TACIR subcommittee urges state to track virtual‑school residency after finding distortions in fiscal‑capacity model

The Tennessee Advisory Commission on Intergovernmental Relations (TACIR) ad hoc subcommittee on education recommended that the Tennessee Department of Education begin collecting residency information for public virtual‑school students, after staff analysis showed virtual enrollment and other factors can distort county fiscal‑capacity calculations.

TACIR Director (Dr.) Lippert told commissioners the staff memorandum and presentation — developed by analysts Michael Mount and Ismail Tanwe — found that including virtual‑school students in local fiscal‑capacity calculations can boost the calculated fiscal capacity of the hosting county and reduce the calculated capacity of other counties. Staff also reported that decreased residential or farm assessments (for example, from greenbelt classifications) and tourism can both change a county’s fiscal capacity and therefore affect its state funding share under the Tennessee Investment in Student Achievement (TISA) framework.

Why this matters

TACIR’s fiscal‑capacity model helps allocate certain state education resources under TISA; changes in the model’s inputs can shift which counties receive more or less state share. The subcommittee said the current practice — where local counties receive residency reports from virtual schools but the state does not centrally collect residency data — makes it hard to analyze system‑wide effects of virtual programs and potential out‑of‑state enrollments.

What staff presented

Dr. Lippert summarized staff conclusions from the August 28 ad hoc meeting. Key findings in the memorandum included: including virtual students in fiscal‑capacity calculations can increase the fiscal capacity of the county that hosts the virtual school and change other counties’ calculated capacities; changes in residential or farm assessments (for example, from greenbelt rollbacks) can raise or lower a county’s fiscal capacity depending on the model interactions; and tourism‑generated value can raise a county’s calculated capacity and thus reduce its state share under TISA.

Staff told members they found a small number of virtual‑school students whose county records listed an out‑of‑state address — “four or five students” in one virtual school — and that this was initially attributed to reporting glitches (students who remained on vendor rosters after moving). The subcommittee asked staff to analyze whether out‑of‑state students are enrolled in Tennessee virtual schools, whether other states enroll nonresidents in virtual programs, the relative cost of serving virtual versus brick‑and‑mortar students, and how other states treat tourism in school funding formulas.

Action and next steps

Subcommittee members voted unanimously to recommend that the full commission ask the Tennessee Department of Education to begin collecting residency information for virtual‑school students. Dr. Lippert said the full commission will wait to act on that recommendation until staff completes follow‑up analyses requested by the subcommittee and presents them at a subsequent meeting.

Quotes and sources

“Including virtual school students . . . can increase the fiscal capacity of a county that hosts [the] virtual school,” Dr. Lippert said, summarizing staff work by Michael Mount and Ismail Tanwe. He also told commissioners the subcommittee had asked staff to check whether Tennessee virtual schools enroll out‑of‑state students and to compare costs across states.

What was not decided

The full commission did not vote to require residency reporting to the state at this meeting. Staff and the subcommittee plan additional analysis before any final recommendation is put to the full commission.

Context and caveats

TACIR described existing practice as a state Board of Education rule that requires public virtual schools to report residency to the county responsible for the school but not to the state. The memorandum and presentation are posted with TACIR’s meeting materials and the ad hoc meeting video is available on TACIR’s website.

Speakers and attribution

The subcommittee presentation and discussion were summarized on the record by TACIR’s director (Dr. Lippert) and drew on staff presentations by Michael Mount and Ismail Tanwe. The staff memo provided the detailed technical analysis the subcommittee considered.