A Critical Examination of Educational Finance: The Tennessee Center for Educational Finance and Policy's Foundational Michigan Research and Strategic Replication in Tennessee

Executive Summary

The Tennessee Center for Educational Finance and Policy (TNEFP) operates as a research hub committed to a rigorous, justice-oriented analysis of public school funding systems. Its mission is to provide an independent, evidence-based perspective on critical issues in education by examining funding mechanisms within their historical, social, and political contexts (Tennessee Center for Educational Finance and Policy, 2025). The TNEFP’s foundational work, conducted in Michigan, exposed significant and systemic funding gaps that disproportionately affected Black students and those from low-income families. This research, which leveraged powerful conceptual frameworks like Critical Race Theory and Critical Policy Analysis, demonstrated how a reliance on local property taxes in Michigan reinforced racial and economic inequities, with far-reaching consequences for student achievement and teacher retention (Caldwell et al., 2021; Smart et al., 2023).

The TNEFP is now strategically positioned to apply this proven research framework to its home state of Tennessee. With the recent implementation of the Tennessee Investment in Student Achievement (TISA) funding formula, which replaced the Basic Education Program (BEP), an opportunity exists for a critical, independent examination of this new policy's efficacy (Tennessee Comptroller of the Treasury, 2025; The Alliance TN, 2023; Tennessee Disability Coalition, n.d.). The replication of the Michigan study in Tennessee will serve as a timely and crucial analysis, testing whether TISA’s student-based model is a genuine structural solution to educational inequity or if it inadvertently perpetuates existing disparities. This report provides a detailed overview of the TNEFP's research methodology, key findings from its Michigan work, and its strategic plan for contributing to the ongoing policy dialogue in Tennessee.

I. The TNEFP's Vision: A Justice-Oriented Approach to Educational Finance

The Tennessee Center for Educational Finance and Policy (TNEFP) distinguishes itself through a research agenda centered on equity and a deep understanding of the structural forces that shape educational outcomes. The organization is a research hub dedicated to a rigorous, justice-oriented examination of Tennessee’s public school funding systems (Tennessee Center for Educational Finance and Policy, 2025). Its core mission is to provide an independent and evidence-based perspective on the critical issues facing education in the state. The TNEFP’s work is founded on the belief that understanding the historical, social, and political contexts behind school funding is essential for creating a more just and equitable educational landscape. The ultimate goal is to serve as a trusted resource for policymakers, school leaders, and the public, informing data-driven reform that guarantees every Tennessee student has access to an adequate and equitably funded education (Tennessee Center for Educational Finance and Policy, 2025).

The research team is led by key personnel with extensive experience in this area. Dr. Rajah E. Smart serves as the Director of Research. Dr. Phillip Caldwell is also a key figure, serving as a Faculty Advisor for the Center (Tennessee Center for Educational Finance and Policy, 2025), as well as Dr. Karri Grob of the University of Michigan's Medical School.

Conceptual and Analytical Frameworks

To fulfill its mission, the TNEFP leverages established conceptual frameworks to go beyond surface-level data and investigate the deeper structural issues that can perpetuate inequities (Smart et al., 2023; Tennessee Center for Educational Finance and Policy, 2025). The two primary lenses through which the TNEFP’s work is conducted are Critical Race Theory and Critical Policy Analysis.

Critical Race Theory (CRT) is applied by the TNEFP to assert that racism is not merely a series of isolated acts but a fundamental and permanent fixture in U.S. society (Smart et al., 2023). This framework challenges the notion of "colorblindness" in public policy, arguing that seemingly race-neutral laws can, in fact, perpetuate racial disparities. A central tenet of this approach is the concept of "whiteness as property," which posits that societal structures and laws have historically bestowed privileges and economic advantages based on White identity, often at the expense of people of color (Smart et al., 2023). The TNEFP’s use of CRT also employs intersectionality to understand how multiple identities—such as race and class—converge to create unique and compounded forms of disadvantage, particularly for Black students who also come from low-income backgrounds (Cladwell et al., 2022); Smart et al., 2023). Furthermore, the framework emphasizes the importance of historical context to understand how past policies continue to shape current racial inequities in education (Cladwell et al., 2022).

Complementing this, Critical Policy Analysis (CPA) provides a methodology for assessing the multifaceted systems and environments in which policy is created and implemented (Smart et al., 2023). This framework is designed to examine the crucial distinction between a policy's stated purpose, or its "policy rhetoric," and its actual impact, or "practiced reality" (Smart et al., 2023; Cladwell et al., 2022). This is essential for the TNEFP’s work, as it allows researchers to investigate how funding mechanisms might reinforce social stratifications despite being presented as equitable.

The TNEFP’s strategic approach to its own public identity is also noteworthy. The organization’s name, "Tennessee Center for Educational Finance and Policy," employs politically neutral terms like "finance" and "policy" rather than the more overtly justice-oriented terminology of "equity" (Caldwell et al., 2021; Tennessee Center for Educational Finance and Policy, 2035). This stands in contrast to the name of one of its leader’s other affiliations, the "Institute for Educational Funding Equity" (Smart et al., 2023).

This naming convention suggests a deliberate strategy to navigate the challenging political landscape in Tennessee, where laws have been passed to prohibit the teaching of "divisive concepts" and Critical Race Theory in public education (CriticalRace.org, n.d.). By not using a term like "equity" in its main title, the Center may be attempting to create a space for its research to be considered on its merits, while still being transparent about its foundational frameworks on its website to its target audience of academics and policymakers. This illustrates a sophisticated awareness of the real-world challenges involved in conducting and disseminating justice-oriented research in a politically contested environment (Tennessee Center for Educational Finance and Policy, 2025).

In addition to these conceptual lenses, the TNEFP’s work incorporates rigorous quantitative methods (Smart et al., 2023). The studies utilize analytical techniques such as descriptive statistics, t-tests, and multiple regression analyses to investigate relationships between race, income, school funding, and educational outcomes. This mixed-methods approach allows the research to move beyond qualitative theory and provide a robust, data-driven foundation for its conclusions.

II. The Michigan Study: Exposing Systemic Funding Disparities

The TNEFP’s foundational research was developed and tested using financial data provided by the Michigan Department of Education (Smart et al., 2023). This body of work served as a critical proof of concept for the Center's methodology and revealed a complex web of systemic inequities.

The Problem in Michigan

The research was initiated in response to a clear and systemic funding gap in Michigan’s public school system, which disproportionately affected Black students and those from low-income families (Cladwell et al., 2022; Smart et al., 2023). The core problem was identified as the state’s reliance on local property taxes for school funding (Smart et al., 2023). This funding mechanism created a self-perpetuating cycle of inequity, as districts with a higher concentration of Black and low-income students tended to have lower property values, resulting in significantly less revenue for their schools (Smart et al., 2023).

This issue is not merely a matter of economic correlation; it is a systemic causal loop that the TNEFP's framework is uniquely designed to uncover. Historical policies and systemic racism, as analyzed through the Critical Race Theory lens, led to racial and residential segregation (Smart et al., 2023). Segregation, in turn, concentrated poverty in specific neighborhoods. The reliance on local property taxes then tied school funding directly to these lower property values, creating an under-resourced educational environment (Smart et al., 2023). These underfunded schools, struggling with limited resources, in turn produced less positive student outcomes, thereby reinforcing the cycle of poverty and segregation for generations (Smart et al., 2023). The TNEFP’s research is valuable because it maps this entire chain, demonstrating how the funding system is not a neutral mechanism but a key part of a larger system that perpetuates racial and economic disparities (Smart et al., 2023).

Key Outcomes and Findings

The Michigan study produced a series of significant and quantifiable findings that underscored the severity of these disparities:

• Significant Funding Disparity: The research found that an average Black student receiving free or reduced-price lunch (FRL) received hundreds of dollars less in funding each year compared to their White peers. Specifically, the average Black student receiving FRL received $414 less per pupil per year than the average White student also receiving FRL. This gap widened to $783 less per pupil when comparing the same Black FRL student to a White student who was not receiving FRL (Caldwell et al., 2021; Caldwell et al., 2022 ). These disparities were found to be primarily due to differences in locally sourced district revenues tied to property wealth.

• Property Wealth Disparities: The study established a strong negative relationship between property wealth and student demographics. The analysis showed that a one-percentage-point increase in the percentage of Black and FRL students was associated with a $2,354 decrease in taxable property value per pupil (Smart et al., 2023).

• Strain on Human Resources: The financial disparities had tangible and far-reaching consequences for school operations. Underfunded urban districts struggled to attract and retain quality educators, as evidenced by high teacher turnover rates of approximately 30% in places like Detroit and Flint (Smart et al., 2023).

• Segregation and Broader Outcomes: The research connected these funding issues to the wider societal impacts of racial and residential segregation. The data indicated that segregation in cities like Detroit led to Black students disproportionately attending high-poverty schools with fewer resources, which negatively impacted long-term outcomes such as academic achievement, college enrollment, future wages, and overall health (Smart et al., 2023).

• Charter vs. Traditional Public Schools: A key component of the research was a comparative analysis of resource allocation between charter public schools and traditional public schools (Smart et al., 2023). The study found no statistically significant overall spending differences between the two school types. However, a significant finding was that traditional public schools had more than twice the special education student population compared to charter schools, and that special education enrollment was a statistically significant factor impacting student performance (Smart et al., 2023). This particular finding offers a nuanced critique of the "marketplace competition" policy that created charter schools in Michigan. The research suggests that any apparent performance advantage enjoyed by charter schools may not be due to a more efficient or superior educational model, but rather may be an artifact of serving a student population with fewer high-cost, high-needs students. This is a perfect example of how the TNEFP’s Critical Policy Analysis framework exposes the gap between the policy rhetoric of a competitive marketplace and the practiced reality of a two-tiered system where traditional public schools bear the financial and logistical burden of serving a disproportionate number of students with special needs (Smart et al., 2023).

III. A Compendium of Research: Publications from the Michigan Study

The foundational research in Michigan has produced a number of key publications that form the basis of the TNEFP’s work. The following is a list of these studies and their primary focus, which collectively demonstrate the breadth and depth of the Center's analytical framework.

Publication Title	Publication Year	Publication Type	Primary Research Focus
Comparing resource-allocation practices on student performance between charter public schools and traditional public schools	2019	Doctoral Dissertation, University of Michigan	A foundational study that implicitly used an equity lens to examine marketplace competition in education, comparing resource allocation and student performance between charter and traditional public schools (Smart, 2019).
An investigation to explain structural racism associated with Michigan public charter districts funding effort	2021	Article	This research explicitly applied Critical Race Theory and quantitative analysis to investigate structural racism, inequity, and inadequacy in the Michigan public school finance system, focusing on Black students in charter districts (Smart et al., 2021).
The Intersectionality of Educating Black Students in Michigan: Public School Finance, Racial Segregation, and Housing Policy	2022	Article	This study investigated how Michigan’s public school funding system, racial segregation, and housing policies intersect to create inequities for Black students, using Critical Race Theory as its primary lens (Smart et al., 2022).
The Crisis of Michigan's Public School Funding and Its Influence on Human Resources Management	2023	Article	This article applied Critical Race Theory to analyze the link between funding disparities, property wealth, and high teacher turnover in underfunded urban districts, highlighting the negative impact on human resource management (Smart et al., 2023).

IV. The Tennessee Replication: Applying the Framework to TISA

Building on its successful and impactful work in Michigan, the TNEFP is now turning its attention to its home state of Tennessee, with the goal of replicating its research framework to analyze the state’s new education funding system.

The Shift from BEP to TISA

In 2022, the Tennessee General Assembly passed the Tennessee Investment in Student Achievement (TISA) Act, which replaced the Basic Education Program (BEP), the state’s funding formula for over 30 years (Tennessee Comptroller of the Treasury, 2025; University of Tennessee County Technical Assistance Service, 2023). TISA, which became effective for the 2023-24 school year, is a student-based funding model that aims to provide a high-quality education to all students, regardless of their background (Tennessee Comptroller of the Treasury, 2025; University of Tennessee County Technical Assistance Service, 2023). The model provides a base amount of funding for each student, with additional "weighted allocations" for those with specific needs, such as students who are economically disadvantaged, reside in concentrated poverty, or have unique learning needs like disabilities (Tennessee Comptroller of the Treasury, 2025; University of Tennessee County Technical Assistance Service, 2023). It also includes direct funding for priority areas like K-3 literacy and career and technical education, and "outcomes funding" for districts that meet specific student performance targets (Tennessee Comptroller of the Treasury, 2025; University of Tennessee County Technical Assistance Service, 2023).

An initial evaluation by the Tennessee Comptroller’s Office of Research and Education Accountability (OREA) found that, in its first year, all locally administered school districts received more state money under TISA than under the old BEP (Tennessee Comptroller of the Treasury, 2025). While district leaders were generally complimentary of the transition, the OREA report acknowledged that more years of data are required to evaluate the formula's full effect on district spending decisions and its resulting impact on student achievement (Tennessee Comptroller of the Treasury, 2025).

The Strategic Replication Plan

The TNEFP’s replication of its Michigan study is a direct and timely response to the need for a more comprehensive and independent analysis of the TISA formula. The Center’s work will apply its Michigan-tested framework—including Critical Race Theory and Critical Policy Analysis—to critically examine the new student-based funding model (Smart et al., 2023; Tennessee Center for Educational Finance and Policy, 2035). The central research question is whether TISA, which is ostensibly designed to be equitable, will actually address the same kind of systemic inequities that were so pronounced in Michigan’s property-tax-based system.

The TNEFP’s approach will be to rigorously investigate the gap between TISA's policy rhetoric and its practiced reality. The TISA model is a new arena for the old battle against structural inequity. The Michigan research exposed how a property-tax-based model served as a mechanism for perpetuating racial and economic disparities. Tennessee's TISA model is presented as a structural solution to these problems by tying funding to student needs rather than property values. The TNEFP’s replication in Tennessee is, therefore, not just a new study, but a critical test case for whether this new policy design is truly an effective solution. The Center's independent voice and critical lens will be necessary to move beyond TISA’s stated goals and evaluate whether the weighted allocations and outcomes funding truly provide the resources needed to overcome the structural disadvantages linked to poverty, race, and geography.

Navigating the Political Landscape in Tennessee

A nuanced understanding of the TNEFP’s work requires acknowledging the unique and challenging political environment in Tennessee. The state has passed laws that explicitly restrict the teaching of Critical Race Theory and related concepts. In May 2021, a law was signed banning the teaching of CRT in K-12 public education, with a provision to withhold funding from schools found to be in violation (CriticalRace.org, n.d.). This was followed by a 2023 bill, SB 817, which prohibits teaching "divisive concepts" related to Diversity, Equity, and Inclusion (DEI) and CRT in higher education, requiring institutions to report violations to the comptroller of the treasury (CriticalRace.org, n.d.). These laws carry significant financial penalties, with the potential for the Tennessee Department of Education to withhold up to 10% of a school district’s annual state funds for five or more violations (CriticalRace.org, n.d.).

This legislative environment creates a complex and potentially contradictory space for researchers. On one hand, the state has legally restricted concepts central to the TNEFP’s research framework; on the other, the Tennessee Department of Education’s own "Equity Playbook" commits to "significant shifts in mindset and practice to provide and sustain equitable outcomes for all students" (CriticalRace.org, n.d.). This tension highlights the high stakes of TNEFP's role as a trusted, independent voice. Their work, by its very nature, is designed to uncover "deeper structural issues" and "reinforce social stratifications" (Tennessee Center for Educational Finance and Policy, 2035). Such findings could be interpreted by critics as violating the state's anti-CRT legislation. This underscores the courage and rigor required by TNEFP’s leadership to continue pursuing their justice-oriented research agenda, and it makes their independent analysis all the more vital for ensuring accountability in the state's new funding model.

V. Conclusion: Looking Forward

The Tennessee Center for Educational Finance and Policy’s foundational research in Michigan provides a powerful, data-driven methodology for uncovering deeply rooted systemic inequities in education finance. By leveraging conceptual frameworks that challenge traditional assumptions, the Center's work has moved beyond simple data analysis to expose the complex interplay of policy, history, and social stratification. The key findings from Michigan—quantified funding disparities, the link between property wealth and racial demographics, and the flawed assumptions of marketplace competition—provide a robust and necessary foundation for the Center's future work.

The replication of this research in Tennessee represents a critical opportunity. The new TISA funding model, while designed with the intent of student-based equity, requires an independent and rigorous examination to determine its true impact. By applying its proven framework to the Tennessee context, the TNEFP will serve a vital role in evaluating whether the state's new policy successfully dismantles the structural inequities that its Michigan research so clearly identified. The Center’s work is essential for ensuring that Tennessee’s new funding model achieves its stated goals and ultimately contributes to a more just and equitable educational landscape for all students.

References

1. The Alliance TN. (2023). TISA Rulemaking Analysis. Retrieved from https://thealliancetn.org/dollars-and-sense/tisa-rulemaking/

2. CriticalRace.org. (n.d.). Tennessee. Retrieved from https://criticalrace.org/states/tennessee/

3. Smart, R. E. (2019). Comparing resource-allocation practices on student performance between charter public schools and traditional public schools. Doctoral dissertation, University of Michigan.

4. Smart, R. E. (2021). An investigation to explain structural racism associated with Michigan public charter districts funding effort. Resolute 2021.

5. Smart, R. E., Caldwell, P. II, Richardson, J. T., & Sim, G. (2022). The intersectionality of educating Black students in Michigan: Public school finance, racial segregation, and housing policy.

6. Smart, R. E., Caldwell, P. II, Richardson, J. T., & Sim, G. (2023). The crisis of Michigan's public school funding and its influence on human resources management.

7. Tennessee Center for Educational Finance and Policy. (2035). About. Retrieved from https://www.tnefp.org/about

8. Tennessee Comptroller of the Treasury. (2025, February 19). New study finds school districts receive more funding under TISA. Retrieved from https://comptroller.tn.gov/news/2025/2/19/new-study-finds-school-districts-receive-more-funding-under-tisa.html

9. Tennessee Disability Coalition. (n.d.). TISA 101 - Part 2: How Does TISA Work?. Retrieved from https://www.tndisability.org/article/tisa-101-part-2-how-does-tisa-work-text-only

10. University of Tennessee County Technical Assistance Service. (2023). The Tennessee Investment Achievement Act (TISA). Retrieved from https://www.ctas.tennessee.edu/eli/tennessee-investment-student-achievement-tisa

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