Tennessee Department of Education asks for recurring $164 million to raise base student funding, expands summer learning and teacher pay proposals

The Tennessee Department of Education asked the Finance, Ways and Means Committee on March 10, 2025, for several new and recurring investments, led by a $164 million recurring request to raise the Tennessee Investment in Student Achievement (TISA) base funding to $7,295 for fiscal 2025-26 and by separate proposals for teacher bonuses and summer learning supports.

Commissioner Lizette Reynolds presented the department's budget and enumerated cost increases enacted during the special session and included in the department's request: teacher bonuses ($198,400,000), funding tied to the Education Freedom Scholarship Act ($148,600,000), $17,000,000 for "grade A" LEA incentives and $6,200,000 for tourism-zone LEA grants. The commissioner and her budget team also requested recurring funding to raise the minimum teacher salary to $47,000 in 2025-26 (with a statutory target of $50,000 by 2026-27), $27.3 million recurring for summer learning camps and transportation, $10 million recurring for paid parental leave, and smaller recurring and nonrecurring items for programs including advanced placement exam fees, Jobs for Tennessee Graduates, Junior Achievement and special schools salary adjustments.

Why it matters: TISA base increases, teacher minimum-pay proposals and the package of special-session appropriations together would expand the department's recurring obligations and change how state K-12 dollars are distributed to districts and charter schools statewide. Committee members focused on how one-time and recurring revenues are being used, whether funds previously allocated have been spent, and the distribution and local control of incentive dollars.

Major program and funding items described by the department

- TISA request: $164,000,000 recurring to raise the base funding to $7,295 for FY 2025-26 and to continue the phased increase to a $50,000 minimum teacher salary by 2026-27 (the department said the 2025-26 step would be $47,000).

- Special-session and related items (as presented): teacher bonuses ($198,400,000); Education Freedom Scholarship Act funding ($148,600,000); Grade A schools incentive ($17,000,000); tourism zone LEA grant ($6,200,000).

- Summer learning camps and transportation: $27,300,000 recurring; department reported summer learning programs have stabilized around 90,000 students and that attendance in the most recent year rose about 15 percent over the previous year.

- Paid parental leave: $10,000,000 recurring; the department said 1,300 families across 135 districts used the benefit last year.

- Fast-growth fund and infrastructure stipends: $5,000,000 recurring and $20,000,000 nonrecurring to support districts experiencing student growth; the department said it paid out the full $35,000,000 allocated last year but that actual obligations exceeded that amount, producing a prorated distribution; the department reported $8,400,000 in payments so far this year and said about 17 LEAs have received projected fast-growth stipends in 2024-25.

- Charter school equitable facilities fund: $5,000,000 nonrecurring (one-time) to support low-cost facility loans for public charter schools.

Questions from legislators and department responses

- FSAG balance and summer camps: Representative/Chair Hicks asked about FSAG (federal/state grant) spending. CFO Mary Ann Durske said the department had spent about $65 million of $102 million in FSAG funds and that the remaining FSAG funds would be used this summer to fund summer learning camps in lieu of state dollars; she said those FSAG-paid costs would be reimbursed to the department no later than December 2025 and that the summer learning camp FSAG allocation would be exhausted at the end of the summer.

- Summer learning outcomes: The department said students who attended summer learning were less likely to show the typical "summer slide," and that the program has shifted toward an acceleration model with some gains above pre-pandemic achievement trends.

- TANF appeal and funding source: Representative Hicks asked whether the department's $20,000,000 replacement for TANF funds (from the prior year) had been resolved with the federal government. The department said the appeal had not been decided and that the FY26 budget assumes no TANF funding will be available.

- Use and distribution of outcome bonuses: Vice Chair Gillespie asked how outcome bonuses (the carryforward outcomes money) are calculated and distributed. The department said outcome bonuses are tied to sets of criteria at the elementary, middle and high school levels and are paid as a percentage of the base funding amount (typically 10 or 20 percent). The department said last year's outcome bonuses ($82.3 million) were funded from the prior year's carryforward and that those funds are paid to districts, not directly to schools; the department said there are no statutory restrictions on how districts allocate those outcome bonus dollars to individual schools or staff.

- Grade A school incentives and distribution tiers: Assistant Commissioner Jack Powers told lawmakers the special-session $17,000,000 grade-A incentive applies to LEAs where 50 percent or more of eligible schools earned an A in 2023-24. The department said 15 LEAs qualify; the payment schedule is tiered by the number of graded schools in a district (0-5 schools = $500,000; 6-10 = $1,000,000; 11-20 = $2,000,000; 21-30 = $3,000,000; 31+ = $4,000,000). Powers said the appropriation is a one-time payment and that districts may distribute funds internally as they choose.

- Fast-growth funding: Lawmakers asked why the department requested an additional $5,000,000 recurring and $20,000,000 nonrecurring for fast growth given current spending levels. The department said last year's obligations exceeded the $35,000,000 appropriation (actual needs generated over $38,000,000), which forced prorating; the recurring $5,000,000 is intended to reduce the need to prorate, and the $20,000,000 nonrecurring is to allow infrastructure stipends and to offer flexibility (for example, lowering the eligibility threshold) if funds remain after covering first-priority needs.

- Department reversions and unspent funds: Representative Reeves asked about nearly $68,000,000 in departmental reversion for FY23-24. The department described a number of reversion sources, including federal funds (ESSER) being used before state funds, unspent administrative and federal-revenue-offset items, contracted programs (e.g., grow-your-own center, early literacy and virtual programs), career ladder attrition, and state special schools ($4.5 million attributed partly to the gradual spend-down of COVID dollars). The department also acknowledged an internal reporting error that omitted a $2.029 billion figure on carryforward documents and said it was working with fiscal staff to correct that communication (the department said ultimately the practical reversion figure would be about $2,400,000 of standard reversion after corrections).

- Achievement School District (ASD): Lawmakers asked about ASD operations and costs. The department said three schools remain associated with the ASD, one has been taken over by the Charter Commission, and two remain in Memphis/Shelby County; it said it does not plan to place additional schools in the ASD and seeks legislation to revise available options for priority schools so districts may select interventions locally.

Other notable details

- Testing costs: The department said annual TCAP (grades 3-8) costs are roughly $31,000,000 (development, administration, scoring and reporting) and that the high school end-of-course (EOC) assessments cost about $5,000,000 annually.

- Charter commission and textbook commission supplements: The department noted separate supplemental requests for administratively attached entities (Charter Commission and Textbook Commission), and deferred detailed questions to those commissions.

What the department did not decide at the hearing

No formal committee action or vote occurred during this presentation. Legislators asked for follow-up on multiple items including detailed lists of qualifying grade-A schools by district, the exact timing of grade-A and fast-growth payments, district-level breakdowns of outcome bonus distributions and more granular lists showing how carryforward and reversion line items were calculated.

Tapered next steps

Committee members asked the department to provide additional documentation, including district-level lists (grade-A distribution, fast-growth recipients), clarification on TANF appeal status, and corrected carryforward numbers. The department said it would follow up with more detailed, district-level figures and to provide the source documents for questions about reversion and carryforward.