Office Of ReseaRch and educatiOn accOuntability
capital spending fOR lOcal schOOl distRicts
JasOn e. MuMpOweR
Comptroller of the Treasury
May 2022
linda wessOn
Assistant Director
cassie stinsOn
Legislative Research Analyst
Introduction
What are capital expenditures?
Methodology
Types of capital spending
What factors can increase capital spending?
Student enrollment growth
Classroom size limits
Age and quality of school buildings
Cost of building materials and labor
Who pays for capital spending?
Local revenues cover the majority of capital expenditures
State revenues are provided primarily through the BEP and district growth funds
Federal funding options available in the wake of COVID
Strategies and challenges in growing districts
Serving students in crowded schools
Adding school capacity
Keeping up with basic maintenance
Funding and relationships with local governments
Conclusions
Appendices
Table of contents
3
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4
5
8
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12
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16
21
23
24
25
26
26
27
33
3
Introduction
Spending for public school capital projects by both local school districts and their county and city
governments totaled an estimated $2 billion in scal year 2019-20, including all types of capital spending.
e bulk of capital spending on K-12 schools is paid from local revenues, including revenues from bonds and
notes issued by local governments, adequate facilities taxes, and dedicated property taxes. e state supports
capital spending for schools primarily through the state’s share of Basic Education Program (BEP) funding for
several components related to capital needs. State dollars allocated in scal year 2019-20 totaled $503 million
for the BEP’s capital outlay, equipment, and technology components.
Major capital projects can require large, nonrecurring expenditures and are usually considered separately from
schools’ day-to-day spending on instruction, support services, student transportation, and the like. Capital
expenditures, and related debt payments for capital projects, are commonly not included in measures of
education spending per pupil at either the federal or state level due to their nonrecurring nature. For example,
buying land and constructing a new school is generally not an activity repeated every year and does not have
to be budgeted for annually the same way that salaries for teachers and gas for school buses do.
While some capital needs, such as school building additions or new construction, increase with a large or
continuous inux of new students, other capital costs are unrelated to student numbers. For example, a leaking
roof needs repair or replacement regardless of student enrollment numbers. Tennessee’s maintenance of eort
laws, which require local governments to at least maintain education funding at the prior year’s level as a
minimum, also exempt major capital and debt service budgets from consideration in maintenance of eort levels.
is brief reviews the amount and type of capital spending by Tennessee’s local school districts and the
districts’ local government funding bodies. It summarizes the main drivers of capital spending, looking
particularly at enrollment growth, and provides an overview of the methods districts and local governments
use to pay for capital and debt spending.
What are capital expenditures?
In accounting terms, capital expenditures are payments for assets with a useful life longer than one year. For
school districts, capital spending encompasses the construction and renovation of school facilities–the brick
and mortar of school buildings, along with their roofs, plumbing, and heating and cooling systems. Adjacent
facilities such as playgrounds, parking lots, and athletic elds are also part of capital spending for school
districts. Expenditures to purchase land for school facilities, to make any site improvements needed prior
to building, and to cover professional services such as architect fees are included under the capital spending
umbrella as well.
Another category of capital spending encompasses equipment with a useful life of more than one year, such as
desks, chairs, computers, oce and playground equipment, and buses. Such equipment spending may be part
of school districts’ instructional programs, support services, cafeteria operations, or student transportation,
among other school functions.
Often, capital expenditures are categorized by the method for funding them: that is, whether they are paid for
directly out of school district operating funds or from government borrowing through loans or bond issues.
In the latter case, borrowing by local governments provides revenue for school capital project spending and
creates debt that must be repaid in subsequent years. School districts cannot borrow money themselves, as
they are not taxing authorities. Instead, most districts must rely on their local funding body (such as county
commissions and city councils). Special school districts, which do not have a direct local funding body, may
issue debt with the approval of the General Assembly. In most cases, revenues from borrowing can be used
only for capital expenditures. While any debt obligations on behalf of the districts are legally obligations of the
county or city, many districts and local governments make arrangements for districts to share the debt burden.
4
Methodology
is report focuses on major capital spending for buildings and grounds, dened as regular capital outlay and
education capital projects in Exhibit 1, and debt service for related spending in earlier years.
Financial data
In order to get a full picture of capital spending for schools, the Comptroller’s Oce of Research and
Education Accountability (OREA) included not only spending by school districts, but also spending by
local county and city governments on behalf of districts. One source used was the Tennessee Comptroller’s
Transparency and Accountability for Governments (TAG) nancial reporting database, which contains
audited nancial data for 89 county school districts and for their county governments. Account spending
codes allow education-specic spending data by the counties to be easily compiled. For the remaining 52
districts (33 municipal districts, 14 special school districts, and ve county districts not included in TAG),
OREA reviewed districts’ nancial expenditure reports made to the Tennessee Department of Education
(TDOE) and summarized in TDOE’s Annual Statistical Report, and reviewed districts’ and their related local
governments’ nancial audit reports.
A
Because the audit reports do not include data by account codes and
do not necessarily identify capital and debt spending specically for education, total spending calculations
are based on a combination of both the nancial reports districts make to TDOE and the audit reports of
the districts and local governments.
1
As such, total spending is reported as a dollar range, rather than a single
gure. Capital equipment data is an exception; only districts’ nancial reports to TDOE were used, and total
spending is reported as a single dollar gure.
District growth data
In focusing on capital spending triggered by student enrollment growth, OREA identied 35 districts that
had experienced growth of 2 percent or more from school year 2014-15 through school year 2019-20,
encompassing ve year-to-year changes, mostly prior to the coronavirus (COVID-19). Growth gures were
based on districts’ average daily membership (ADM) reported in TDOE’s Annual Statistical Report.
Interviews and reports
OREA reviewed general information about types of revenue sources and methods for funding school capital
costs from a variety of sources including the Comptroller’s Division of Local Government Finance, the
University of Tennessee’s Municipal and County Technical Advisory Service, and the Tennessee Advisory
Commission on Intergovernmental Relations (TACIR). OREA also reviewed TACIR’s annual reports on
public infrastructure needs. OREA interviewed school district ocials in 11 districts, representing all three
Grand Divisions of the state, and all three types of districts (county, municipal, and special).
2
Interviews
included chief nancial ocers and, in some cases, chief operations ocers and directors of schools.
A
e Achievement School district and the State Board of Education district were not included in OREA’s analysis. Both are comprised primarily or wholly of charter
schools, which are not addressed in this report.
5
Types of capital spending
Exhibit 1: All school-related capital and debt spending for Tennessee public
schools | FY 2019-20
Note: Ranges are reported for capital outlay, capital projects, and debt service because for some districts, dierences in how data was reported in the two dierent data
sets used did not allow certain education expenditures to be identied. (See endnote 1 for a more detailed explanation.)
Sources: Districts’ nancial expenditure reports submitted to and compiled by TDOE, Comptroller TAG data, district and local government nancial audit reports.
Debt service
Expenditures by both districts and local governments
in the current year for capital projects that were
nanced in prior years.
Examples: principal and interest payment on year
ve of a 30-year bond
$684.8 - $693.1 million
Capital equipment
Equipment lasting more than one year
used for school instructional, support,
administration and maintenance services.
Examples: student and teacher desks
$ 195.2 million
Regular capital outlay
Expenditures on building structures and grounds,
and related professional services, usually funded
through operating funds.
Examples: security upgrade of a school building
entrance from available funds
$125.6 - $140.9 million
Education capital projects
Expenditures by both school districts and local governments on major equipment,
school building structures and grounds, or related professional services funded
through long-term nancing like bonds or loans.
Examples: construction of a new school building using funds raised through
the sale of bonds by the local government
$928.9 - $1,119.8 million
6
Capital equipment
Capital equipment is used across almost every area of K-12 education. Total spending in 2019-20 for
equipment purchased with districts’ general operating funds was $195,167,722.
3
Almost one-third (31
percent) of that spending was on regular instruction, which could include items like desks and whiteboards
in classrooms, as well as laptops, Wi-Fi hotspots, and other devices used for instruction as classrooms
pivoted to remote learning due to the COVID-19 pandemic. Technology and transportation were the next
largest equipment categories based on 2019-20 statewide spending data, accounting for 16 percent each
of total capital equipment spending. Technology in this category includes infrastructure components to
support districtwide networks, ensuring sucient connectivity, security, sharing, bandwidth, and storage.
Transportation equipment can include oce equipment used in the student transportation program
(computers and desks, for example) as well as buses or other vehicles used for transporting students in districts
that do not contract out their bus service. General operations and maintenance of district buildings and food
service are the other main areas of spending for capital equipment and accounted for another 16 percent of
total capital equipment spending in 2019-20. Any capital equipment nanced through bonds or other debt,
rather than operating funds, is accounted for in the education capital projects category. Equipment needs for
a new school are generally included in the nancing package for building the new school, but districts are
usually replacing some portion of existing equipment in any given year due to normal wear and tear.
Regular capital outlay
Regular capital outlay includes expenditures on buildings and grounds that are not funded through debt.
Such expenditures may include land purchases and improvements; building acquisition, construction, or
improvements; and any related professional services, such as those contracted with architects, engineers,
or consultants. ese expenditures are typically made from districts’ general operating funds. In 2019-20
reporting to TDOE, about 60 percent of district spending in this category was for building construction
and improvements and another 33 percent was for other capital outlay.
4
Spending on contracted professional
services was just under 5 percent and spending on land acquisition and development was about 2 percent.
Education capital projects
Education capital projects can include the same types of
expenditures as reported in regular capital outlay – land
purchases and improvements; building acquisition, construction,
or improvements; and professional contracted services – and
the same types of capital equipment as reported in the capital
equipment category, but education capital projects expenditures
are funded with revenues raised through long-term nancing.
In 2019-20 reporting to TDOE, districts’ education capital
project spending alone (without local government spending) was
primarily for building construction and improvements, about 80
percent of total dollars in this category.
5
Other spending included
professional contracted services (8 percent), capital equipment
(6 percent), land acquisition and development (2 percent), and
other capital outlay (4 percent).
Since school districts cannot borrow, they are dependent on local governments, such as their county commission
or city council, to borrow funds on their behalf. Districts and local governments work out various arrangements
as to how those capital funds are spent and reported. In some cases, the funds will be transferred to the district’s
accounts and will be reported as a school district expenditure. In other cases, the local government may record
the funds in one of its accounts (a general capital funds account or a separate capital education fund account, for
example) and record spending for school capital projects as a local government expenditure.
School districts and their local
governments may both invest in
education capital projects
In one city school district, the school
district is directly funding an addition to
a middle school, while a new elementary
school will be primarily funded by the
local government. The local government
borrowed funds on the district’s behalf
for a new administrative building, and the
district will transfer its funds to the city to
cover debt service over 12 years.
Source: Dec. 2021 interview with district ocials.
7
In the 89 county school districts that are part of the Comptroller’s TAG database, a total of $678,450,066
in education capital projects spending was reported in 2019-20.
6
Of that total, about 56 percent ($378.6
million) were school district expenditures, and the other 44 percent ($299.8 million) were local government
expenditures on school capital projects. Note that beyond this spending on specic education capital projects,
local governments spent an additional $45.9 million in 2019-20 on capital projects that were then donated
to the school districts. ese expenditures might be for general government projects like a road or sewer line
that was on school property. Transferring the project to the school district would incorporate it as part of the
district’s assets going forward.
Another perspective on the involvement of local governments in
education capital projects is gained by comparing all 141 school
districts’ capital project spending reported to TDOE to the
estimated totals OREA calculated for local government spending
on education projects. In 2019-20, districts reported $509.5
million in education capital project spending.
7
Including local
government spending brings that total to between $928.9 million
and $1.1 billion, increasing the districts’ spending gure by 82
percent to 120 percent.
8
Debt service
Debt service is a close cousin of education capital projects.
When funds are borrowed for capital projects, a debt is created
that must be paid back over a number of years. Debt service
expenditures, which include principal and interest payments
plus fees related to issuing the bonds and trustee commissions
if applicable, are paid by districts and/or their local government
funding body for buildings constructed in earlier years. Even if
school districts have no current capital projects, they will likely
have debt service expenditures in a given year for past projects.
While debt obligations are legally only the responsibility of the
local governments that incurred them, the payments on debt
service can come from school districts, their local governments,
or both. Arrangements vary across districts and from one debt
to another within districts as to the level of contributions each
entity (i.e., school district or local government) makes toward a
debt payment. School districts may transfer funds to their local
government for some or all of a particular debt, while other debts
may be paid from a city’s or county’s funds.
In 2019-20, TAG data for 89 counties showed that a total of $487,475,603 was paid for school debt service.
9
Of that total, school districts paid $67.8 million (13.9 percent), while their local governments paid $419.7
million (86.1 percent of total school debt service). Using a dierent data set, districts’ nancial reports to
TDOE show all 141 districts spent a combined total of $266.3 million on debt service in 2019-20.
10
When
local government payments on debt service are added in, the total expenditures are more than double,
increasing by an estimated 157 percent to 160 percent.
11
Charter schools
Unlike traditional public schools, which
are the property of the local board of
education, most charter schools in
Tennessee are responsible for securing
their own facilities and either lease or
own them. Charters may lease available
space from their authorizing district.
The situation diers, however, for
charter schools in the Achievement
School District (ASD). An ASD charter
school does not typically lease or own
their facility, which is a school formerly
operated by the local school district. ASD
charter schools are usually given free
access to the school, though the local
district retains ownership of the school.
Charter schools are funded through a
per pupil allocation of state and local
funds received by the authorizing
district, but local revenues raised from
debt obligations (like bond issues) and
revenues earmarked for the associated
debt service are excluded. In 2017,
the state established a charter school
facilities grant fund to assist charters
in leasing, purchasing, or repaying
capital debt for facilities, which has been
expanded in succeeding years.
Sources: TCA 49-13-112 and state appropriation acts,
2019-2021.
8
What factors can increase capital spending?
Major factors that drive increases in school capital spending include both educational needs, like more
students enrolling in a district or changes in how education is provided, and external factors, like the natural
aging of buildings, changing building standards, and construction costs.
Student enrollment growth
Student enrollment growth of sucient size can create the need for more classrooms or larger core spaces like
cafeterias and gyms. Student enrollment, as measured by average daily membership (ADM), grew in Tennessee
by 1.5 percent during the ve years from 2014-15 through 2019-20.
12
Starting with a baseline of 959,536
ADM in 2014-15, student enrollment increased to 973,632 by 2019-20, with the largest increase – almost
7,400 ADM – coming in the last year of that period. Growth has not been even across all school districts,
however. (See Exhibit 2.) Enrollment grew in about one-third of the state’s 141 county, city, and special school
districts between school years 2014-15 and 2019-20.
B
e other two-thirds of districts experienced enrollment
declines. While a few districts (e.g., Alcoa City and Williamson County school districts) experienced growing
enrollments throughout the entire ve-year period (2014-15 through 2019-20, mostly pre-COVID-19), most
growing districts had some uctuation. (See Appendix A for the ADM growth rates for all Tennessee districts.)
Of the districts with growing enrollment, 35 were determined to have had 2 percent or more growth over ve
years. ese “high growth” districts were most likely to be in Middle Tennessee (43 percent) or to be city or
special school districts (60 percent). Challenges facing high-growth districts are discussed later in this brief.
(See “Strategies and challenges in growing districts.”)
Exhibit 2: Five-year enrollment change in school districts | 2014-15 to 2019-20
Note: Because the map reects enrollment changes over ve years, trends up or down are intensied. us, more districts are shown as having enrollment increases or
decreases exceeding 2 percent. Compare to Exhibit 3, showing enrollment changes over only one year.
Source: OREA mapping of ADM data, reported in Tennessee Department of Education’s Annual Statistical Report, 2014-15 through 2019-20.
e map in Exhibit 3 shows fewer districts with large enrollment increases or decreases since this map
reects only a single year of change, in contrast to the ve-year change shown in Exhibit 2. It is still clear,
however, that some Middle Tennessee county districts, as well as some municipal and special school districts,
experienced strong growth within a single year.
B
Enrollment growth calculated from ADM totals reported in TDOE’s Annual Statistical Report. Enrollment was not weighted by types of students, such as those
taking CTE classes or those with disabilities, or weighted by ADM membership month, as it is for BEP calculations.
Growth Decline
2% or more Between 0.01 and 1.99% Between 0 and 1.99% 2% or more
9
Exhibit 3: One-year enrollment change in school districts | 2018-19 to 2019-20
Classroom size limits
Changes in how education is provided, such as the state limits on the number of students per classroom
teacher, can also trigger increases in capital spending. In Tennessee, the 1992 Education Improvement Act
set new limits on the number of students per classroom teacher, which led to the need for more teachers and
more classrooms.
13
Districts had nine years, until 2001, to achieve compliance with the new standards. ere
have been no changes to classroom size limits in Tennessee since then. Recently, however, the COVID-19
pandemic has generated more attention to class size, both as a physical health concern to maximize space
between people and as an educational concern, especially in lower grades and key subjects, to address lags
in learning that occurred during remote learning periods. A 2021 review of class size limits by the National
Council on Teacher Quality found that, in a sampling of 148 large districts nationwide, class size limits had
not changed much in the previous ve years.
14
e state’s maximum class size limits set for Tennessee districts
were above the average maximum limit of the other districts in the 2021 review, but Tennessee’s average class
size limits – which apply to each grade band within a school – were at, or lower than, other districts’ limits.
C
Age and quality of school buildings
e age and quality of existing school buildings can drive the
need for increased capital spending on a variety of renovations
or even whole building replacements. Upgraded standards for
technology and security systems, health concerns related to
asbestos, mold, or lead in water pipes, and decades of normal
wear and tear on buildings can all impact capital spending.
School buildings typically have a useful life of 30
to 50 years
D
Capital spending on building updates occur throughout
a building’s life cycle as some components need repair or
replacement before an entire building is replaced. Roofs,
heating and ventilation systems, and boilers for hot water are
some common examples of these capital expenditures.
C
Districts may only have to meet maximum class limits, may use average class size to comply with the maximum limits, may be subject to recommended maximums,
or may not have any class limits. Tennessee requires its districts to meet average class size limits across a grade band, although individual classes only need to comply
with the higher maximum limits.
D
e useful life of a school building depends on the quality of building materials, design, construction, and preventive maintenance, among other issues. e state’s
Basic Education Program (BEP) formula uses 40 years as its estimate of a school’s useful life.
A TDOE ocial noted during a meeting
with school and county nance ocials in
Dec. of 2021 that “we have a lot of aging
school buildings in this state,” and that it
costs money to keep them in shape where
students can come into them each day.
• A 2019-20 Shelby County Schools audit
reports the average age of the school
district’s buildings is 50 years old.
• District ocials in Hamilton County
Schools and the Clarksville-
Montgomery County School System
report the average age of their school
buildings is over 40 years old.
Sources: Tennessee Department of Education Local Match
Town Hall (Dec. 2021), Shelby County Board of Education
2020 audit, 2021 interviews with district ocials.
Growth Decline
2% or more Between 0.01 and 1.99% Between 0 and 1.99% 2% or more
10
As buildings age, maintenance tends to become more expensive. Old buildings need major renovations or full
replacement when repairs became more costly and reach a point where they are no longer cost-ecient.
Prompt attention to maintenance can help maximize building life, but when faced with limited resources,
districts are more likely to direct funding to classroom needs and defer maintenance in order to stretch their
resources. e state’s Basic Education Program (BEP) funding for districts reects the priority placed on
classroom spending: state funds from the instructional categories of the BEP calculation can be spent by
districts only on instructional components (primarily educators’ salaries and benets); funds from the BEP
classroom category can be spent on instructional or classroom needs; and funds from the non-classroom
category, which includes school maintenance and operations and capital outlay, can be spent on any district
need. (See more about BEP funding on page 16.)
Natural disasters, such as tornadoes, can also trigger the need for new buildings; two schools in Wilson County
were destroyed and one school in Hamilton County sustained signicant damage from tornadoes in 2020. In
these cases, insurance and disaster funds can cover much of the cost for major repairs or a new building.
Changing building standards can also trigger capital spending on schools
Increased security concerns may require redesigned school entrances to control and monitor people entering
the building, as well as security cameras, locks on classroom doors, and other additions. e federal Americans
with Disabilities Act (ADA), passed in 1990, included requirements for public schools to be more accessible
to persons with disabilities.
15
In 2020, 26 districts reported needed upgrades of $46.6 million to comply with
the ADA.
16
School facility modications to comply with the ADA can include playground upgrades, ramps,
curb cuts, and wider door openings to make entrances more accessible. In 2020, 14 school districts reported
needing to make capital improvements to ensure compliance with State Fire Marshal regulations or local re
codes. One district in 2020 reported needing to make capital improvements to comply with the Tennessee
underground oil storage tank law.
Health concerns about lead in paint, lead in water pipes, and asbestos used in general construction materials
have led to federal and state regulations that can require districts to take corrective or preventive actions,
which may lead to increases in capital spending. For example, in 2020, 19 districts reported $19.4 million of
improvements needed to address asbestos issues in their buildings.
17
Capital spending may also be triggered by
eorts to address air quality in buildings (e.g., mold or poor ventilation) or the safety of gym oor surfaces or
playground surfaces.
Technology upgrades, such as ensuring adequate bandwidth and wireless computing access, may require
capital spending. One district nance director noted that as more instruction depends on student and teacher
internet access, keeping districts’ technology up to date has become a greater need. Purchasing servers, routers,
and backup generators and paying for technology-related renovations in older buildings are other examples of
capital spending.
Inventory of school conditions and needs conducted annually by TACIR
A review of the annual inventory of public infrastructure needs conducted by the Tennessee Advisory
Commission on Intergovernmental Relations (TACIR) shows that the overall condition of all of Tennessee’s
public school buildings declined between July 2015 and July 2020. e percentage of schools in excellent
condition slightly increased over this period, but a decline occurred in the percentage of schools in good
condition. During the same period, schools in fair and poor condition increased.
11
Exhibit 4: Condition of public school buildings | as of July 1, 2015, and July 1, 2020
Note: e condition of existing public school buildings is rated by local school district ocials as part of TACIR’s annual inventory of public infrastructure needs.
For denitions of school conditions, see endnotes.
18
Source: TACIR infrastructure needs reports, 2017 (covering 2015-2020) and 2022 (covering 2020-2025).
As of July 1, 2020, local district ocials indicated that about 92 percent of schools in fair or poor condition
would need renovations to their existing space within the next ve years, at an average cost of $14.1 million
per school. About 58 percent of schools in good or excellent condition were projected to need improvements
to existing space within the same period, at an average cost of $3 million per school.
19
TACIR’s annual inventories collect estimated costs of new school space needed (either additions to existing
buildings or new schools) and costs of needed improvements to existing schools (including renovations,
whole-building replacements, technology infrastructure, and mandated facility upgrades).
E
e graph in
Exhibit 5 shows that the estimated costs for renovations have exceeded costs for new school space in recent
years. “School systems with growing enrollment face the challenge of providing enough space for students,
while other school systems need to renovate or replace their schools because of age, condition, or issues
concerning school restructuring or consolidation, all while costs increase.”
20
e estimated costs for school capital projects are a function of both the number and types of projects, as well
as construction costs. For example, in the 2015 inventory, TACIR reported that the need for new school space
was the main factor in increases for K-12 school projects. e 2016 and 2017 inventories cited increased need
for renovations, new space for enrollment growth, and rising construction material costs as the key drivers
behind increased estimates. Renovation increases in the 2018 report were driven primarily by a large increase
for Metro Nashville Public Schools after a change in design guidelines, education specications, and better
estimating practices, as well as the district’s building conditions and rising construction costs.
Rising costs of construction materials and labor continued to be a driving factor in the most recent renovation
cost estimates. e estimated costs for new schools or additions have declined somewhat from their peak
in 2017, in part due to completions of 33 new schools from 2017 to 2020. e 2019 estimated costs for
improvements to existing schools showed a slight decline for the rst time in several years but rose again in the
2020 estimate. While in 2010 the average cost of a completed new school in Tennessee was $18 million, the
average completed cost of new schools in 2020 was $31 million per school.
21
Combining the TACIR infrastructure needs data with OREA’s map of districts’ one-year enrollment growth
provides a fuller picture of how capital needs interact with student growth trends in districts. (See the
interactive map of capital needs and student growth on the OREA website.)
E
A whole school replacement occurs when an existing building—due to age and condition—is replaced with a new building, but the number of schools does not
increase. A new school means an additional building is added to the district’s inventory. Mandated facility upgrades include state or federal requirements that aect
the cost of capital projects and include those related to the Americans with Disabilities Act, asbestos, lead, and underground storage tanks.
Excellent
37.8%
Excellent
38%
Good
54.1%
Good
51.3%
Poor
0.3%
Fair
7.8%
Fair
9.8%
Poor
0.9%
2015 2020
12
Exhibit 5: TACIR Infrastructure Inventory: estimated costs of new school
space needed versus existing school improvements needed and student
enrollment growth | Inventory years 2010 – 2020
Notes: (a) New space and new school space includes new schools and additions to existing buildings. Improvements to existing school space are renovations to
existing buildings that do not add space for more students.
(b) Each inventory year, school ocials project school facility infrastructure needs and estimated costs for the next ve years. In the 2020 inventory year,
for example, projected school improvements to existing space were estimated at $5.3 billion through 2025; projected new schools and additions to existing
schools were estimated at $3.2 billion through 2025.
Source: Tennessee Advisory Commission on Intergovernmental Relations, Building Tennessee’s Tomorrow: Anticipating the State’s Infrastructure Needs, July 2020 through
June 2025, January 2022.
Cost of building materials and labor
Even if the number and size of school construction projects has not increased, capital spending can rise due
to increases in building materials and labor costs, especially during periods when rising construction costs
outpace cost increases in other sectors of the economy. e challenge of increasing costs can be compounded
in areas experiencing growth and more demand. In interviews with local nance ocials in high-growth
school districts during fall 2021, OREA found that some of those districts were struggling to buy land and
contract for new construction given rapidly rising construction costs.
Who pays for capital spending?
Local revenues cover the majority of capital expenditures
Historically and nationally, the funding of school capital improvements, renovations, or new building projects
has been a local responsibility. is holds true in Tennessee as well. Local funding sources pay for the largest
share of capital costs, using either district or local government regular operational funds or, more commonly,
the borrowed revenues raised by local governments from issuing bonds or notes or qualifying for a loan.
State funds that can be used for capital or debt expenditures includes revenues allocated to school districts
by the BEP formula and extra funding appropriated for fast-growing districts. Newly available federal
COVID-19 relief funds have provided districts with a large, one-time infusion of federal funds, some of which
can also be used for capital projects.
Cost in millions
Inventory year
New space Existing space Students
Students
10 11 12 13 14 15 16 17 18 19 20
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
13
Bonds and notes
One of the most common methods to fund school
capital projects is for local governments to issue bonds.
General obligation bonds, a type of long-term borrowing
with repayment periods of 20 years or more, are issued
by school district funding bodies (local county or city
governments) rather than school districts themselves
because only taxing authorities can create debt obligations.
Special school districts may issue bonds with the approval
of the General Assembly, which gives its approval
through passing amendments to the private acts of the
local government. Bonds can be issued for a variety of
school capital projects, including purchasing property,
constructing or repairing buildings, furnishing and
equipping those buildings, and purchasing buses or other
major equipment.
Counties can issue bonds for school projects by a majority
vote of the county commission and state law does not
require a voter referendum.
22
Cities can issue initial bond resolutions for school projects
that are then subject to a voter petition.
23
If enough voters
petition, the city must hold a referendum and receive
majority voter approval to issue the bond. e referendum
requirement for school bonds appears to have been
implemented very rarely in the past decade.
Special school districts are unique in that their taxing
authority and debt issuance must be approved by the state
legislature since they do not have another funding body.
Special school districts, like counties, can issue bonds
without a voter referendum.
For smaller or short-term projects, local governments may issue notes, a form of short-term borrowing, typically
repaid in one year or less. Bond anticipation notes may be used to generate funds to pay for the construction or
acquisition phase of a building project. Once a project is nished, long-term bonds are issued, with the bond
proceeds used to pay o the bond anticipation notes. Capital outlay notes are an intermediate-term form of
borrowing, which can have a pay-o period as long as 12 years. Similar to other notes, they may be used to
fund the construction phase of a building project or to purchase smaller assets, such as vehicles or equipment.
Revenues raised through bonds or notes may be held and spent by the local funding body or transferred to the
school board to be applied toward approved capital projects. Local governments may issue bonds earmarked
for schools or for a specic school construction project, or they may issue more general bonds to cover
multiple local projects, including school-related projects.
As the issuers of bonds or notes, counties and cities are legally liable for debt issued on behalf of school
districts, but districts often contribute a portion of their operating funds to either partially or fully pay back
the debt incurred (referred to as debt service). Counties and cities, as the districts’ funding bodies, can provide
funds outside of dedicated education tax revenues to help pay school debt. Counties and cities vary in how
Payments on debt service often shared
between districts and local governments
• A county school district would make
payments on two energy eciency loans
from the general purpose school fund and
the county would make payments on one
energy eciency loan for the schools from the
county’s general debt service fund.
• A municipal school district budgets $1 million
annually for debt service on a bond for a new
high school, while the city uses a designated
portion of its property tax revenues to pay
$3.6 million on the same bond’s debt service.
• A county school district would make payments
on $3.6 million of lease-purchase agreements
made from 2017 through 2020 for student and
teacher laptops and other computers. The
county would make payments on $19.6 million
of lease-purchase agreements for student
laptops and school system IT equipment.
• A municipal school district makes payments
of $700,000 per year from its fund balance
to the city for four years to help cover part
of a school construction loan. The city is
also making payments. After four years,
projections are that the city’s growth will
provide enough in property taxes to cover the
remaining portion of the debt.
Sources: Local audits for scal year 2019-20, 2021 interviews with
district ocials.
14
they handle school debt, both across jurisdictions and within one jurisdiction, over time and for dierent debt
obligations. Each local government and school district works out separate agreements as to whose funds are
used, and in what proportion, for various capital projects and other debt obligations.
Public building authorities can issue bonds for schools
Some bonds issued by public building authorities (PBAs),
authorized under TCA 12-10-101, have also been used to provide
funds for school capital projects, but this does not appear to be a
widely used approach. PBAs are public, non-prot corporations
that can build and operate buildings for public use or for private
businesses to lease. e PBA can issue revenue bonds following
the same procedures as local governments, and counties or cities
can enter into a lease or loan agreement with a public building
authority. A few county PBAs have issued bonds for school capital
needs in other counties. For example, in 2004, the Public Building
Authority of Sevier County issued a bond to provide a $10 million
loan to the City of Oak Ridge to construct a new high school and
to renovate other school facilities.
24
Counties must share bond revenues, but have revenue
options that do not require sharing
Counties with multiple school districts (30 counties encompass
76 districts) are required by state law to share school bond
revenues with all city and special school districts within the
county’s borders unless the city or special school districts waive
their right to their share. e bond revenue sharing requirement
is similar to the required sharing of local taxes allocated for school
operations and maintenance. Cities that issue bonds for their
school districts, and special school districts that issue bonds, are not required to share bond revenues with
other districts within the county.
Counties do have some capital revenue options that do not require sharing with other school districts in their
boundaries. Counties can create a rural debt service district, which excludes any city or special school districts
included in the county; bonds issued by a county and paid for by tax collections only from these rural debt
service districts are not subject to sharing requirements. A 2020 TACIR study found that six of the state’s 30
multi-district counties had established such rural debt service districts.
25
Some counties have chosen not to issue bonds and instead allocate other revenues to a capital funds account,
which they do not have to share with any city or special school districts within their borders. (For an in-depth
review of sharing requirements of revenues for capital needs in multi-district counties, see TACIR’s 2020
report, Eects of Sharing of Resources among School Systems in Counties with More than One School System.)
Adequate facilities taxes
Adequate facilities taxes are specically designed and authorized in law for growing counties to raise revenues
for education capital projects and debt service. In 2006, the General Assembly passed the County Powers
Relief Act (TCA 67-4-2901). e act authorizes counties and metropolitan governments to levy a privilege
tax on residential development to provide additional funding for school capital expenditures and debt service
related to population growth. Some counties had previously established similar privilege taxes on development
Washington County and town of
Jonesborough
The town of Jonesborough in
Washington County used a federal
rural development loan from the U.S.
Department of Agriculture to build a
school, which the town then leased to
the county and used the county lease
payments to pay back the loan. If
Washington County had issued school
bonds for this project, a portion of the
bond proceeds would have had to be
shared with the Johnson City School
District, a municipal district within
Washington County. To avoid being
sued by the Johnson City Schools over
whether sharing was required for the
revenues generated by the federal loan,
Washington County agreed to pay the
city school district $500,000 per year for
capital needs for the next 25 years.
Sources: Dec. 2021 interview with Johnson City Schools
ocial, Jan. 13, 2020, Interlocal Agreement between
Johnson City and Washington County.
15
(also known as adequate facilities taxes or impact or development fees) through private acts, although they
were not always limited to education expenditures.
F
e 2006 law prohibited counties from adopting any new
adequate facilities taxes under private acts and, further, prohibited them from adopting any development/
impact fees or real estate transfer taxes by either public or private acts. Counties that had established adequate
facilities taxes or impact fees prior to the 2006 law were allowed to continue to levy and collect those taxes.
A total of 18 counties were identied by the University of Tennessee County Technical Assistance Service
(CTAS) as having an adequate facilities tax or a development/impact fee as of early 2021 and conrmed
through the Comptroller’s TAG system as having revenues from these taxes in scal year 2019-20.
26
Ten of the
18 counties had an adequate facilities tax dedicated to education spending, primarily for capital projects and/or
debt service. (Montgomery County’s private acts specify that its adequate facilities tax can also fund recurring
education costs.)
27
In the 10 counties where adequate facilities taxes for education were identied, combined
revenues collected in 2019-20 totaled $15.2 million, ranging from $2,700 to $5.9 million.
28
Five of the 10
counties included a county school district identied by OREA as a high-growth district. Four other counties
in this group of 10 included a county school district identied as high growth, but revenues from adequate
facilities taxes in these four counties were not earmarked for education capital projects or debt service.
Adequate facilities tax rates, adopted under either the general state law or under private acts, ranged from 50
cents to one dollar per residential square foot, with generally lower rates per industrial or commercial foot.
One county charged $500 per lot and $500 per dwelling unit, rather than by square footage, and another
revised their tax rates in March 2020 to set amounts for ranges of residential square footage ($3,374 per
dwelling unit for 1,399 square feet or less and up to $12,237 for 3,400 square feet or more).
In order to be eligible to levy an adequate facilities tax since the 2006 law, counties must meet the population
growth criteria set in law and adopt a capital improvement plan. e law sets the initial tax rate and limits
how often counties can increase the rate.
Some municipalities adopted adequate facilities taxes prior to the 2006 County Powers Relief Act, and some
municipalities have specic authority under their city charters to levy impact fees under general state statutes.
29
However, out of approximately a dozen cities and towns identied as having adequate facilities taxes or impact
fees, none operated city school systems.
30
Dedicated taxes and other sources
County tax structures vary, but often certain portions of property tax revenues are dedicated or earmarked for
certain funds. Every county that operates a school district allocates a portion of the property tax for general
education operating expenses.
31
Additionally, eight counties had specic property tax allocations for school
capital projects, and 10 had specic allocations for education debt service in 2019-20. More counties earmark
funds for general county capital projects (34 counties) or general debt service (84 counties), from which
school projects and school debt can also be paid. For example, Blount County designated 0.14 percent of
property taxes to a school capital projects fund out of its total 2.47 percent tax rate, and Lawrence County
designated 0.06 percent tax allocation to an education debt service fund out of its total 2.96 percent tax rate.
Counties may designate portions of other taxes specically for education capital or debt service needs, such
as a hotel/motel tax or a wheel tax, or set aside a portion of the sales tax collections that are already directed
toward education. For example, Williamson County voters approved a sales tax hike in 2018 to pay down
school construction debt. After three years, the revenues from the increase were to shift from debt to school
operational funds and city needs.
F
Although a development tax or fee, impact fee, and adequate facilities tax can refer to dierent types of local methods for generating revenue from development or
regulating the nancial burdens of new growth, some sources use these terms interchangeably. For purposes of this report, they were considered as variations of one
type of tax and the term adequate facilities tax was used to refer to all the variations.
16
Cities with school districts are likely to fund their districts as one of their city departments but may also
earmark certain taxes for school capital needs or debt service. Special school districts have limited taxing
authority to raise funds specically for their districts.
School districts use funds from their general operating budgets and cash reserves for the capital and debt
service obligations agreed to with their local governments. Other school district sources for capital project
spending can include funds raised by parent-teacher organizations (PTOs) and booster clubs, other private
donations, and grants.
State revenues are provided primarily through the BEP and district
growth funds
Basic Education Program (BEP)
Tennessee’s BEP formula includes 46 dierent funding components in four categories: Instructional Salaries,
Instructional Benets, Classroom, and Non-classroom. ere are multiple BEP components related to capital
expenditures found in the latter two categories. All BEP components – including those related to capital
needs – are calculated to provide equitable funding to districts and are generally not required to be spent
on the same components for which they are calculated. e BEP is a funding formula, not a spending plan.
ere are, however, a few restrictions by category: funding in Instructional Salaries and Instructional Benets
can be spent only on instructional personnel, and Classroom funding must be spent on either Classroom
components or instructional personnel. Non-classroom funding can be spent in any area.
BEP capital outlay component
e largest BEP component for capital spending is the “capital outlay” component. In scal year 2019-20,
the state funding for this component totaled $406 million.
32
Because this component is in the non-classroom
category of the BEP formula, the state splits the funding of this component 50:50 with local districts as a
whole. is ratio of state to local funding can vary signicantly, however, for individual districts based on their
scal capacity, which is the local ability to raise education funds in each county relative to other counties’
abilities.
G
If districts are in growing counties that are increasing their education funding abilities (through
expanding their property and sales tax bases) at a pace faster than other counties, their increased scal capacity
will reduce their state share of BEP funding. In 2019-20, districts’ state share of non-classroom funding
ranged from 25 percent to 87 percent; local funding must cover the balance, 75 percent to 13 percent.
33
Although referred to as the “capital outlay” component, the actual BEP calculation of this component is an
annualized, projected cost to nance a new school based on the allowable square footage for all students currently
enrolled.
34
Because it includes a debt repayment cost for a long-term bond with interest, it is essentially an estimated
debt service cost. See Appendix B for an example of the calculation for the BEP capital outlay component.
Because there are no restrictions on how funding from the capital outlay component is spent, districts are free
to use these funds for any school need. at means the dollars calculated for the capital outlay component can
be spent on teacher salaries, special education classroom aides, or textbooks, if district and school management
determine those are higher priority needs than building improvements. Because of the restrictions on the other
categories of BEP allocations, funds in the non-classroom category are the only BEP dollars that can be spent
on capital projects and debt service.
Looking at only district-level spending on major capital needs and debt service (without local government
expenditures), Exhibit 6 shows districts’ spending was more than double the state’s 2019-20 BEP funding at
the statewide level.
G
e BEP formula calculates scal capacity at a county level. All school districts within a county get the same scal capacity rating.
17
Exhibit 6: Comparison of BEP capital funding component to district capital
expenditures and debt service | FY 2019-20
Sources: District expenditures reported to Tennessee Department of Education (TDOE) from TDOE’s Annual Statistical Report, 2020. State-funded share of BEP
capital outlay component from OREA BEP Calculator, Fiscal Year 2020.
Total local spending on capital outlay, capital projects, and debt service is signicantly higher than district-
level spending alone, as described earlier, and is not captured in Exhibit 6. When local government spending
by cities and counties, particularly for education capital projects and education debt service, is added to the
district-level spending, the total spending is estimated to be at least $1.739 billion – or about 95 percent more
than district-level spending alone.
35
(See Exhibit 1.)
Local government expenditures are negotiated between the districts and their local government funders.
School districts experience varying levels of support from their local governments, depending on multiple
factors, such as the size of the local tax base, rates of population growth and business development, existing
debt, and support for increased education spending among voters and elected ocials. (See further discussion
in “Funding and relationships with local government”.)
BEP capital equipment components
e BEP also provides funding for instructional equipment (regular, alternative, special education, and
vocational) and for non-instructional equipment (other student support, principal and central oce, nance
and personnel, maintenance and operations, and transportation). In 2019-20, the state provided $66.6
million in funding for school equipment through the BEP.
ese equipment components are based on a district’s average equipment expenditures per student for the
three prior years. e average per-student expenditure is then inated up by two years. e BEP equipment
components do not distinguish between capital equipment (having a useful life of more than one year) and
other equipment.
In the BEP, the instructional equipment component is within the classroom category and is funded 75 percent
by the state across all districts. e non-instructional equipment is within the non-classroom category and
is funded 50 percent by the state across all districts, although individual districts receive more or less state
funding percentages according to their scal capacity.
Category of district expenditures
Combined district expenditures
reported to TDOE
Regular capital outlay
spending on buildings, grounds, and related professional services;
usually paid with operating funds $117,316,790
Capital projects
spending on major equipment, buildings, grounds, and related
professional services; typically funded through debt instruments, like
bonds, notes, and loans $509,501,847
Debt service
spending in the current year for capital projects nanced in prior years
$266,292,753
Total of districts’ capital-related expenditures
(regular capital outlay + capital projects + debt service)
$893,111,390
State-funded share of BEP capital outlay component $406,346,485
State BEP capital outlay funding as a percentage of districts’ capital-
related expenditures
45.50%
18
Exhibit 7: BEP equipment funding components | FY 2019-20
*Note: Not all equipment funding is spent on capital equipment.
Sources: State Board of Education, Tennessee Basic Education Program (BEP) Blue Book, 2019-20; OREA BEP Calculator, Fiscal Year 2020.
BEP technology component
Finally, the BEP provides technology funding, which is a at amount set by the General Assembly that
is allocated to districts based on student enrollment. In scal year 2019-20, the total dollar amount for
technology in the BEP was $40 million, which was allocated to districts based at $41.30 per student.
36
As a
classroom component, the technology allocations were funded by the state at 75 percent, resulting in
$30 million total of state funds distributed to local school districts.
State growth funds
Outside of the BEP, the state provides additional funding to growing districts that meet certain criteria. e
amount of growth funds and the criteria districts must meet to receive a portion vary based on the General
Assembly’s annual appropriation. e growth fund appropriations have ranged from between $10 million to
$37 million over the past 10 years (See Exhibit 8.) Districts may use growth funds as they choose, whether for
capital or general operating expenses, as rising student enrollment can drive increases in both capital spending
for more learning space and spending for day-to-day operations on such things as additional teachers,
textbooks, and cafeteria food. In the ve years from 2016-17 through 2020-21, 85 districts received growth
funds at least once, and 60 percent (51 districts) received growth funds for multiple years.
37
A third of the
districts (30) received growth funds in at least three years of the ve-year period reviewed. (Preliminary data
for 2021-22 is reported but was not included in the analysis.)
e needs of growing districts were recognized in the 1992 Education Improvement Act that established the
BEP.
38
For most districts, BEP funding would be calculated based on prior year student enrollment (average
daily membership, or ADM, and similar prior year counts for subgroups of vocational and special education
students); but for districts with more than 2 percent growth, the BEP would be calculated using current
year student numbers. us, growth funds would provide districts the additional funding they would have
been allocated if current year enrollments were substituted into the BEP formula in place of the prior year
enrollments that are the basis for BEP calculations. A 1998 revision specied that any increases in districts’
funding using current year rather than prior year enrollment numbers would be provided “to the extent funds
are appropriated for that specic purpose” and claried that only additional funding linked to growth above
2 percent would be provided.
39
A 1999 revision provided that if the appropriated funds exceeded the amount
needed to fund growth of more than 2 percent, the percentage could be lowered so that all appropriated funds
could be distributed to school districts with student growth.
40
Current law still indicates that any growth funding based on current year enrollments is intended for districts
with student growth that exceeds 2 percent over the previous year,
41
with the provision that funds distribution
Equipment
components
Unit
funding*
ADM or other student
units used
Total BEP
allocation
State share of
BEP allocation
Regular and alternative
instructional equipment
$69.50 Per regular and alternative ADM $64,568,958 $48,426,719
Special education
instructional equipment
$17.00
Per special education students
identied and served
$3,167,689 $2,375,767
Vocational/CTE
instructional equipment
$99.75 Per CTE full-time-equivalent ADM $3,943,060 $2,957,295
Non-instructional
equipment
$26.50 Per total ADM $25,667,404 $12,833,702
Total $66,593,483
19
to districts can be adjusted based on available appropriations. From 2016-17 through 2020-21, the amount
of funding appropriated by the General Assembly has exceeded the amount needed to fund growth of
more than 2 percent. (See Exhibit 8.) In some years, the General Assembly’s appropriations exceeded the
growth funds distributed to districts, even when all district growth was funded (rather than just the portion
above 2 percent). is is at least partly because estimates of growth and the passage of the appropriations
act occur months before the next school year begins and districts can collect current year enrollment data.
e Department of Education, in explaining why signicantly fewer funds than appropriated were actually
distributed to districts, noted that while there was an enrollment increase statewide in 2018-19, it was lower
than it had been in previous years, and that in 2020-21, the pandemic drove enrollment declines in many
districts.
Exhibit 8: State funding for growth districts based on current year enrollment,
by school year
* Note: As of April 25, 2022, $11.5 million had been distributed to qualifying districts based on prorated payments for estimated growth over 2 percent. Initial
estimates for all growth over 2 percent would have exceeded the appropriated growth funds by $1.6 million. Final growth payments will be made in June 2022, and
the Department of Education expects the full $23 million to be distributed at that time.
Source: Tennessee Department of Education.
Energy Ecient Schools Loan Program
e Energy Ecient Schools Initiative (EESI) Loan Program was initially established by the General Assembly
in 2008 to provide low-interest loans and grants to local school districts for capital projects that improve
energy eciency.
42
Since its inception, the program has disbursed about $20 million in grants and more than
$106 million in loans. Loans to districts can cover renovation and repair projects, as well as new construction
projects, not exceeding $5 million. Types of eligible projects include interior and exterior lighting system
upgrades, electrical systems, pumps and motors, energy management systems and equipment controls,
building insulation, and HVAC equipment. Projects must show that energy savings, or other available funds,
are sucient to retire the loans within the time period set, not to exceed 16 years.
e program is administered by the 12-member Energy Ecient Schools Council, comprising three state
agency commissioners and appointees of the Governor and the speakers of the House and Senate, representing
school systems, local government, the energy industry, and others. A technical advisory committee is to set
energy ecient design and technology guidelines for schools as well as guidelines for monitoring and verifying
energy eciency achieved from capital projects.
Originally started with $90 million from lottery reserves, the General Assembly made an additional
appropriation of $11 million in 2018.
43
e loan program uses a low-interest revolving loan mechanism
through which repayments of previously approved loans replenish the fund balance to make new loans. As of
June 30, 2021, 80 loans totaling $67.5 million were outstanding.
44
Year 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Total appropriation $19 million $37 million $37 million $23 million $23 million $23 million
Total distributed $19,000,003 $35,820,000 $26,392,000 $22,692,000 $15,787,000 $11,500,000*
Threshold
percentage of
growth funded
100.89%
(growth
above .89%
funded)
100%
(all growth
funded)
100%
(all growth
funded)
101.35%
(growth
above 1.35%
funded)
100%
(all growth
funded)
> 102%*
(growth above
2.0% was
prorated)
Number of districts
funded
30 52 55 26 14 12
20
Other state funds
Occasionally, the state provides one-time funding for specic purposes,
which may include capital items. For example, in 2018, the state
provided $35 million in safety grants to improve aging school buildings
with upgrades like security cameras, strengthening the security at front
entrances, and xing or replacing broken locks or outdated doors.
Recent legislative proposals for increased state funding
In recent years, several legislative proposals have been introduced to
supplement state funding of capital needs in high-growth districts.
2021 | House Bill 1174/Senate Bill 1131
is bill would create a rapid growth school district fund from a
one-time $30 million appropriation from the general fund. Districts
with a minimum of 2 percent growth over the preceding ve scal
years would be eligible to apply for a grant to cover school-related
capital improvements or debt service, not to exceed $7 million. e
Department of Education would develop the process for awarding
grants, and any undistributed funds would revert to the general fund.
e department had indicated 39 districts were eligible in 2021.
e bill was approved by the Senate Education Committee and a
House subcommittee but was rolled to 2022 by the House Education
Administration Committee due to the inux of federal money from
the Elementary and Secondary School Emergency Relief (ESSER) Fund and due to concerns about whether
smaller, rural districts would benet under the bill. (See more about ESSER funds in the following section
on federal funding.) When the Education Administration Committee returned on January 19, 2022, it voted
to defer further consideration of this bill to a nal education funding calendar in light of the Governor’s
proposed new funding formula for K-12 education.
2021 | Senate Bill 1130/House Bill 1173
e proposed Tennessee Local Education Capital Investment Act was to create a new allocation of state sales
tax revenue for local school districts meeting the denition of a “rapid growth school district.” Districts with
enrollment growth of at least 2 percent total over the preceding ve years would qualify for the rapid growth
designation and apply to receive additional state sales tax funds from taxes collected within the county, which
could be used only for school-related debt service or capital improvements. e highest growth districts (with
20 percent or more enrollment growth) would be eligible to receive additional state funds, up to a maximum
amount. e bill’s scal note cited TDOE calculations that 35 districts would qualify, and the decrease in
state revenue – and the resulting increase in districts’ revenue – would total $21.4 million. After passing in
the House Government Operations Committee, the bill did not receive a vote in either the House or Senate
nance committees it was referred to. (e bill was not assigned to be heard by the education committees.)
2020 | House Bill 2122/Senate Bill 2370
e proposed bill was to create a rapid growth school district fund from $30 million of the state’s general
appropriations funds for scal year 2020-21. TDOE would administer the fund and award grants for school-
related debt service or capital improvements to districts that had at least 10 percent growth over ve years.
e scal note for the bill cited TDOE gures that six districts met the 10 percent growth threshold; thus,
an average grant amount was calculated at $5 million. e bill was voted down in the House K-12 Education
Subcommittee and not voted on by the Senate Education Committee.
Change to TISA funding formula
The Tennessee Investment in
Student Achievement Act, passed
by the General Assembly in April
2022, will replace the BEP funding
formula for school districts starting
in 2023-24. It incorporates the BEP
capital outlay funding component
into the base per-student funding
of TISA. Funding for instructional
equipment used for students
with disabilities will be allocated
through weighted funding, and
instructional equipment for
career technical programs will be
allocated through direct funding.
Other equipment and technology
funding will be incorporated into
the base funding. TISA also
authorizes a state-funded growth
stipend for districts experiencing
growth over 1.25 percent and an
infrastructure stipend for districts
with more than 2 percent growth
for three consecutive years.
21
2019 | Senate Bill 197/House Bill 239
e proposed Tennessee Local Education Capital Investment Act had provisions similar to those in the 2021
version (see SB 1130/HB1173 above), except the rapid growth district threshold was determined in numbers
of students (250 additional students, on average, each year) rather than percentages of students (2 percent
enrollment growth). e allocation of state funds to a qualifying district would be an amount equal to 2
percent of state sales taxes collected and remitted from within the boundaries of the district but would be in
lieu of the existing 4.6 percent of existing state allocations to municipalities. e scal note cited Department
of Revenue calculations that four counties would qualify as rapid growth districts and that, since none of the
four were municipal districts, they would opt to receive the additional state funding. e scal note estimated
the bill would result in an $18.3 million transfer of funds from the state to the qualifying local districts. e
bill, introduced in 2019, was rolled into the 2020 session, but it was not heard in full committees.
2019 | House Bill 124/SB 198
Also known as the Tennessee Local Education Capital Investment Act, this bill is similar to the others, providing
districts additional state funds up to a maximum amount.
H
Qualifying districts would have to meet the
growth threshold of at least a 2 percent increase in enrollment over the previous ve years. e bill would
result in a $32.9 million transfer of funds from the state to the qualifying local districts in 2019-20. is bill
was also rolled from the 2019 to the 2020 session but was not heard in full committees.
Federal funding options available in the wake of COVID
ESSER funds
In March 2020, at the beginning of the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief,
and Economic Security (CARES) Act, which included the creation of the Elementary and Secondary School
Emergency Relief Fund (ESSER Fund). Since the creation of the ESSER Fund, Tennessee local school districts
have been allocated approximately $3.37 billion in federal funds. (See Appendix C.)
e initial ESSER Fund was to provide funds to state educational departments to help local districts address
the impact of COVID-19, including purchasing educational technology, providing mental health services,
implementing summer and after-school learning programs, maintaining district operations, continuing to
employ existing sta, and oering any activities already authorized under a host of existing federal programs
(Elementary and Secondary Education Act, IDEA, McKinney-Vento, and others), plus training and
coordinating activities around health preparedness and response to the coronavirus, including cleaning and
sanitizing facilities.
Supplemental funds were added through ESSER 2.0 in December 2020 and ESSER 3.0 in March 2021. e
ESSER 2.0 and 3.0 funds can be used for most of the same purposes as the original ESSER funds but can also
be used to address learning loss, safely reopen and operate schools, and make certain school facility repairs and
improvements. Specically, funds can be used for school facility repairs and improvements that reduce the risk
of virus transmission and exposure to environmental health hazards during school operation, support student
health needs, and improve the indoor air quality in schools (e.g., by replacing or upgrading HVAC systems,
air lters, fans, windows, doors, etc.).
All Tennessee school districts received ESSER funds, and funds in the ESSER 2.0 and 3.0 allotments can be
used, in part, for facility needs. Exhibit 9 highlights how some growing districts are using, or plan to use, these
federal funds.
H
e maximum amount would be equal to 2 percent of the district’s share of the state sales tax revenues collected from within the county, capped at a maximum of
$7 million.
22
Exhibit 9: Examples of school facility projects using federal ESSER funds |
Selected districts
Source: 2021 interviews with district ocials.
USDA Rural Development Loans are an option for some districts
A few communities have qualied to use U.S. Department of Agriculture (USDA) Rural Development loans
to build schools. e USDA’s Community Facilities Direct Loan and Grant Program provides “aordable
funding to develop essential community facilities in rural areas.”
45
e program sets priorities to fund projects
in small and lower income communities, and projects must demonstrate substantial community support.
rough this USDA loan program, the city of Lakeland was approved for a loan to build a new high school
as well as to renance an existing capital outlay note used to fund construction of a middle school. Lakeland
School System ocials commented that the USDA loan was a more economical way to nance their school
construction than for the city to try to issue bonds. In addition, there is no citizen referendum requirement for
USDA loans as there is for city bond issues.
USDA loans also dier from county bond issues in that there is no explicit requirement that the loan proceeds
be shared with any non-county districts. With bond issues, state law requires that counties with multiple
school districts share the revenues generated with all school districts within the county’s borders.
e town of Jonesborough, in Washington County, was also approved for a USDA loan to build a school,
which it is leasing back to the county school district. (See previous box “Washington County and Town of
Jonesborough.”) e Bradford Special School District (Gibson County) is developing plans to borrow through
the USDA loan program for a school addition.
District ESSER-funded facility project
Alcoa City
Roof repairs, security cameras in buildings and on buses, perennial termite
issue at an elementary school
Bradford Special Addition of a special education oce and classroom
Clarksville-Montgomery County Replacement of HVAC units and addition to one school
Germantown Municipal Addition to a middle school and technology equipment
Hamilton County School building replacement
Knox County
Elementary school addition, HVAC replacements, renovations to a school
serving students with special needs, upgrades of computer devices and
classroom technology infrastructure
Lakeland City
Revision of new high school plans to include more space, upgrades of some
HVAC units
Manchester City Upgrades or replacements of HVAC units
Rutherford County
Infrastructure improvements such as HVAC replacement and technology for
distance learning
Williamson County Purchase of Chromebook laptops
Wilson County Purchase of backup generators and technology infrastructure upgrades
23
Strategies and challenges in growing districts
OREA identied 35 districts that experienced total enrollment growth of 2 percent or more across a ve-year
period, from 2014-15 through 2019-20 (reecting mostly pre-COVID average daily membership data), for
further research. Several recent legislative proposals have used total enrollment growth of 2 percent or more
across a ve-year period as criteria for additional funding.
e earlier map presented in Exhibit 2 showed where enrollment growth was occurring. Exhibit 10 shows the
amount of enrollment change over the ve-year period 2014-15 to 2019-20. In Exhibit 11, the 35 districts
shown comprise 14 county school districts, 18 municipal districts, and three special school districts.
I
Exhibit 10: Total ve-year change in enrollment (ADM) by district | 2014-15
through 2019-20
Note: Lakeland School System had 117 percent ADM growth over the ve years reviewed and is omitted from this graph in order to see the rest of Tennessee’s districts
more clearly. Students from Lakeland attended other districts during construction of a new school building and were not counted as Lakeland students at that time.
Source: Tennessee Department of Education Annual Statistical Report, scal years 2015 and 2020, Table 7.
Exhibit 11: School districts with at least 2 percent total growth in ADM |
2014-15 through 2019-20
I
Final ADM numbers for scal year 2020-21 show that total public school enrollment in Tennessee dropped about 2.47 percent from 2019-20, a national trend due
to in-person schooling disruptions from COVID-19. Not all Tennessee districts saw declines, but the majority did.
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
Percent change
2.00 – 4.99 percent growth 5.00 – 9.99 percent growth 10.00 or more percent growth
Clinton City
(Anderson County)
2.56 Alcoa City
(Blount County)
9.02 Manchester City
(Coee County)
10.59
Oak Ridge City
(Anderson County)
3.67 Maryville City
(Blount County)
5.90 Bradford Special
(Gibson County)
12.56
Bedford County 4.42 Cleveland City
(Bradley County)
6.00 Etowah City
(McMinn County)
12.82
Tullahoma City
(Coee County)
3.59 Huntingdon Special
(Carroll County)
5.30 Montgomery County 14.03
Greeneville City
(Greene County)
3.48 Humboldt City
(Gibson County)
5.69 Robertson County 10.35
Hamilton County 3.24 Macon County 5.08 Rutherford County 13.17
Knox County 2.96 Maury County 6.96 Murfreesboro City
(Rutherford County)
15.43
Athens City
(McMinn County)
4.04 Putnam County 6.09 Collierville City
(Shelby County)
15.28
Dayton City
(Rhea County)
2.80 Bartlett City
(Shelby County)
6.88 Lakeland City
(Shelby County)
116.98
Kingsport City
(Sullivan County)
4.12 Germantown City
(Shelby County)
7.06 Williamson County 16.42
24
Source: OREA calculations based on Tennessee Department of Education Annual Statistical Report, scal years 2015 and 2020, Table 7.
Districts in the highest growth tier (10 percent or more ADM growth) are either Middle Tennessee county
districts or city and special school districts. Some of these districts emphasized that their rapid student
increases mean they are continually planning for another new school. e second highest growth tier (at least
5 percent but below 10 percent ADM growth) is also made up of county districts in Middle Tennessee and
city and special school districts, with Union County Schools in East Tennessee as the only exception.
Districts may experience enrollment growth in certain grade bands, typically in early elementary grades as
young families buy their rst houses, or across the board when general population growth follows new jobs
and new development. Growth may be uneven across a school district, causing districts to consider rezoning
solutions as well as expanding existing schools or constructing new schools. At least one district has developed
magnet programs in schools that have additional capacity to encourage more students from overcrowded
schools to move.
Serving students in crowded schools
One of the most immediate issues facing growing districts is how to physically t more students and their
teachers into existing buildings.
One common solution is the use of portable classrooms to
provide additional classroom space. In TACIR’s 2020 public
infrastructure inventory, it reported a total of 1,912 portable
classrooms in use statewide.
46
e 35 districts identied as
high-growth districts in this report were using 769 (40 percent)
of those portables. At least one district is using larger modular
units, which include six to eight classrooms, bathrooms, and a
central hallway. District ocials note that larger modular units
look nicer than individual portables. e units also provide more
security than portables since students have less need to leave the unit to attend a class in the main building.
Other districts have tried to avoid using portables by repurposing some larger spaces, such as gymnasiums,
and through creative scheduling. One district converted a former breakroom for teachers to a classroom while
another subdivided the space for a single classroom to create two classrooms. Some districts may try to avoid
using portables in order to save the costs of leasing the portable units and preparing the sites where they would
be installed.
Another common strategy, mentioned by several districts, is to eliminate the need for some classrooms by
shifting non-academic subjects (often called “specials” that elementary students may have only once or twice
per week) out of classroom space. An art or music teacher may have their curriculum supplies on a cart, which
they transport as they rotate among dierent classrooms, rather than have a xed art or music space. is
method may limit the kind of lessons that can be oered. In high schools, where students have more options
to choose certain elective classes, limited space may lead to the elimination of less popular elective options. A
crowded school may not have room to oer classes that are not lled.
Sumner County 4.84 Trousdale County 8.22 Wilson County 11.18
Union County 8.26
Lebanon Special
(Wilson County)
5.38
Our district has ordered more portables
in the last eight years than in the last 20
years combined.
The challenge at one school is that they
had more kids in portables than they had
in actual building classrooms.
Source: 2021 interviews with two county district ocials.
25
In some cases, a grade level has been shifted from an overcrowded building to one with more space. Alcoa City
Schools shifted two of its intermediate school (grades 3-5) classrooms to the middle school, which had more
space. Bradford Special School District moved their 6th grade up to the high school.
Adding school capacity
School districts may target a certain capacity for school buildings. One county district indicated their target
is about 80 percent, which allows exibility for instructional needs and the ability to absorb some enrollment
growth. According to ocials in this district, once a school exceeds 80 percent capacity, it is less than ideal. All
the district’s schools were over 80 percent capacity: elementary schools were above 91 percent, middle schools
were above 100 percent, and the high school was at 94 percent. Another county district made a distinction
between capacity for building code compliance and capacity for educational programs, which may change as
instructional needs change. For example, seven students with special needs may need to be together in one
classroom, while 25 students might occupy the same classroom if it were used for general education purposes.
As building costs continue to rise, districts recognize that delays
in obtaining nancing and construction approval can increase the
nal cost. In the most recent inventory of public school needs,
TACIR reported that local ocials across the state projected a
need for 69 new schools in the next ve years at an average cost
of $39 million each.
47
One district noted that construction costs
had increased signicantly, but interest rates were low, so the costs
evened out. Others disagreed. A county district ocial noted, “cost
per square foot has gotten very expensive – o the charts – and not
as predictable as it used to be.” Ocials stated that rising prices and
supply chain issues have impacted their ability to get project bids
and resulted in less predictable prices for new construction. Others noted signicant increases; for example,
in 2017-18, one district built a school for 900 students that cost $20 million. In 2021, the same size school
might cost $30 million.
Acquiring land for a new facility is another cost factor. Two districts mentioned acquiring land for new schools
through a property trade with their local governments, using land next to an existing school. Ocials from
one of those districts noted that basic infrastructure may not be adequate for a school in areas where growth is
occurring. In addition to the property purchase and school construction costs, there may be costs for widening
roads to accommodate buses and extending sewer and water connections. e county and the school district
in one case were splitting the infrastructure support costs for a new school. Another district commented that
it is cheaper to add on to or rebuild within an existing school campus footprint because no additional land
purchase is necessary. A disadvantage of this approach is the logistics of continuing to operate the existing
school while adding on to it or constructing a new facility.
Adding on to or making major renovations to an existing building can require all the older parts of the
building to be brought into compliance with building and safety codes, adding to the costs. One county
district reported that it was more economical to replace an 80-year-old school than to bring the whole
building up to compliance with modern codes. Sometimes maintenance costs on an older building reach a
point where it becomes cheaper to replace the whole building.
When a district builds a new school, it not only incurs one-time capital costs for the building and equipment
but will also increase some of its recurring operating costs. Additional building-level sta are required, such as
principals, assistant principals, librarians, and school secretaries. More teachers may be needed, depending on how
well student-teacher ratios are preserved as students and teachers at overcrowded schools move to a new building
when students are re-zoned. More custodial or maintenance sta may be necessary to manage more square footage.
New school costs
When Germantown Municipal School
District opened a new elementary
school in 2020, 30 new full-time
equivalent certied sta were hired.
The additional costs for other new
positions totaled $800,000.
Source: City of Germantown, Tennessee:
Comprehensive Annual Financial Report for the Fiscal
Year Ended June 30, 2020, pdf. p.28.
26
Keeping up with basic maintenance
In OREA’s interviews with selected districts during fall 2021, district ocials stressed the need for constant
planning given student enrollment growth trends. Planning must encompass maintenance of existing buildings as
well as any new construction. Ocials often juggle how much limited funding to allocate to major construction
projects, like new buildings and additions, and how much to allocate to more predictable maintenance, like
replacing heating, ventilation, and cooling (HVAC) units and roofs that can no longer be patched.
A county district noted that half of its schools are over 40 years old, and there are higher costs associated with
maintaining older buildings. If schools are crowded, they get used more – every space is in use all day – so
there is more wear and tear on buildings. Another county district prioritizes the biggest maintenance issues,
but such priorities can be derailed by urgent issues that arise in the district’s older buildings, like water ooding
classrooms or an HVAC unit going out.
e pressure to increase capacity with new construction can mean that other building upgrades that do not
add space are delayed. One county district ocial noted that a new school serving students in one portion of
the district can highlight the lack of equity for students elsewhere in the district who may be in a much older
school building needing upgrades.
Funding and relationships with local governments
e district ocials interviewed by OREA in late fall of 2021 had mixed judgments on their relationships
with their local government funders. District ocials who received funding for capital projects through bond
and tax revenues were more positive about their relationships, while those who had not received funding for
projects were more negative.
District ocials were nearly unanimous in recognizing that most local governments do not want to raise taxes.
ey also recognized that local governments have practical limits to how much debt in the form of bonds and
notes they can issue. e state does not set a debt limit for local governments, but good scal management
dictates that local governments limit the amount of debt taken on relative to expected tax revenues. A county
may set debt limits, such as a set percentage of the assessed or appraised value of the properties in its property
tax base, that impact how many capital projects it can nance. Several district ocials mentioned the goal of
their local governments to maintain strong bond ratings as another factor.
When cities and counties are experiencing growth, they may be able to avoid raising taxes and instead raise
capital funds or cover their debt service through the rising property and sales taxes generated by growing
populations and the increase in the property tax base. Such revenue growth also allows the local government
to take on more debt. A city district noted that their local government has not had to raise taxes because
increased tax revenues generated from growth have been sucient to service the debt from new bonds and
notes issued.
Ocials also noted some pitfalls that can come with growth. One district ocial noted that revenue increases
from property tax collections can lag a year or two behind the actual population growth and the resulting
capital spending required for schools to accommodate more students. When increases in revenues are realized
from expansion of a county’s property and sales tax base, the resulting increase in the county’s scal capacity
will reduce the district’s share of state BEP funding. A city district noted that as its enrollment grows, its share
of the countywide taxes gets larger and its state BEP funding grows from the higher student numbers, but its
costs also increase at a similar pace to the funding.
27
Tensions may arise between what districts think their government funders can aord and what their
government funders believe they can aord. Disagreements may center on:
• whether a proposed tax increase is needed;
• whether a proposed tax increase is sucient to meet capital needs;
• whether bonds should be issued;
• the timeline for issuing bonds relative to the growth rate in the tax base;
• school zoning decisions and existing capacity in a district’s schools; and
• the sharing of bond revenues in counties with multiple school districts.
Conclusions
Spending for public school capital projects totaled an estimated $1.7 billion in scal year 2019-20,
including spending on current projects that year and the debt payments due for previous years’ projects.
J
is spending is primarily for building education facilities, including any necessary land purchases and
major additions and renovations. e projects are typically nanced through long-term debt, like bonds. e
payment of principal and interest due on those debts is the bulk of the debt service spending.
e bulk of capital education costs are paid from local dollars, and city and county governments are major
funders, as well as the school districts themselves. Education capital project expenditures for scal year 2019-
20 increase from the $509.5 million reported by districts alone to a range of $929 million to $1.12 billion when
local government expenditures are included. Debt service spending increases from the $266 million reported by
districts to between $685 million and $693 million when local government spending is added.
e majority of funding for this capital spending comes from local sources, including bonds and notes,
adequate facilities taxes, and dedicated property taxes. e state provides revenues for capital spending
primarily through the capital outlay component of the Basic Education Program (BEP). In scal year 2019-20,
when district-level capital spending and debt service totaled $776 million, the state share of the BEP capital
component was $406 million, or about 52 percent of those district expenditures.
K
In 2019-20, the BEP formula also provided $67 million in state funding for equipment and $30 million in
state funding for technology, both of which could be considered funding for capital spending. Outside of the
BEP, the state provided $23 million in additional funds for high-growth districts in 2019-20 that could be
used for capital projects.
In Tennessee, most school districts are not allowed to issue debt or borrow money; they must work with
their local governments to initiate and complete major capital projects.
L
OREA’s review of funding and
payment arrangements between districts and their local governments found a variety of ways that districts and
local governments split the costs of capital projects and debt payments. For example, a district may contribute
a portion of its operating funds to its local government each year to cover some or all of the government’s
payment on education-related debt. In another case, a local government may use some general local revenues
to cover a specic capital need of the school district. Because these arrangements may change from project to
project, reviewing only a school district’s capital spending does not necessarily provide a full picture of total
education capital spending.
J
When additional spending for capital equipment (having a useful life of more than one year) and facility spending from operating funds (regular capital outlay,
without debt nancing) is added, total capital spending on public schools in 2019-20 was an estimated $2 billion.
K
When district spending from operating funds for regular capital outlay was included, the state BEP funding totaled about 45 percent of district-level spending.
L
Special school districts’ debt issuance must be approved by the General Assembly since these 14 districts do not have a local government equivalent to county and
municipal (city) school districts.
28
Challenges for growing districts include developing strategies to serve students in crowded schools,
meeting the costs of adding school capacity while keeping up with existing maintenance needs and
negotiating with local government funders. Growing districts have adopted a variety of strategies to add
space, including using portable classrooms, repurposing of gymnasiums and other larger spaces, and shifting
classes such as music and art out of xed classrooms. In 2020, districts reported 1,900 portable classrooms
in use; the 35 high-growth districts identied in this report were using about 40 percent of those portables.
Districts seeking to permanently increase school capacity identied rising construction costs as a concern.
Some district ocials noted that the pressure to increase building capacity in a fast-growing district through
new buildings or additions can cause funding delays for needed maintenance of existing facilities. Local factors
that impact districts’ abilities to serve growing student enrollments include whether tax revenues are keeping
pace with infrastructure and service needs triggered by growing populations and local governments’ ability and
desire to seek additional revenues through taxes, fees, new debt, or some combination.
More students, especially a large or continuous inux of new students, is a signicant driver of increases
in capital spending as the demand for more space prompts the construction of new schools and additions
to existing buildings. Other drivers of capital spending are unrelated to the size of the student population,
however. A leaking roof needs repair or replacement regardless of whether student enrollment is increasing.
Technology upgrades, such as ensuring adequate wireless internet service, also require capital spending. School
security concerns and changes to school buildings due to health concerns also drive capital spending.
29
Endnotes
1
To calculate total regular capital outlay, education
capital project, and debt service expenditures for the
school districts not included in the Comptroller’s
TAG (Transparency and Accountability for
Governments) system, OREA reviewed two data
sources. One was the nancial expenditure data
spreadsheet, compiled from districts’ nancial
reports to the Tennessee Department of Education.
e department provided expenditure data from
scal year 2019-20 to OREA. Summaries of the
expenditure data can be found in the department’s
Annual Statistical Report, 2020, Tables 47, 48, and
49 (https://www.tn.gov/education/data/department-
reports/2020-annual-statistical-report.html).
e second source used for school districts not
included in the TAG system was scal year 2019-20
nancial audit reports. (All nancial audit reports
are available through the Comptroller’s report
search webpage at https://www.comptroller.tn.gov/
advanced-search.html.) In cases where the school
district audit (usually titled Board of Education audit)
was separate from the local city or county government
audit, both the district and the local government
audits were reviewed. Note that the City of
Rogersville audit was not included in the audit review
as it was not completed and available at the time of
OREA’s research. In most cases, the audit numbers
matched the district expenditure reports compiled by
the department, or the audit numbers were clearly
for school related capital or debt service expenditures
by either the district or the local government. It is
not uncommon for audits to reclassify and/or correct
certain gures initially reported by districts.
Where there was a signicant discrepancy between
the district expenditures reported to the department
and the nancial audit numbers that could not be
conrmed as expected variation between district
reporting and nal audit numbers, OREA recorded
both numbers and used them as a potential
range for actual expenditures. In some cases, the
discrepancies were due to local government capital
or debt spending specically for education not being
separately identied from other government capital
or debt spending. Some large dollar dierences in the
ranges result because one number of the range was
zero where specic school expenditures could not
be identied. Expenditure ranges in capital outlay
resulted from variances in 14 districts; ranges in
education capital projects resulted from variance in
seven districts; ranges in debt service resulted from
variances in 11 districts.
2
OREA conducted telephone interviews from Oct.
through Dec. of 2021 with the following school
district ocials:
• Alcoa City Schools – Director of Schools,
Director of Finance
• Bradford Special School District – Director of
Schools
• Clarksville-Montgomery County School System –
Chief Financial Ocer, Chief Operating Ocer
• Germantown Municipal School District –
Director of Schools, Chief Financial Ocer,
Deputy Superintendent and Chief of Operations
• Hamilton County School District – Chief
Financial Ocer
• Knox County Schools – Chief Operating Ocer
• Lakeland School System – Director of Schools,
Director of Finance
• Manchester City Schools – Chief Financial
Ocer
• Rutherford County Schools – Assistant
Superintendent for Budget and Finance
• Williamson County Schools – Assistant
Superintendent of Budget and Finance
• Wilson County School District – Deputy
Director of Finance and Business Operations
3
Tennessee Department of Education 2019-20 data
provided for select capital equipment expenditure
codes.
4
Tennessee Department of Education, Annual
Statistical Report, 2020, Table 47 – Capital Outlay,
https://www.tn.gov/content/dam/tn/education/
documents/asr/2020_ASR_PDFCombined_Upd.pdf
(accessed March 8, 2021).
5
Tennessee Department of Education, Annual
Statistical Report, 2020, Table 49 – Capital Projects,
https://www.tn.gov/content/dam/tn/education/
documents/asr/2020_ASR_PDFCombined_Upd.pdf
(accessed March 8, 2021).
6
Tennessee Comptroller of the Treasury, Transparency
and Accountability for Governments in Tennessee
30
(TAG), selected 2019-20 capital project expenditures,
https://comptroller.tn.gov/oce-functions/la/e-
services/tag-tableau.html (data pulled and provided
by Nathan Abbott, Senior Information Systems
Specialist, Tennessee Comptroller’s Division of Local
Government Audit, May 13, 2021).
7
Tennessee Department of Education, Annual
Statistical Report, 2020, Table 49 – Capital Projects,
https://www.tn.gov/content/dam/tn/education/
documents/asr/2020_ASR_PDFCombined_Upd.pdf
(accessed March 8, 2021).
8
OREA calculations using Tennessee Comptroller
TAG data, Tennessee Department of Education
Annual Statistical Report data, and county, city, and
board of education nancial audit data, all for scal
year 2019-20.
9
Tennessee Comptroller of the Treasury, Transparency
and Accountability for Governments in Tennessee
(TAG), selected 2019-20 debt service expenditures,
https://comptroller.tn.gov/oce-functions/la/e-
services/tag-tableau.html (data pulled and provided
by Nathan Abbott, Senior Information Systems
Specialist, Tennessee Comptroller’s Division of Local
Government Audit, May 13, 2021).
10
Tennessee Department of Education, Annual
Statistical Report, 2020 – Table 48 - Debt Service,
https://www.tn.gov/content/dam/tn/education/
documents/asr/2020_ASR_PDFCombined_Upd.pdf
(accessed March 8, 2021).
11
OREA calculations using Tennessee Comptroller
TAG data, Tennessee Department of Education
Annual Statistical Report data, and county, city, and
board of education nancial audit data, all for scal
year 2019-20.
12
Tennessee Department of Education, Annual
Statistical Report, 2015-2020, Table 7 – Average Daily
Membership Grades Kindergarten through Twelve,
https://www.tn.gov/education/data/department-
reports.html (accessed March 4, 2021).
13
Public Chapter 535, 1992.
14
Patricia Saenz-Armstrong, “Comparing school
districts on class size policies,” National Council on
Teacher Quality, Oct. 14, 2021, p. 2, https://www.
nctq.org/blog/Comparing-school-districts-on-class-
size-policies (accessed Feb. 10, 2022).
15
“Americans with Disabilities Act (ADA),” U.S.
Code 42, 12101 et seq.
16
Tyler Carpenter, Presley Powers, Mark McAdoo,
Building Tennessee’s Tomorrow: Anticipating the
State’s Infrastructure Needs, July 2020 through
June 2025, Tennessee Advisory Commission on
Intergovernmental Relations, Jan. 2022, pdf p.
262, https://www.tn.gov/tacir/infrastructure/
infrastructure-reports-/building-tennessee-s-
tomorrow-2020-2025.html (accessed Feb. 9,
2022).
17
Ibid.
18
e facility rating scale used by local ocials
to inventory school conditions as of July 2020 in
TACIR’s January 2022 report, Building Tennessee’s
Tomorrow: Anticipating the State’s Infrastructure Needs,
is as follows:
Excellent: can be maintained in a “like new”
condition and continually meet all building code
and functional requirements with only minimal
routine maintenance.
Good: does not meet the denition of “excellent,”
but the structural integrity is sound, and the
facility can meet building code and functional
requirements with only routine or preventive
maintenance or minor repairs that do not hinder
its use.
Fair: structural integrity is sound, but the
maintenance or repairs required to ensure that it
meets building code or functional requirements
hinder – but do not disrupt – the facility’s use.
Poor: repairs required to keep the structural
integrity sound or to ensure that it meets building
code or functional requirements are costly
and disrupt – or in the case of an individual
component may prevent – the facility’s use.
19
Tyler Carpenter, Presley Powers, Mark McAdoo,
Building Tennessee’s Tomorrow: Anticipating the
State’s Infrastructure Needs, July 2020 through
June 2025, Tennessee Advisory Commission on
Intergovernmental Relations, Jan. 2022, pdf p.
23, https://www.tn.gov/tacir/infrastructure/
31
infrastructure-reports-/building-tennessee-s-
tomorrow-2020-2025.html (accessed Feb. 9, 2022).
20
Ibid., p.21.
21
Ibid., p.23.
22
Tennessee Code Annotated 49-3-1001 et seq.
23
Tennessee Code Annotated 9-21-205, 9-21-207.
24
Municipal Securities Rulemaking Board (MSRB)
Electronic Municipal Market Access, “Ocial
Statement for the $44,350,000 Local Government
Improvement Bonds,” Series VI-D, Dec. 15, 2004
(with the City of Oak Ridge’s $10 million portion
designated Series VI-D-3), https://emma.msrb.org/
MS228954-MS204262-MD396862.pdf (accessed on
Dec. 12, 2021).
25
Michael Mount, David Keiser, Emma Johnson,
Melissa Brown, Eects of Sharing of Resources among
School Systems in Counties with More than One
School System, Tennessee Advisory Commission
on Intergovernmental Relations, Dec. 2020,
pdf p. 16, https://www.tn.gov/content/dam/tn/
tacir/2020publications/2020MultiSystemSchools.pdf
(accessed Dec. 12, 2021).
26
University of Tennessee County Technical Advisory
Service, table of counties’ adequate facilities tax
information, Nov. 11, 2021; Tennessee Comptroller
of the Treasury, Transparency and Accountability for
Governments in Tennessee (TAG), selected 2019-
20 adequate facilities/development tax revenues,
https://comptroller.tn.gov/oce-functions/la/e-
services/tag-tableau.html (data pulled and provided
by Nathan Abbott, Senior Information Systems
Specialist, Tennessee Comptroller’s Division of Local
Government Audit, Feb. 18, 2022); Tennessee
Comptroller’s Division of Local Government Audit,
Annual Financial Report – Williamson County,
Tennessee, for the year ended June 30, 2020, pdf p.
24, https://comptroller.tn.gov/content/dam/cot/la/
advanced-search/2020/county/FY20WilliamsonAFR.
pdf (accessed Jan. 27, 2022).
27
University of Tennessee County Technical
Assistance Service, Private Acts of 2004, Chapter 90,
https://www.ctas.tennessee.edu/private-acts/private-
acts-2004-chapter-90 (accessed Jan. 24, 2022).
28
Tennessee Comptroller of the Treasury,
Transparency and Accountability for Governments
in Tennessee (TAG), selected 2019-20 adequate
facilities/development tax revenues, https://
comptroller.tn.gov/oce-functions/la/e-services/
tag-tableau.html (data pulled and provided by
Nathan Abbott, Senior Information Systems
Specialist, Tennessee Comptroller’s Division of Local
Government Audit, Feb. 18, 2022).
29
Tennessee Code Annotated 6-2-201(15), 6-33-
101(a).
30
University of Tennessee Municipal Technical
Advisory Service, “Development and Impact Fees
in Selected Tennessee Cities,” Feb. 2019; Tennessee
Comptroller’s Oce of Local Finance, email, Nov.
15, 2021; Tennessee Advisory Commission on
Intergovernmental Relations, email, April 21, 2022.
31
University of Tennessee County Technical
Assistance Service, Tennessee County Tax Statistics,
2020, pdf pp. 4-7, https://www.ctas.tennessee.edu/
sites/default/les/Tennessee%20County%20Tax%20
Statistics%202020.pdf (accessed Jan. 25, 2022).
32
Tennessee Comptroller’s Oce of Research and
Education Accountability, OREA BEP calculator,
Fiscal Year 2020, https://comptroller.tn.gov/content/
dam/cot/orea/documents/bep/fy-20-calculator-
spreadsheets/FY20OREABEPCalculator.xlsm
(accessed Feb. 16, 2022).
33
Tennessee Comptroller’s Oce of Research and
Education Accountability, OREA BEP calculator,
Fiscal Year 2020, https://comptroller.tn.gov/content/
dam/cot/orea/documents/bep/fy-20-calculator-
spreadsheets/FY20OREABEPCalculator.xlsm
(accessed Feb. 16, 2022).
34
In 2019-20, four county school districts
(Hamilton, Knox, Metro Nashville, and Shelby) had
authorized a total of 82 charter schools to operate in
their districts. Like other BEP funds, those calculated
for capital outlay are transferred to the charter schools
on a per-pupil basis.
35
OREA calculations using Tennessee Comptroller
32
TAG data, Tennessee Department of Education
Annual Statistical Report data, and county, city, and
board of education nancial audit data, all for scal
year 2019-20.
36
Tennessee State Board of Education, Tennessee
Basic Education Program (BEP) Blue Book,
2019-20, p. 6, https://www.tn.gov/content/
dam/tn/stateboardofeducation/documents/
bepcommitteeactivities/2019-bep/BEP_Blue_Book_
FY20_FINAL.pdf (accessed Jan. 31, 2022).
37
OREA analysis of Tennessee Department of
Education growth fund distribution data, 2017 -
2021.
38
Public Chapter 535, 1992.
39
Public Chapter 936, 1998.
40
Public Chapter 360, 1999.
41
Tennessee Code Annotated 49-3-351.
42
Tennessee Code Annotated 49-17-101 et seq.
43
Tennessee Comptroller of the Treasury, Department
of Education, State Board of Education, Energy
Ecient Schools Council, Tennessee Public Television
Council Performance Audit Report, Dec. 2018, pdf
p. 130, https://www.capitol.tn.gov/Archives/Joint/
committees/gov-opps/ed/Department%20of%20
Education%20for%20Dec%2019.pdf
(accessed Jan. 10, 2022).
44
Sandi ompson, Director, Tennessee
Comptroller’s Division of State Government Finance,
internal training presentation, Jan. 6, 2022.
45
U.S. Department of Agriculture-Rural
Development, “Community Facilities Direct Loan &
Grant Program” webpage, https://www.rd.usda.gov/
programs-services/community-facilities/community-
facilities-direct-loan-grant-program (accessed Jan. 30,
2022).
46
Tyler Carpenter, Presley Powers, Mark McAdoo,
Building Tennessee’s Tomorrow: Anticipating the
State’s Infrastructure Needs, July 2020 through
June 2025, Tennessee Advisory Commission on
Intergovernmental Relations, Jan. 2022, pdf pp.
249-253, https://www.tn.gov/tacir/infrastructure/
infrastructure-reports-/building-tennessee-s-
tomorrow-2020-2025.html (accessed Feb. 9, 2022).
47
Ibid., p.23.
33
Appendix A: District ADM changes over ve years
ANDERSON COUNTY -0.43 -0.16 -1.08 -1.48 -0.88 -0.81 -3.97
CLINTON -3.26 1.98 4.94 -2.77 1.88 0.55 2.56
OAK RIDGE 0.39 -0.67 0.12 1.63 2.17 0.73 3.67
BEDFORD COUNTY 1.24 0.54 0.87 0.77 0.91 0.87 4.42
BENTON COUNTY -1.14 -0.7 0.16 0.02 -2.48 -0.83 -4.1
BLEDSOE COUNTY -1.77 -2.23 -2.18 -2.72 -1.45 -2.07 -9.94
BLOUNT COUNTY -1.74 -2.05 -0.5 -1.91 0.8 -1.08 -5.31
ALCOA 1.17 1.53 1.95 2.86 1.21 1.74 9.02
MARYVILLE 0.16 2.1 2.25 0.44 0.83 1.16 5.9
BRADLEY COUNTY -0.74 -1.4 1.08 0.95 -0.39 -0.1 -0.52
CLEVELAND 2.48 1.54 0.63 -1.07 2.32 1.18 6
CAMPBELL COUNTY -1.39 -0.57 -2.01 -3.19 -1.13 -1.66 -8.04
CANNON COUNTY -1.88 -1.77 -2.4 2.13 1.04 -0.58 -2.93
CARROLL COUNTY -36.95 49.53 26.92 45.39 -51.62 6.65 -15.83
*HOLLOW ROCK-BR 2.11 -1.11 -2.06 1.6 -3.1 -0.51 -2.64
*HUNTINGDON -1.65 2.18 2.22 3.29 -0.76 1.06 5.3
*MCKENZIE -1.08 -2.25 0.97 -4.73 -2.52
-1.92 -9.33
*S. CARROLL -3.34 -0.01 -0.32 -1.78 -1.59 -1.41 -6.88
*W. CARROLL -2.03 0.28 -4.18 0.53 1.42 -0.8 -4.02
CARTER COUNTY 0.04 0.21 -3.94 -2.04 -2.43 -1.63 -7.96
ELIZABETHTON 0.62 0.64 -0.14 0.17 -0.03 0.25 1.26
CHEATHAM COUNTY -1.25 -0.29 -2.31 -3.4 -0.13 -1.47 -7.19
CHESTER COUNTY 0.81 1.28 -1.94 -1.62 0.11 -0.27 -1.4
CLAIBORNE COUNTY -2.48 -1.86 -2.53 -2.79 -0.38 -2.01 -9.65
CLAY COUNTY 0.28 -0.93 2.08 1.36 -1.99 0.16 0.76
COCKE COUNTY -1.19 -0.59 -1.32 -1.64 1.15 -0.72 -3.57
NEWPORT -2.25 -6.77 0.99 0.23 -5.32 -2.63 -12.67
COFFEE COUNTY -0.7 -0.5 -0.87 -0.73 0.06 -0.55 -2.72
MANCHESTER 4.85 -0.11 2.01 0.46 3.05 2.05 10.59
TULLAHOMA 1.92 0.82 -2.75 1.97 1.66 0.72 3.59
CROCKETT COUNTY -0.81 2.17 0.08 -2.86 -0.11 -0.31 -1.59
ALAMO 0.45 -2.13 -7.23 8.52 -0.82 -0.24 -1.84
BELLS 1.65 -2.81 1.86 -0.66 -0.59 -0.11 -0.62
CUMBERLAND COUNTY 0.4 -0.57 -1.13
-0.45 -0.95 -0.54 -2.68
DAVIDSON COUNTY 1.04 0.35 -1.04 -0.23 0.22 0.07 0.32
DECATUR COUNTY 2.76 -0.91 -0.72 -3.12 -0.41 -0.48 -2.47
DEKALB COUNTY -0.21 -0.53 -0.27 -0.6 -0.87 -0.49 -2.45
DICKSON COUNTY -0.67 0.74 -1.19 -0.91 -1.15 -0.64 -3.16
DYER COUNTY 0.65 -1.67 1.54 -0.98 -1.82 -0.46 -2.31
DYERSBURG 0.39 0.44 -4.05 -0.89 -1.84 -1.19 -5.89
FAYETTE COUNTY -1.01 0.71 1.21 -1.13 -1.26 -0.3 -1.5
Average
growth over
five years
Total growth
over five
years
2015-16
growth
(percent)
2016-17
growth
(percent)
2017-18
growth
(percent)
2018-19
growth
(percent)
2019-20
growth
(percent)
34
FENTRESS COUNTY -1.69 -0.99 -0.43 0.81 -0.07 -0.47 -2.35
FRANKLIN COUNTY 0.24 -2.3 -3.69 -0.48 -1.48 -1.54 -7.52
GIBSON COUNTY N/A N/A N/A N/A N/A N/A N/A
HUMBOLDT -0.37 3.96 -6.88 2.99 6.4 1.22 5.69
*MILAN -0.58 0.76 -1.48 -2.56 1.64 -0.44 -2.26
*TRENTON -1.21 -2.42 0.91 1.38 -2.57 -0.78 -3.92
*BRADFORD -0.1 4.12 -0.25 4.23 4.08 2.42 12.56
*GIBSON CO. SPEC. 1.5 -0.12 -0.53 -0.68 0.22 0.08 0.38
GILES COUNTY 0.8 -1.29 -2.93 -2.83 0.36 -1.18 -5.82
GRAINGER COUNTY 1.97 -3.88 -0.74 -2.21 -3.35 -1.64 -8.03
GREENE COUNTY -2.95 -1.67 -2.14 -2.24 -2.54 -2.31 -11.02
GREENEVILLE 1.62 -1.07 0 2.24 0.68 0.69 3.48
GRUNDY COUNTY -3.39 -0.85 -3.91 -3 -4.71 -3.17 -14.92
HAMBLEN COUNTY 0.39 0.79 0.61 -0.29 -0.55 0.19 0.95
HAMILTON COUNTY 1.01 0.24 0.82 0.41 0.72 0.64 3.24
HANCOCK COUNTY 2.52 -1.73 -0.45 -1.41 -5.21 -1.26 -6.27
HARDEMAN COUNTY -4.18 -1.58 -1.25 -4.2 -1.47 -2.54 -12.1
HARDIN COUNTY -1.88 -0.67 0.08 -0.61 -1.06
-0.83 -4.09
HAWKINS COUNTY -0.9 -3.68 -2.06 -2.11 -0.99 -1.95 -9.39
ROGERSVILLE 2.39 2.71 -1.93 0.27 -1.77 0.33 1.57
HAYWOOD COUNTY -2.05 -3.38 -1.69 -2.24 -2.03 -2.28 -10.89
HENDERSON COUNTY 0.97 -0.05 -1 -0.42 0.21 -0.06 -0.29
LEXINGTON -5.75 -7.29 -0.72 -0.53 2.79 -2.3 -11.31
HENRY COUNTY -1.39 -0.41 -1.39 0.77 -0.17 -0.52 -2.57
*PARIS 0.42 -4.46 -0.17 -2.35 -0.86 -1.48 -7.26
HICKMAN COUNTY -4.27 -1.42 0.08 -0.66 -0.33 -1.32 -6.49
HOUSTON COUNTY -0.25 0.37 -0.38 -0.63 -1.3 -0.44 -2.17
HUMPHREYS COUNTY 1.21 -1.86 -0.9 1.51 -0.76 -0.16 -0.84
JACKSON COUNTY -3.43 -2.09 -1.37 -0.56 -0.74 -1.64 -7.95
JEFFERSON COUNTY -1.02 -0.91 -1.51 -1.21 -0.06 -0.94 -4.63
JOHNSON COUNTY -3.61 -2.43 0.11 -1.12 1.95 -1.02 -5.09
KNOX COUNTY 0.6 0.45 0.73 0.11 1.03 0.59 2.96
LAKE COUNTY -2.98 -2.19 -3.04 -5.38 0.47 -2.62 -12.53
LAUDERDALE COUNTY -4.3 -1.52 -3.52 -4.3 -1.8 -3.09 -14.55
LAWRENCE COUNTY 1.19 1.56 0.77
0.58 -3.67 0.09 0.34
LEWIS COUNTY -2.21 -3.97 -1.94 -0.36 -0.48 -1.79 -8.68
LINCOLN COUNTY -0.63 -1.95 -1.73 0.27 0.45 -0.72 -3.57
FAYETTEVILLE 0.13 -3.87 -0.95 -2.74 -2.12 -1.91 -9.24
LOUDON COUNTY -1.06 -1.07 2.45 -1.66 -0.81 -0.43 -2.18
LENOIR CITY -0.44 -2.62 -1.93 2.7 4.02 0.35 1.57
MCMINN COUNTY -0.72 -0.21 -1.57 -2.12 -1.95 -1.32 -6.42
ATHENS 0.46 -1.18 2.09 -0.09 2.75 0.81 4.04
ETOWAH 12.55 -0.33 4.91 -1.72 -2.45 2.59 12.82
MCNAIRY COUNTY -0.03 -1.42 -0.87 -2.82 -1.94 -1.41 -6.89
35
MACON COUNTY -0.02 3.8 0.93 0.16 0.16 1.01 5.08
MADISON COUNTY -0.41 -0.7 -1.35 -1.37 -0.73 -0.91 -4.48
MARION COUNTY -1.17 -0.94 -0.82 -0.8 -1.78 -1.1 -5.39
*RICHARD CITY 2.06 -8.72 -1.26 -1.5 -13.8 -4.65 -21.9
MARSHALL COUNTY 0.87 1.01 0.15 -0.77 -0.21 0.21 1.05
MAURY COUNTY 1.49 2.91 1.31 0.57 0.51 1.36 6.96
MEIGS COUNTY -1.74 -3 0.12 2.56 -2.69 -0.95 -4.77
MONROE COUNTY -0.79 -0.17 -2.58 -0.89 -0.59 -1.01 -4.94
SWEETWATER 0.79 -1 -4.38 -1.41 -1.51 -1.5 -7.35
MONTGOMERY COUNTY 1.59 3.38 3.67 1.59 3.1 2.66 14.03
MOORE COUNTY -4.37 -2.62 1.02 1.47 1.38 -0.62 -3.22
MORGAN COUNTY -0.59 -2.17 -3.6 -3 -2.29 -2.33 -11.14
OBION COUNTY -2.79 -3.28 -2.77 -2.02 -0.48 -2.27 -10.86
UNION CITY 2.23 2.75 -0.5 -2.2 -2.05 0.04 0.11
OVERTON COUNTY -1.52 -3.06 0.75 0.18 1.27 -0.48 -2.43
PERRY COUNTY -3.44 -0.21 -2.97 -1.07 0.84 -1.37 -6.73
PICKETT COUNTY -2.45 -4.26 -6.59 -4.65 0.25 -3.54 -16.61
POLK COUNTY -2.39 -3.83 -1.81 -2.97 -0.87
-2.37 -11.34
PUTNAM COUNTY 0.16 1.39 1.11 1.26 2.03 1.19 6.09
RHEA COUNTY 0.44 -0.78 -1.07 -0.09 -1.18 -0.54 -2.66
DAYTON 3.73 0.79 0.9 -1.38 -1.18 0.57 2.8
ROANE COUNTY -1.85 -1.69 -1.18 -1.33 -0.46 -1.3 -6.35
ROBERTSON COUNTY -1.5 0.99 -0.31 -0.82 12.2 2.11 10.35
RUTHERFORD COUNTY 2.96 2.67 2.41 2.33 2.16 2.51 13.17
MURFREESBORO 6.01 0.43 4.21 0.84 3.17 2.93 15.43
SCOTT COUNTY -1.65 -2.57 0.52 0.02 -0.48 -0.83 -4.12
*ONEIDA -0.84 1.51 -2.21 0.18 0.62 -0.15 -0.78
SEQUATCHIE COUNTY -0.14 -2.38 -1.72 -0.75 -1.61 -1.32 -6.44
SEVIER COUNTY 0.08 0.32 -1.18 0.27 0.94 0.09 0.42
SHELBY COUNTY -3.93 -2.58 0.78 0.37 1.4 -0.79 -4
ARLINGTON 2.78 2.06 -10.2 1.96 2.55 -0.17 -1.5
BARTLETT 2.01 2.24 3.14 0.13 -0.77 1.35 6.88
COLLIERVILLE 2.14 3.35 3.62 4.21 1.14 2.89 15.28
GERMANTOWN 0.91 2.62 2.17 0.32 0.87 1.38 7.06
LAKELAND 6.73 4.73 70.68
7.74 5.57 19.09 116.98
MILLINGTON -4.32 0.22 -1.99 -1.06 1.39 -1.15 -5.73
SMITH COUNTY 0.42 -1.3 -0.21 -2.21 1.32 -0.39 -1.99
STEWART COUNTY 0.08 -1.31 0.63 0.18 -0.66 -0.22 -1.08
SULLIVAN COUNTY -1.78 -2.52 -2.93 -3 -2.18 -2.48 -11.82
BRISTOL -0.61 -0.25 -0.4 2.13 -3.71 -0.56 -2.88
KINGSPORT 1.61 2.54 0.39 -0.49 0.04 0.82 4.12
SUMNER COUNTY 1.48 0.56 0.64 0.27 1.81 0.95 4.84
TIPTON COUNTY -1.9 -1.73 -0.73 -2.34 -1.38 -1.61 -7.82
TROUSDALE COUNTY 3.46 1.96 -1.54 1.06 3.11 1.61 8.22
36
UNICOI COUNTY -3.87 -1.39 0.28 -1.82 -3.68 -2.1 -10.12
UNION COUNTY -17.6 4.1 10.88 7.55 5.84 2.15 8.26
VAN BUREN COUNTY -0.61 -2.27 -0.92 3.07 0.79 0.01 -0.02
WARREN COUNTY -1.45 1.29 -2.57 -0.3 -0.3 -0.67 -3.33
WASHINGTON COUNTY -0.82 -1.74 -1.45 -0.97 0.77 -0.84 -4.17
JOHNSON CITY 0.51 -0.62 0.19 0.9 0.82 0.36 1.8
WAYNE COUNTY -0.61 -2.49 -0.15 -4.05 -2.69 -2 -9.64
WEAKLEY COUNTY -1.16 -1.35 -2.49 -1.42 -1.04 -1.49 -7.25
WHITE COUNTY -2.16 -0.8 -0.4 -2.1 -0.2 -1.13 -5.56
WILLIAMSON COUNTY 3.75 3.74 2.72 3.09 2.15 3.09 16.42
*FRANKLIN -4.1 2.91 -0.3 -2.18 0.16 -0.7 -3.59
WILSON COUNTY 2.63 2.83 2.03 1.46 1.78 2.14 11.18
*LEBANON -2.09 -0.42 2.53 2.76 2.58 1.07 5.38
Growth Decline
2% or more Between 0.01 and 1.99% Between 0 and 1.99% 2% or more
37
Appendix B: BEP Calculation of capital outlay
component | 2019-20
A cost per square foot by type of school (elementary, middle, high) is calculated using a three-year average of
school construction costs from a national construction cost service, adjusted for Tennessee cities’ specic costs,
and inated up by one year using a non-compensation ination factor.
In the FY 2019-20 BEP calculation, the cost per square foot for elementary (K-4) schools used was $139.41,
for middle (5-8) schools used was $140.00, and for high (9-12) schools was $149.73.
A
A set square-footage allowance per student, which remains constant in BEP calculations, allows 100 square
feet per elementary student, 110 square feet per middle school student, and 130 square feet per high school
student. Multiplying the costs per square foot by the allowable square feet per student, provides a standardized
construction cost per student for all Tennessee districts.
ose standardized construction costs per student are then applied to each district, multiplied by the number
of enrolled students (average daily membership) in each grade band.
For each grade band total, a 7 percent addition for architects’ fees and a 10 percent addition for equipment are
calculated and added to the total construction cost.
A
Tennessee State Board of Education, Tennessee Basic Education Program (BEP) Blue Book, 2019-20, p. 6, https://www.tn.gov/content/dam/tn/stateboardofeducation/
documents/bepcommitteeactivities/2019-bep/BEP_Blue_Book_FY20_FINAL.pdf (accessed Jan. 31, 2022).
School grade level
Square foot allowance
per student
Cost per square foot
(3-year average,
ination adjusted)
Cost per student
(Square foot per student x
cost per square foot)
Elementary (K-4)
100 $139.41 $13,941
Middle (5-8)
110 $140.00 $15,400
High School (9-12)
130 $149.73 $19,465
School grade level
Cost per student
(standard for all districts)
District ADM
(varies by district)
District base
capital cost
Elementary (K-4)
$13,941 3,250 $45,308,250
Middle (5-8)
$15,400 2,831 $43,597,400
High School (9-12)
$19,465 2,478 $48,234,270
Total
$137,139,920
School grade level
District base
capital cost
Plus 17% for architect
and equipment
District total
capital cost
Elementary (K-4)
$45,308,250 $7,702,403 $53,010,652
Middle (5-8)
$43,597,400 $7,411,558 $51,008,958
High School (9-12)
$48,234,270 $8,199,826 $56,434,096
Total
$160,453,706
38
Once the total construction cost for hypothetical new schools is calculated, the next part of the formula
calculates the nancing cost. e BEP formula assumes that a bond will be issued for the total construction
cost, to be paid back over 20 years, at 6 percent interest with monthly payments.
e total nanced cost of construction is then divided by 40 years, considered to be the useful life of a school.
e resulting gure is the total BEP capital outlay component.
e state and local shares of the component are calculated using each district’s scal capacity index. Overall,
capital outlay components are funded 50 percent by the state, but that varies by district. Selecting a state share
of 71.52 percent (such as Bedford County’s scal capacity for capital outlay in 2019-20) would result in the
state funding for this example at $4,932,907.
Districts are not required to use BEP capital outlay funds for capital expenditures. e BEP formula is to
calculate funding, not to direct spending.
Note: Rounded numbers were used in calculations for simplicity.
Amount to be borrowed: $160,453,706
at 6.0 percent interest and
repaid over 20 years
Generates total interest of: $115,435,938
Total nanced cost of: $275,889,644
Total nanced cost: $275,889,644
Divided into 40 payments to reect
expected useful life of a school
Total BEP capital outlay amount: $6,897,241
Total BEP capital outlay: $6,897,241
At 71.52 percent state share
based on scal capacity
State BEP funded capital outlay: $4,932,907
39
Appendix C: ESSER allocations by Tennessee
school district
Local Educational Agency
ESSER 1.0
Allocation*
ESSER 2.0
Allocation
ESSER 3.0
Allocation
ALAMO CITY SCHOOL DISTRICT $90,590.34 $403,558.91 $906,335.98
ALCOA CITY SCHOOL DISTRICT $249,118.71 $955,547.78 $2,146,024.57
ANDERSON COUNTY SCHOOL DISTRICT $1,363,922.91 $5,211,798.01 $11,704,957.98
ARLINGTON CITY SCHOOLS $861,928.81 $2,935,408.38 $6,592,510.24
ATHENS CITY ELEMENTARY SCHOOL DISTRICT $579,168.59 $2,370,524.18 $5,323,860.58
BARTLETT CITY SCHOOLS $2,140,221.88 $7,850,155.94 $17,630,335.11
BEDFORD COUNTY SCHOOL DISTRICT $1,689,353.92 $7,091,905.34 $15,927,411.96
BELLS CITY SCHOOL DISTRICT $85,413.87 $347,756.03 $781,010.64
BENTON COUNTY SCHOOL DISTRICT $590,184.73 $2,651,824.82 $5,955,621.85
BLEDSOE COUNTY SCHOOL DISTRICT $477,863.69 $2,238,873.52 $5,028,191.89
BLOUNT COUNTY SCHOOL DISTRICT $1,961,847.05 $7,534,471.10 $16,921,351.81
BRADFORD SPECIAL SCHOOL DISTRICT $89,758.42 $305,684.11 $686,523.08
BRADLEY COUNTY SCHOOL DISTRICT $1,601,836.73 $6,994,966.43 $15,709,700.96
BRISTOL CITY SCHOOL DISTRICT $784,372.33 $3,709,696.25 $8,331,450.81
CAMPBELL COUNTY SCHOOL DISTRICT $1,953,048.13 $7,045,982.86 $15,824,276.61
CANNON COUNTY SCHOOL DISTRICT $371,004.16 $1,601,092.95 $3,595,827.33
CARTER COUNTY SCHOOL DISTRICT $1,592,960.01 $6,694,242.58 $15,034,317.91
CHEATHAM COUNTY SCHOOL DISTRICT $769,981.28 $2,767,862.71 $6,216,226.47
CHESTER COUNTY SCHOOL DISTRICT $535,860.30 $2,169,202.65 $4,871,721.01
CLAIBORNE COUNTY SCHOOL DISTRICT $1,198,322.50 $5,163,117.98 $11,595,629.56
CLAY COUNTY SCHOOL DISTRICT $352,997.11 $1,454,668.48 $3,266,978.76
CLEVELAND CITY SCHOOL DISTRICT $1,304,557.71 $5,422,194.40 $12,177,478.39
CLINTON CITY ELEMENTARY SCHOOL DISTRICT $158,763.95 $674,524.56 $1,514,886.35
COCKE COUNTY SCHOOL DISTRICT $1,552,244.99 $6,764,454.93 $15,192,004.87
COFFEE COUNTY SCHOOL DISTRICT $807,018.49 $3,727,220.93 $8,370,808.75
COLLIERVILLE CITY SCHOOLS $2,093,807.58 $7,130,725.02 $16,014,595.45
CROCKETT COUNTY SCHOOL DISTRICT $341,655.49 $1,439,623.93 $3,233,190.84
CUMBERLAND COUNTY SCHOOL DISTRICT $1,697,532.71 $6,740,238.59 $15,137,618.41
DAVIDSON COUNTY SCHOOL DISTRICT $26,007,292.76 $123,220,823.62 $276,736,466.07
DAYTON CITY ELEMENTARY SCHOOL DISTRICT $256,588.01 $1,108,871.15 $2,490,367.08
DECATUR COUNTY SCHOOL DISTRICT $397,053.03 $1,593,522.21 $3,578,824.52
DEKALB COUNTY SCHOOL DISTRICT $782,053.27 $2,980,856.22 $6,694,579.64
DICKSON COUNTY SCHOOL DISTRICT $1,422,463.35 $5,956,809.01 $13,378,146.86
DYER COUNTY SCHOOL DISTRICT $710,169.25 $2,763,069.58 $6,205,461.78
DYERSBURG CITY SCHOOL DISTRICT $860,883.13 $3,999,463.42 $8,982,226.71
ELIZABETHTON CITY SCHOOL DISTRICT $631,129.02 $2,519,890.05 $5,659,315.09
ETOWAH CITY ELEMENTARY SCHOOL DISTRICT $102,059.54 $422,607.76 $949,116.99
FAYETTE COUNTY SCHOOL DISTRICT $967,476.44 $4,002,575.28 $8,989,215.50
FAYETTEVILLE CITY ELEMENTARY SCHOOL $322,296.02 $1,212,555.20 $2,723,226.72
FENTRESS COUNTY SCHOOL DISTRICT $736,879.11 $3,000,369.68 $6,738,404.09
FRANKLIN COUNTY SCHOOL DISTRICT $1,003,928.14 $4,349,833.28 $9,769,107.64
FRANKLIN SPECIAL SCHOOL DISTRICT $388,870.40 $1,324,348.13 $2,974,297.76
GERMANTOWN CITY SCHOOLS $1,478,383.98 $5,034,823.18 $11,307,497.65
GIBSON SPECIAL DISTRICT $418,445.07 $1,575,980.82 $3,539,429.05
GILES COUNTY SCHOOL DISTRICT $801,985.65 $3,426,637.46 $7,695,740.98
GRAINGER COUNTY SCHOOL DISTRICT $814,913.07 $3,293,689.91 $7,397,159.67
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GREENE COUNTY SCHOOL DISTRICT $1,562,629.09 $6,556,020.58 $14,723,890.93
GREENEVILLE CITY SCHOOL DISTRICT $470,137.64 $2,038,638.30 $4,578,492.02
GRUNDY COUNTY SCHOOL DISTRICT $654,905.68 $2,363,317.77 $5,307,676.01
HAMBLEN COUNTY SCHOOL DISTRICT $2,311,033.57 $8,982,340.96 $20,173,061.82
HAMILTON COUNTY SCHOOL DISTRICT $10,712,853.56 $40,530,274.94 $91,025,240.10
HANCOCK COUNTY SCHOOL DISTRICT $436,109.51 $1,887,230.17 $4,238,450.88
HARDEMAN COUNTY SCHOOL DISTRICT $1,004,653.26 $4,212,343.28 $9,460,324.64
HARDIN COUNTY SCHOOL DISTRICT $1,012,277.60 $4,082,888.63 $9,169,587.89
HAWKINS COUNTY SCHOOL DISTRICT $1,752,340.12 $7,302,816.47 $16,401,088.41
HAYWOOD COUNTY SCHOOL DISTRICT $835,548.32 $3,293,753.42 $7,397,302.30
HENDERSON COUNTY SCHOOL DISTRICT $678,116.96 $2,999,594.22 $6,736,662.52
HENRY COUNTY SCHOOL DISTRICT $787,332.37 $3,501,495.88 $7,863,862.34
HICKMAN COUNTY SCHOOL DISTRICT $879,730.25 $3,497,160.67 $7,854,126.08
HOLLOW ROCK-BRUCETON SCHOOL DISTRICT $177,158.40 $796,354.99 $1,788,500.19
HOUSTON COUNTY SCHOOL DISTRICT $298,211.14 $1,203,453.59 $2,702,785.82
HUMBOLDT CITY SCHOOL DISTRICT $423,807.16 $1,974,873.61 $4,435,285.59
HUMPHREYS COUNTY SCHOOL DISTRICT $561,245.22 $2,246,003.05 $5,044,203.80
HUNTINGDON SPECIAL SCHOOL DISTRICT $291,214.58 $1,357,321.79 $3,048,351.93
JACKSON COUNTY SCHOOL DISTRICT $438,448.18 $1,745,742.56 $3,920,689.80
JEFFERSON COUNTY SCHOOL DISTRICT $1,528,635.20 $6,274,352.27 $14,091,303.91
JOHNSON CITY SCHOOL DISTRICT $1,516,113.06 $6,181,120.19 $13,881,917.90
JOHNSON COUNTY SCHOOL DISTRICT $706,241.21 $2,669,142.26 $5,994,514.37
KINGSPORT CITY SCHOOL DISTRICT $1,685,794.98 $7,603,109.14 $17,075,503.09
KNOX COUNTY SCHOOL DISTRICT $12,886,555.72 $50,810,033.58 $114,112,117.74
LAKE COUNTY SCHOOL DISTRICT $371,342.17 $1,479,305.97 $3,322,311.08
LAKELAND CITY SCHOOLS $373,183.59 $1,270,925.10 $2,854,317.24
LAUDERDALE COUNTY SCHOOL DISTRICT $1,318,596.36 $5,961,909.65 $13,389,602.17
LAWRENCE COUNTY SCHOOL DISTRICT $1,606,479.61 $6,975,456.32 $15,665,884.01
LEBANON SPECIAL SCHOOL DISTRICT $543,677.70 $2,171,341.84 $4,876,525.34
LENOIR CITY SCHOOL DISTRICT $331,075.02 $1,299,854.36 $2,919,288.24
LEWIS COUNTY SCHOOL DISTRICT $464,313.20 $1,877,216.07 $4,215,960.63
LEXINGTON CITY ELEMENTARY SCHOOL DISTRICT $205,467.92 $855,286.44 $1,920,851.84
LINCOLN COUNTY SCHOOL DISTRICT $642,930.41 $2,604,689.02 $5,849,761.55
LOUDON COUNTY SCHOOL DISTRICT $756,437.24 $3,021,183.37 $6,785,148.68
MACON COUNTY SCHOOL DISTRICT $976,782.85 $3,944,586.41 $8,858,980.75
MADISON CONSOLIDATED SCHOOL $3,897,423.21 $16,781,246.49 $37,688,295.80
MANCHESTER CITY SCHOOL DISTRICT $296,115.87 $1,347,321.06 $3,025,891.71
MARION COUNTY SCHOOL DISTRICT $905,594.73 $3,600,263.12 $8,085,679.54
MARSHALL COUNTY SCHOOL DISTRICT $793,791.46 $3,635,556.48 $8,164,943.41
MARYVILLE CITY SCHOOL DISTRICT $485,519.33 $1,824,291.08 $4,097,098.62
MAURY COUNTY SCHOOL DISTRICT $2,101,141.04 $8,095,367.71 $18,181,045.91
MCKENZIE SPECIAL SCHOOL DISTRICT $277,826.47 $1,113,420.28 $2,500,583.78
MCMINN COUNTY SCHOOL DISTRICT $1,337,113.68 $4,998,734.31 $11,226,447.18
MCNAIRY COUNTY SCHOOL DISTRICT $1,026,873.85 $4,168,041.92 $9,360,830.06
MEIGS COUNTY SCHOOL DISTRICT $433,451.67 $1,790,996.53 $4,022,323.80
MILAN CITY SPECIAL SCHOOL DISTRICT $405,972.26 $1,565,986.77 $3,516,983.84
MILLINGTON CITY SCHOOLS $805,062.04 $3,175,529.54 $7,131,788.25
MONROE COUNTY SCHOOL DISTRICT $1,219,872.51 $4,905,007.54 $11,015,950.17
MONTGOMERY COUNTY SCHOOL DISTRICT $6,085,141.00 $26,035,378.70 $58,471,762.18
MOORE COUNTY SCHOOL DISTRICT $119,030.04 $429,553.45 $964,716.03
MORGAN COUNTY SCHOOL DISTRICT $722,846.81 $2,906,064.66 $6,526,608.41
MURFREESBORO CITY ELEMENTARY SCHOOL $1,269,257.65 $5,642,066.76 $12,671,280.46
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NEWPORT CITY ELEMENTARY SCHOOL DISTRICT $481,269.85 $2,020,575.48 $4,537,925.50
OAK RIDGE CITY SCHOOL DISTRICT $756,515.31 $3,120,709.36 $7,008,669.91
OBION COUNTY SCHOOL DISTRICT $609,721.19 $2,599,575.01 $5,838,276.21
ONEIDA SPECIAL SCHOOL DISTRICT $239,345.89 $1,056,651.42 $2,373,088.99
OVERTON COUNTY SCHOOL DISTRICT $702,872.92 $2,767,127.37 $6,214,574.99
PARIS CITY SPECIAL SCHOOL DISTRICT $424,272.39 $1,957,338.91 $4,395,905.14
PERRY COUNTY SCHOOL DISTRICT $406,166.24 $1,478,306.57 $3,320,066.56
PICKETT COUNTY SCHOOL DISTRICT $149,424.50 $604,790.19 $1,358,272.85
POLK COUNTY SCHOOL DISTRICT $513,900.78 $2,109,622.76 $4,737,913.05
PUTNAM COUNTY SCHOOL DISTRICT $2,413,382.03 $9,206,454.93 $20,676,389.97
RHEA COUNTY SCHOOL DISTRICT $1,028,198.70 $4,332,305.26 $9,729,742.20
RICHARD CITY SPECIAL SCHOOL DISTRICT $66,892.97 $257,665.89 $578,680.99
ROANE COUNTY SCHOOL DISTRICT $1,395,189.85 $5,904,014.38 $13,259,577.61
ROBERTSON COUNTY SCHOOL DISTRICT $1,673,761.85 $6,573,070.63 $14,762,182.91
ROGERSVILLE CITY ELEMENTARY SCHOOL DISTRICT $168,052.74 $833,165.84 $1,871,172.12
RUTHERFORD COUNTY SCHOOL DISTRICT $4,406,039.06 $19,491,250.70 $43,774,580.29
SCOTT COUNTY SCHOOL DISTRICT $986,929.29 $3,556,493.21 $7,987,378.54
SEQUATCHIE COUNTY SCHOOL DISTRICT $556,965.57 $2,217,130.62 $4,979,360.42
SEVIER COUNTY SCHOOL DISTRICT $2,862,713.31 $12,255,157.02 $27,523,341.79
SHELBY COUNTY SCHOOL DISTRICT $48,633,664.51 $224,032,803.64 $503,145,852.64
SMITH COUNTY SCHOOL DISTRICT $546,292.57 $2,190,323.85 $4,919,156.22
SOUTH CARROLL SPECIAL SCHOOL DISTRICT $90,753.94 $385,546.23 $865,882.05
STEWART COUNTY SCHOOL DISTRICT $384,918.37 $1,624,543.86 $3,648,494.74
SULLIVAN COUNTY SCHOOL DISTRICT $2,130,586.57 $9,176,960.79 $20,610,150.34
SUMNER COUNTY SCHOOL DISTRICT $3,461,661.69 $14,009,559.97 $31,463,481.60
SWEETWATER CITY SCHOOL DISTRICT $357,376.91 $1,351,078.02 $3,034,329.31
TIPTON COUNTY SCHOOL DISTRICT $1,959,321.99 $7,944,180.19 $17,841,500.22
TRENTON SPECIAL SCHOOL DISTRICT $276,323.04 $1,283,332.43 $2,882,182.33
TROUSDALE COUNTY SCHOOL DISTRICT $238,609.19 $960,310.82 $2,156,721.70
TULLAHOMA CITY SCHOOL DISTRICT $606,227.55 $3,151,299.83 $7,077,371.76
UNICOI SCHOOL DISTRICT $515,334.92 $2,088,986.23 $4,691,566.32
UNION CITY SCHOOL DISTRICT $613,465.68 $2,247,630.84 $5,047,859.59
UNION COUNTY SCHOOL DISTRICT $915,449.31 $3,528,092.07 $7,923,593.62
VAN BUREN COUNTY SCHOOL DISTRICT $210,360.06 $917,018.89 $2,059,494.16
WARREN COUNTY SCHOOL DISTRICT $1,629,651.60 $8,338,012.45 $18,725,991.53
WASHINGTON COUNTY SCHOOL DISTRICT $1,312,491.76 $5,326,779.68 $11,963,190.47
WAYNE COUNTY SCHOOL DISTRICT $539,055.82 $2,138,612.18 $4,803,019.16
WEAKLEY COUNTY SCHOOL DISTRICT $939,040.76 $3,871,148.56 $8,694,049.76
WEST CARROLL SPECIAL DISTRICT $234,252.75 $1,038,244.33 $2,331,749.28
WHITE COUNTY SCHOOL DISTRICT $928,876.18 $3,894,542.65 $8,746,589.56
WILLIAMSON COUNTY SCHOOL DISTRICT $588,381.64 $2,325,327.03 $5,222,354.19
WILSON COUNTY SCHOOL DISTRICT $1,332,270.83 $5,589,863.74 $12,554,039.91
TOTAL: $227,067,600.18 $968,525,616.43 $2,175,170,953.23
* ESSER 1.0 funds are not eligible to be used for facility repairs or improvements. Figures are included here only for context of the full ESSER program.
Note: is table does not include ESSER allocations for the Achievement School District, the State Board of Education (a charter school authorizer when ESSER
funds were allocated), or the four state special schools. No ESSER funds were reported for Carroll County School District, a limited-service district.
42
Oce of Research and Education Accountability Sta
Director
♦ Russell Moore
Assistant Director
♦ Linda Wesson
Principal Legislative Research Analysts
♦ Kim Potts
Lauren Spires
Associate Legislative Research Analysts
Erin Brown
♦ Lance Iverson
♦ Anna Johnson
♦ Dana Spoonmore
♦ Cassie Stinson
♦ Jaymi ibault
Publication Specialist
♦ Paige Donaldson
Program Coordinator
♦ Caitlin Kaufman
Special thanks to Comptroller sta Nathan Abbott and Jerry Durham, Local Government Audit,
and Steve Osborne, Local Government Finance, who also assisted with this project.
♦ Indicates sta who assisted with this project
Oce of Research and Education Accountability
Russell Moore | Director
425 Rep. John Lewis Way N.
Nashville, Tennessee 37243
615.401.7866
www.comptroller.tn.gov/OREA/
