12 Instructional CategoryState Funds 70%
Slide 13
13 Classroom CategoryState Funds 75%
Slide 14
14 Non-Classroom CategoryState Funds 50%
Slide 15
Non-Classroom (continued) 15
Slide 16
16 Per Pupil Own-Source Revenue Per Pupil Equalized Property
Assessment Per Pupil Taxable Sales Per Capita Income Ratio of total
equalized residential and farm assessment in each county divided by
the total equalized property assessment. This variable is intended
as a proxy for a countys potential ability to export taxes. A high
residential/farm ratio indicates a low ability to pass taxes on to
non-residents. Amount of local money that the school systems in the
county report that they spend on education, divided by enrollment
(average daily membership (ADM) Total property assessment for the
county area, equalized by the appropriate county appraisal-to-sales
ratio, and then divided by ADM. This is a measure of the local
ability to raise revenue. Local sales tax base divided by
ADM-measure of the local ability to raise revenue. Per capita
income is included in the fiscal capacity model as a proxy
measurement for ability to pay for education; and for all other
local revenue not accounted for by property or sales taxes. Tax
Burden Service Burden Included as a reflection of spending needs.
It equals average daily membership divided by county population.
The greater the number of pupils per 100 residents, the greater the
fiscal burden for each taxpayer. Fiscal Capacity TACIR Model
Slide 17
CBER Model (New Model) The new formula determines a countys
capacity to raise local revenues for education from its property
and sales tax base. Each countys fiscal capacity is the sum of: The
countys equalized assessed property plus IDBs multiplied by a
statewide average property tax rate for education (1.1583%) The
countys sales tax base multiplied by a statewide sales tax rate for
education (1.5570%) Each countys fiscal capacity index is the ratio
of its fiscal capacity to total statewide fiscal capacity.
Slide 18
CBER Calculation Example Davidson County Equalized Assessed
Property plus IDBs (3-year average): $ 19,130,924,199 Sales Tax
Base (3-year average): $ 10,702,878,267 Fiscal Capacity
=($19,130,924,199 x 1.1583%)+ ($10,702,878,267 x 1.5570%) =
$221,593,495+ $166,643,815 = $388,237,310 = $ 388,237,310
/$2,754,000,000 (state total) Fiscal Capacity Index= 14.10%
Slide 19
Fiscal Capacity Used in FY12 BEP 50% of TACIR Model & 50%
of CBER Model Davidson County Index (TACIR Capacity Index x.50) +
(CBER Capacity Index x.50) 14.50% x.50 + 14.10% x.50 =14.30%
Slide 20
20
Slide 21
21 $ 3,200,000,000 Statewide BEP Instructional Salaries - State
and Local (before fiscal capacity) 30%Statewide Local Required
Match $ 960,000,000 Local Required Dollars for Instructional
Funding $ 280,000,000 BEP-Generated Davidson County Funding Before
Fiscal Capacity 14.30%Davidson County Fiscal Capacity $ 137,280,000
Davidson County Local Share Requirement (rounded) $
142,720,000Amount After Subtracting Local Match 49.0% State
Percentage 51.0% Local Share Percentage $ 870,000,000 Statewide BEP
Classroom Funding - State and Local (before fiscal capacity)
25%Statewide Local Required Match $ 217,500,000Local Required
Dollars for Classroom Funding $ 76,000,000 BEP-Generated Davidson
County Funding Before Fiscal Capacity 14.30%Davidson County Fiscal
Capacity $ 31,103,000Davidson County Local Share Requirement
(rounded) $ 44,897,000Amount After Subtracting Local Match
59.1%State Percentage 40.9%Local Share Percentage $ 1,600,000,000
Statewide BEP Non-Classroom Funding - State and Local (before
fiscal capacity) 50%Statewide Local Required Match $
800,000,000Local Required Dollars for Non-Classroom Funding $
150,000,000BEP-Generated Davidson County Funding Before Fiscal
Capacity 14.30%Davidson County Fiscal Capacity $
114,400,000Davidson County Local Share Requirement (rounded) $
35,600,000Amount After Subtracting Local Match 24.0%State
Percentage 76.0%Local Share Percentage Instructional Funding
Classroom Funding Non-Classroom Funding Total State BEP Funding
$223,217,000 Davidson County BEP Funding Example
Slide 22
22
Slide 23
23 Coffee County BEP Funding Example $ 3,200,000,000 Statewide
BEP Instructional Salaries - State and Local (before fiscal
capacity) 30%Statewide Local Required Match $ 960,000,000Local
Required Dollars for Instructional Funding 0.80%Coffee County Area
Fiscal Capacity $ 7,680,000 Coffee County Area All Schools Local
Share Requirement (rounded) 50%Coffee County Schools Percent of ADM
$ 14,100,000 BEP-Generated Coffee County Schools Funding Before
Fiscal Capacity $ 3,840,000 Coffee County School System Share of
Local Share Requirement $ 10,260,000Amount After Subtracting Local
Match 73% State Percentage 27% Local Share Percentage $ 870,000,000
Statewide BEP Classroom Funding - State and Local (before fiscal
capacity) 25%Statewide Local Required Match $ 217,500,000Local
Required Dollars for Classroom Funding 0.80%Coffee County Area
Fiscal Capacity $ 1,740,000 Coffee County Area All Schools Local
Share Requirement (rounded) 50%Coffee County Schools Percent of ADM
$ 4,000,000 BEP-Generated Coffee County Schools Classroom Funding
Before Fiscal Capacity $ 870,000 Coffee County School System Share
of Local Share Requirement $ 3,130,000Amount After Subtracting
Local Match 22%State Percentage 78%Local Share Percentage
Instructional Funding Classroom Funding Non-Classroom Funding $
1,600,000,000 Statewide BEP Non-Classroom Funding - State and Local
(before fiscal capacity) 50%Statewide Local Required Match $
800,000,000Local Required Dollars for Non-Classroom Funding
0.80%Coffee County Area Fiscal Capacity $ 6,400,000 Coffee County
Area All Schools Local Share Requirement (rounded) 50%Coffee County
Schools Percent of ADM $ 7,700,000 BEP-Generated Coffee County
Schools Non-Classroom Funding Before Fiscal Capacity $ 3,200,000
Coffee County School System Share of Local Share Requirement $
4,500,000Amount After Subtracting Local Match 58%State Percentage
42%Local Share Percentage Non-Classroom Funding Total State BEP
Funding $17,890,000
Slide 24
For further information. 24 Tennessee Basic Education Program:
An Analysis http://www.comptroller1.state.tn.us/orea/ See the
Legislative Brief State Board of Education
http://www.tn.gov/sbe/bep.html BEP Blue Bookup to date data on BEP
components Recommendations of BEP Review Committee
Slide 25
25 Local Funding Requirements and the Basic Education
Program
Slide 26
26 Maintenance of Effort Supplanting test used to insure
maintenance of local effort. Supplanting test used to insure
maintenance of local effort. Governed by: Governed by: TCA
49-2-203; and TCA 49-3-314 TCA 49-2-203; and TCA 49-3-314 Budgeted
local revenue must be equal or greater than the previous years
amount, unless ADMs have decreased. Budgeted local revenue must be
equal or greater than the previous years amount, unless ADMs have
decreased.
Slide 27
27
Slide 28
28 3% Fund Balance Test If budgeted expenditures exceed
revenues, LEA must have 3% of operating expenditures in fund
balance, before budget will be approved. If budgeted expenditures
exceed revenues, LEA must have 3% of operating expenditures in fund
balance, before budget will be approved.
Slide 29
29 TCA 49-3-352(c) Uses of Fund Balance Provisions applicable
after operating budget is adopted. Provisions applicable after
operating budget is adopted. shall be available to offset
shortfalls of budgeted revenues shall be available to meet
unforeseen increases in operating expenses.
Slide 30
30 TCA 49-3-352(c) Uses of Fund Balance The accumulated fund
balance in excess of three percent (3%) of the budgeted annual
operating expenses for the current fiscal year may be budgeted and
expended for any education purposes but must be recommended by the
board of education prior to appropriation by the local legislative
body. The accumulated fund balance in excess of three percent (3%)
of the budgeted annual operating expenses for the current fiscal
year may be budgeted and expended for any education purposes but
must be recommended by the board of education prior to
appropriation by the local legislative body.
Slide 31
31 TCA 49-3-352(c) Uses of Fund Balance In other words, there
is no requirement to have 3% of operating expenses in fund balance
but LEAs cannot use fund balance unless the fund balance exceeds 3%
of operating expenses. If the fund balance is in excess of 3% of
operating expenses, then the excess can be used for any education
purposes, as long as the use is first approved by the board of
education. In other words, there is no requirement to have 3% of
operating expenses in fund balance but LEAs cannot use fund balance
unless the fund balance exceeds 3% of operating expenses. If the
fund balance is in excess of 3% of operating expenses, then the
excess can be used for any education purposes, as long as the use
is first approved by the board of education.