(The Center Square) – The Tennessee Advisory Commission on Intergovernmental Relations delayed a vote Thursday that could have required the Tennessee Department of Education to track the residency of virtual school students.
Virtual school students are counted in the county where the school is, not where the student resides, which can skew the state’s funding formula for education.
The Tennessee Investment in Student Achievement funding formula took effect during the 2023-24 school year. The base funding is $7,205 per student for the 2025-26 school year.
The state school funding formula is calculated using base funding, weighted funding, direct funding, and outcomes funding. They way virtual school students are currently counted affects base funding.
Smaller counties with virtual schools, like Union and Johnson counties, could benefit, researchers said.
Union County, with a population of around 21,000, has the largest population of virtual schools, researchers told the commission. But nearly all of the 2,685 virtual students do not live in Union County. Johnson County also has a large percentage of students in virtual schools.
“The effect of including their virtual school students in the fiscal capacity calculations, keeping all else the same, was an increase in state funding for Union and Johnson counties and decrease in state funding for the other 93 counties,” research director Michael Mount said in a presentation to the commission in June.
Dr. Cliff Lippard, executive director of the Tennessee Advisory Commission on Intergovernmental Relations, asked the commission to delay the vote that would require the education department to track virtual school residency. Staff members have additional considerations, he said.
“Members of the subcommittee asked the commission staff for a further analysis regarding whether out-of-state students are enrolled in virtual schools in Tennessee,” Lippard said. “And this request was made because in our initial analysis, we found a handful of students in one virtual school, four or five students that their residency address that we obtained from the county shows their residency as out-of-state. As we said at the subcommittee meeting, we felt as if this was some kind of glitch in reporting and that’s what we are being told.”
The school funding formula also affects counties with large tourism industries. Davidson, home of Nashville, and Sevier County, home to the Smoky Mountains, have larger sales tax bases that increase their fiscal capacity to fund education, which, all else being equal, decreases their state share of funding, researchers said in a report.
The commission also looked at the effect of Greenbelt property assessments on the funding formula. Greenbelt assessments consider the value of the property based on its current use, rather than its highest and best use.
Researchers said “decreasing residential or farm property assessment, for Greenbelt purposes or for any other reason, decreases the county’s property tax base and decreases residential and farm property as a percentage of total assessments. These two effects partially offset each other, and the effect on state funding varies across counties.”
