The present system of providing and funding K-12 education in Tennessee has been in place since the enactment of the Education Improvement Act in 1992.  Formerly, public education in this state was funded according to the Tennessee Foundation Program (TFP), a system that was found unconstitutional because it denied children in small school systems the same opportunities provided to those in the larger and more affluent ones. Tennessee Small School Systems v. McWherter, 851 S.W.2d 139 (Tenn. 1993). The TFP was replaced with the Basic Education Program (BEP), a funding formula providing increased and more equalized funding among the state's local school systems. T.C.A. § 49-3-351.

The BEP provides for minimum levels of funding at both the state and local level.  The BEP has three major categories: instruction, classroom, and non-classroom.  The funds generated by the BEP are divided into state and local shares for each of the three major categories.  Student enrollment as measured by average daily membership is the primary driver of funds generated by the BEP.  The state and local share for each school system is based on an equalization formula. This equalization formula is the primary factor in determining the state's share of funding versus the local share of funding for each local education agency (LEA).  The equalization formula determines the fiscal capacity at the county level and is driven primarily by local property values and sales tax.  Local school systems are free to raise additional education dollars in addition to the funds generated by the BEP.  The statutes pertaining to education funding are found in Tennessee Code Annotated, Title 49, Chapter 3, Part 3.

The state board of education, in consultation with the commissioner of education, establishes performance goals and measures and sets objectives for achievement for the state and for all local education agencies (LEAs). Schools and LEAs are evaluated annually. T.C.A. § 49-1-602.

On the local level, the management and control of the county schools is the responsibility of the county board of education and the director of schools. Counties are required to have a board of education whose members are popularly elected to staggered four-year terms. T.C.A. § 49-2-201. Each board of education is required to employ a director of schools by contract of up to four years' duration. T.C.A. §§ 49-2-203, 49-2-301.  The authority of the board of education and the director of schools is subject to state law, rules and regulations adopted by the state board of education, and the express powers given the state commissioner of education. The county board of education establishes local policies and regulations within the authority given to the board. The director of schools serves as the chief administrative officer to implement board policies and manage the county department of education within the guidelines provided by the state and the county board of education.

Title 49 of Tennessee Code Annotated (Volume 9) defines the funding mechanism for education and sets out the duties and authority of the above-mentioned boards and officials as well as those of the county legislative body and county trustee as they relate to education.