1. BEP Formula OverviewBEP Formula Overview BEP Review CommitteeBEP Review Committee August 13, 2013August 13, 2013

2. BEP Formula BEP Review Committee August 13, 2013 2

3. Basic Education Program (BEP)  Adopted by State Legislature in 1992 as part of the Education Improvement Act (EIA)  In response to small systems lawsuit that claimed former funding formula was inequitable  BEP 2.0 approved in 2007  Determines the funding level required for each school system to provide a common, basic level of service for all students BEP Review Committee August 13, 2013 3

4. Basic Education Program (BEP)  Funding formula, NOT a spending plan  Provides flexibility  Attempts to keep up with increased costs  Formula contains a number of components (45 total) that the Legislature has deemed necessary for schools to succeed BEP Review Committee August 13, 2013 4

5. Basic Education Program (BEP)  Instructional Regular Education Vocational Education Special Education Elementary & Secondary Guidance Elementary Art, Music and Physical Education Elementary & Secondary Librarians ELL Instructors and Translators Principals Elementary and Secondary Assistant Principals System-wide Supervisors (Regular, Special & Vocational Education) Special Education Assessment Personnel Social Workers & Psychologists Staff Benefits & Insurance BEP Review Committee August 13, 2013 5

6. Basic Education Program (BEP)  Classroom K-12 At-risk Class Size Reduction Duty-free Lunch Textbooks Classroom Materials & Supplies Instructional Equipment Classroom Related Travel Vocational Center Transportation Technology Nurses Assistants (Instructional, Special Education & Library) Staff Benefits & Insurance Substitute Teachers Alternative Schools Exit Exams BEP Review Committee August 13, 2013 6

7. Basic Education Program (BEP)  Non-classroom Superintendent System Secretarial Support Technology Coordinators School Secretaries Maintenance & Operations Custodians Non-instructional Equipment Pupil Transportation Staff Benefits & Insurance Capital Outlay BEP Review Committee August 13, 2013 7

8. Basic Education Program (BEP) BEP Review Committee August 13, 2013 8

9. Basic Education Program (BEP)  Two Separate Parts: Funding – Department of Education determines need. Local Ability to Pay or Fiscal Capacity – Fiscal Capacity Indices provided by: » Tennessee Advisory Commission on Intergovernmental Relations (TACIR) » UT Center for Business and Economic Research (CBER) BEP Review Committee August 13, 2013 9

10. Basic Education Program (BEP)  ADMs (average daily membership) drive the Formula – funded on prior year’s ADMs.  ADMs generate: Positions – teachers, supervisors, assistants Funding dollars – ADMs are multiplied by a Unit Cost for supplies, equipment, textbooks, travel, capital outlay, etc.  Funding months and weighting Month 2 – 12.5%Month 6 – 35% Month 3 – 17.5%Month 7 – 35% BEP Review Committee August 13, 2013 10

11. Basic Education Program (BEP) Unit Costs  Equipment, supplies, travel, substitute teachers 3 year average Average is inflated up two years  Textbooks 3 year average Average is inflated up one year  Alternative Schools, Duty Free Lunch, Maintenance & Operations Prior year value is inflated up one year  Capital Outlay Square footage cost obtained from RS Means publication Formula – each ADM generates square footage, multiplied by a cost, then amortized to arrive at a yearly cost Includes architect fees and equipment BEP Review Committee August 13, 2013 11

12. Basic Education Program (BEP)  Cost Differential Factor (CDF) Adjusts BEP funding in LEAs where the cost of living in the county is greater than the statewide average Compares county wages in non-government industries to statewide wages Increase applied to salaries, retirement and FICA contributions Currently 50% of the CDF is applied in the formula BEP Review Committee August 13, 2013 12

13. Basic Education Program (BEP)  Fiscal Capacity TACIR Model (complex multiple-regression model) CBER Model – Based on property and sales tax bases – Model in BEP 2.0  Currently a TACIR/CBER mix is used in BEP calculation (50%/50%) BEP Review Committee August 13, 2013 13

14. Basic Education Program (BEP)  Tennessee Basic Education Program: An Analysis http://www.comptroller1.state.tn.us/orea/ See legislative brief  State Board of Education http://www.tn.gov/sbe/bep.html BEP Handbook – detailed explanation of calculation BEP Blue Book – up to date data on BEP components Recommendations of BEP Review Committee BEP Review Committee August 13, 2013 14

15. Questions? BEP Review Committee August 13, 2013 15