TACIR fiscal-capacity update flags virtual‑school enrollment, model changes under consideration

Tennessee Advisory Commission on Intergovernmental Relations staff on May 29 laid out the methodology behind TACIR’s fiscal-capacity index and warned that recent increases in virtual-school enrollment can lower a county’s measured fiscal capacity while concentrating service responsibility.

Senior research associate Presley Powers explained that the TISA base funding for FY24–25 is set at $7,075 per student and described the regression-based fiscal-capacity model TACIR uses to estimate counties’ ability to fund education. She said variables include per-pupil revenue, sales-tax base per student, equalized property assessment per student, per-capita income and a service-responsibility factor that measures students per 100 residents. Powers recommended replacing the model’s outdated tax-equivalent-payment data with industrial-development-board assessment data that CBER already uses, noting the tax-equivalent payments dataset has not been updated since 1995.

Powers highlighted how virtual schools concentrate service responsibility in counties that operate statewide- or multi-county virtual programs. She said Union and Johnson counties have the largest statewide virtual enrollments and that an 80% year-to-year ADMs increase flagged Johnson County for further review. Powers told commissioners that TACIR obtains virtual-school enrollment data from the Department of Education and that the base funding portion of TISA follows the student, while some local funding treatment differs.

Commissioners pressed staff on data sources, verification of virtual enrollments, how pilot (PILOT/TEP) payments are handled in the model and whether debt is considered. Director Lippert and staff confirmed TACIR’s model currently does not incorporate updated pilot payment data (the CBER model does), and staff said debt is not included in either model. County Executive Huffman and others warned that large industrial PILOTs can materially change capacity calculations for a region and urged attention to how pilot agreements are treated.

Powers said TACIR uses three-year averages to smooth sudden changes and that staff are monitoring variables (virtual students, service responsibility) as well as the possibility of transitioning to a school-system-level model to better reflect intra-county disparities.