1. (1) Public charter school funding shall be governed by the following:

   1. (a) For the purpose of implementing this Rule in calculating, allocating, and disbursing public charter school funding pursuant to T.C.A. § 49-13-112(a):

      1. 1. The Department shall be responsible for calculating required funding and reporting the calculations to both authorizers and public charter schools.
      2. 2. The local board of education shall be responsible for allocating the required funding to public charter schools in the local budget. Each authorizer shall include, as part of its budget submitted pursuant to T.C.A. § 49-2-203, the per student amount of local funds it will pass through to public charter schools during the upcoming school year, including all calculations listed in this Rule. The local board of education shall provide all calculations to its authorized charter schools upon request. Allocations to the public charter schools during the budgeted school year shall be based on that figure until such time as updated interim and final allocations are run pursuant to subparagraph (1)(e) below. The authorizer shall distribute local funding in no fewer than nine (9) equal installments to public charter schools in the same manner as state funds are distributed.
      3. 3. The local education agency’s (LEA) fiscal agent shall be responsible for the disbursement of required funding to public charter schools.
      4. 4. The LEA shall be responsible for the timely and accurate submission of data and other reporting requirements to the Department.
      5. 5. The public charter school shall be responsible for the timely and accurate submission of data and other reporting requirements to the authorizer.
      6. 6. The authorizer and public charter school shall be responsible for collaborating to resolve any data or reporting discrepancies prior to Department reporting deadlines.
   2. (b) Allocations are based on one hundred percent (100%) of state and local funds received by the LEA, including current funds allocated for capital outlay purposes and funds generated under the fast-growth stipends detailed in T.C.A. § 49-3-107, excluding the proceeds of debt obligations and associated debt services.

   3. (c) A local board of education shall allocate to each public charter school an amount equal to the state and local funds as calculated in subparagraphs (1)(d) and (1)(e) below for each student member enrolled in a public charter school and all appropriate allocations under federal laws or regulations, including, but not limited to, IDEA and ESEA funds.

      1. 1. Pursuant to T.C.A. § 49-13-112(a), federal funds received by the LEA must be disbursed to public charter schools authorized by the LEA by either a joint agreement on shared services by individual public charter schools or sub-grants to public charter schools for the charter’s equitable share of the federal grant based on eligible students. The allocation must be made in accordance with the policies and procedures developed by the Department.

   4. (d) Initial Allocations.

      1. 1. The initial allocation shall be set forth in the local board of education’s budget submitted to the Department pursuant to T.C.A. § 49-3-316 for the upcoming school year and represent the state and local funds to be allocated to each public charter school based on prior year average daily membership (ADM) and student counts, as required by the Tennessee Investment in Student Achievement Act (TISA), before such time as current year data and revenues are available. The Department shall pull this information from state-approved LEA budgets as entered into the state’s system of record and include these funds in initial funding estimates shared with authorizing LEAs and public charter schools. If the LEA does not have a fully approved budget in the state’s system of record, the Department will use the LEA’s budgeted prior year additional local revenues or the district’s prior year expenditure report, whichever is more recent, to inform the initial allocations until an LEA budget is fully approved.
      2. 2. Pursuant to T.C.A. § 49-13-112(a)(1)(A), the initial allocation from the local board of education to a public charter school shall be based on the total of the state and local student-generated funds for member students in a public charter school during the prior school year for the base funding amount, weighted allocation, and direct funding allocations in accordance with TISA, and any rules promulgated by the Department pursuant to the TISA, including Chapter 0520- 12-05.
      3. 3. Pursuant to T.C.A. § 49-13-112(a)(1)(B), if the local funds received by the LEA are greater than the local contribution required by TISA as set forth in T.C.A. § 49-3-109, the local board of education shall also allocate the average per pupil local funds received by the LEA in the budgeted school year, in accordance with T.C.A. § 49-3-316, above those required by the TISA for each member student in the public charter school in the prior year. The initial average per pupil local funding amount shall be determined by dividing the budgeted additional local funds by the LEA’s prior year ADM, including all member students of public charter schools geographically located within the LEA. The Department shall pull this information from state-approved LEA budgets as entered into the state’s system of record and include these funds in initial funding estimates shared with authorizing LEAs and public charter schools. If the LEA does not have a fully approved budget in the state’s system of record, the Department will use the LEA’s budgeted prior year additional local revenues or the district’s prior year expenditure report, whichever is more recent, to inform the initial allocations until an LEA budget is fully approved.
      4. 4. Pursuant to T.C.A. § 49-3-105(d)(1)(B), the state share of TISA funding generated by public charter school students shall be allocated to the LEA in which the public charter school is geographically located, but shall be disbursed directly to the public charter school by the Department. If the public charter school is authorized by the Commission or by the Achievement School District (ASD), the funds shall be disbursed by the Department directly to the authorizer.
   5. (i) A public charter school’s total of TISA-generated funds shall be divided between state and local funding responsibilities based on the state and local share percentages of the LEA in which the public charter school is geographically located. The state share for base and weighted funding is determined separately using the LEA’s applicable percentages, which are then applied to the public charter school’s calculated base and weighted amounts. The state fully funds direct allocations. As with LEA allocations, funding for postsecondary assessment is withheld at the state level. The local share of base and weighted funding is the responsibility of the LEA in which the public charter school is geographically located and will be disbursed by the LEA to the public charter schools.
   6. (ii) All federal, state, and local funds generated by or received by an LEA shall be properly accounted for in the LEA’s official financial records. Payment of funds to a public charter school by the state on behalf of an LEA shall be recorded in the LEA’s financial records in the appropriate revenue and expenditure categories.

   7. (e) Interim Funding Adjustments and Final Allocations.

      1. 1. After the initial allocation is made as set forth in subparagraph (1)(d), an authorizer shall adjust payments to its public charter schools on an interim basis during the school year, at a minimum, in October, December, February, April, and June, with final allocations occurring with the completion of the authorizer’s final expenditure reports as submitted and approved by the Department. Pursuant to T.C.A. § 49-13-112(a)(1) and § 49-13-112(a)(3), these adjustments shall update allocations to reflect current year data, including changes in revenue, student enrollment, or student services.
      2. 2. To calculate interim and final allocations, the Department shall calculate current year ADM on the timeline in part (1)(e)1. above for all LEAs with public charter schools geographically located within the LEA’s boundaries. The Department shall publish or otherwise make available to each authorizer and each public charter school the outputs and, if requested, the underlying data from each instance in which the Department runs the ADM calculations for purposes of calculating initial, interim, and final allocations. Authorizers may opt to run the adjustments more frequently in alignment with respective charter agreements.
      3. 3. Interim and final allocations to each public charter school shall include:
   8. (i) Pursuant to T.C.A. § 49-13-112(a)(1)(A), the interim and final allocations from the local board of education to a public charter school shall be based on the total of the state and local student-generated funds for member students in a public charter school during the prior school year for the base funding amount, weighted allocation, and direct funding allocations in accordance with the TISA, and any rules promulgated by the Department pursuant to the TISA, including Chapter 0520-12-05.
   9. (ii) Pursuant to T.C.A. § 49-13-112(a)(1)(B), if the local funds received by the LEA are greater than the local contribution required by TISA as set forth in T.C.A. § 49-3-109, the local board of education shall also allocate the average per pupil local funds received by the LEA in the budgeted school year above those required by the TISA for each member student in the public charter school in the prior year. The interim and final average per pupil local funding amount shall be determined by dividing the additional local funds by the LEA’s current year ADM (inclusive of all member students of public charter schools geographically located within the LEA). The final average per pupil local funding amount is to be determined using the LEA’s final expenditure report as submitted to and approved by the Department.
   10. (iii) Pursuant to T.C.A. § 49-13-112(a)(1)(C) and § 49-13-112(a)(3), a local board of education shall allocate to the public charter school an amount equal to the per student state and local funds received by the LEA for member students in the public charter school in the current school year beyond the prior year’s membership. For each required interim and final allocation adjustment, the Department shall calculate the ADMs for each public charter school and the difference from the prior year ADM as used in the base funding calculation in the TISA formula. For any difference in overall ADM counts, the local board of education shall adjust the public charter school’s allocation and disbursement by an amount equal to multiplying the average per student state and local funds received by the LEA in the current year by the difference in ADM for each public charter school, which may result in an increase or decrease to the overall allocation and disbursement. The final average per pupil state and local funds shall be determined using the LEA’s final expenditure report as submitted to and approved by the Department. In calculating the average per student state and local funds, the total funding will exclude grants awarded on behalf of specific schools and the charter direct funding component of the TISA.
   11. (iv) In determining final amounts to be paid pursuant to subparts (1)(e)3.(ii) and (1)(e)3.(iii) above, the Department shall report to each authorizer and public charter school the results of LEAs state-approved final expenditure reports within five (5) business days of state approval. LEAs and each public charter school shall process final payments within thirty (30) calendar days of the Department’s report on final amounts.

   12. (f) Special Considerations.

       1. 1. New and Expanding Public Charter Schools: Notwithstanding part (1)(d)2., for the purpose of initial allocations, new public charter schools or public charter schools adding a new grade(s) shall be funded based on the anticipated enrollment in the charter agreement unless the authorizer and public charter school mutually agree on a projection of enrollment not to exceed any enrollment maximums or caps set forth in the charter agreement. The initial funding allocation for the new grade(s) shall be based on a per-student average of all state and local funds received by the LEA and disbursed to the public charter school by the LEA. Allocations shall be subsequently adjusted in accordance with subparagraph (1)(e).
       2. 2. Public Charter School Direct Funding: In accordance with T.C.A. § 49-3-105, the charter school direct funding amount each year is subject to an annual appropriation by the Tennessee General Assembly and is calculated by dividing the amount of the appropriation by the statewide public charter school ADM of the prior year. This direct funding amount shall be fully state funded and not require additional local contribution funds. The public charter school direct funding amount is calculated the same as all other direct funding components of TISA as set forth in T.C.A. § 49-3-105.
       3. 3. Fast-Growth Stipends: Subject to annual appropriations by the Tennessee General Assembly and in accordance with T.C.A. § 49-3-107, if an LEA receives a fast-growth stipend or infrastructure stipend, the LEA shall disburse to charter schools geographically located within that LEA a proportional share of funds received. The proportional share shall be equal to the percentage calculated by dividing a public charter school’s TISA funding for base funding, weighted allocations, and direct allocations by the TISA funding for these same components of the LEA as a whole.
       4. 4. Educator Salary Increases: Pursuant to T.C.A. § 49-3-105(e), if the Tennessee General Assembly restricts an amount of an annual increase to the TISA base funding amount for the purpose of providing salary increases to existing educators, the Department shall determine the proportional share of funds received by each public charter school driven by the restricted funds and report that amount to each authorizer and to each public charter school. Public charter schools shall use these funds to provide salary increases to existing educators pursuant to T.C.A. § 49-3-105(e).
       5. 5. Cost Differential Factor Grants: Subject to annual appropriations by the Tennessee General Assembly and in accordance with T.C.A. § 49-3-108(d), if an LEA receives a Cost Differential Factor (CDF) grant, the LEA shall disburse to public charter schools geographically located within that LEA a proportional share of the CDF grant. The proportional share shall be equal to the percentage calculated by dividing a public charter school’s TISA funding for base funding, weighted allocations, and direct allocations by the TISA funding for these same components of the LEA as a whole.
       6. 6. Outcomes Funding: If a public charter school generates outcome bonus funding as a result of students enrolled in the public charter school in the prior year, the public charter school shall receive the earned amount of outcome bonus funds from the authorizer when such funds are awarded by the Department. The Department shall report the amount of outcome bonus funds due to each public charter school to the authorizer and to each public charter school.
   13. (g) ASD and Commission: Pursuant to T.C.A. § 49-1-614 and T.C.A. § 49-13-112, the ASD and Commission shall receive funding in alignment with this rule for each public charter school within their respective LEAs from the LEAs in which each public charter school is geographically located.
   14. (h) Opportunity Public Charter Schools (OPCS): Pursuant to T.C.A. § 49-13-106(k)(1)(C), TISA state and local funds generated by an at-risk student who transfers to an OPCS located in an LEA other than the LEA in which the at-risk student resides shall follow the at-risk student to the LEA in which the OPCS is located, but only for the first school year in which the at-risk student is enrolled in an OPCS located in an LEA other than the LEA in which the at-risk student resides. For purposes of this Chapter, “at-risk student” is defined by T.C.A. § 49-13-104(3). The LEA in which the OPCS is located shall not charge tuition to such students.
   15. (i) Allocations to a public charter school shall not be reduced by the authorizer except for the annual authorizer fee. If the charter agreement includes a provision whereby the authorizer will provide for employee benefits or retirement, the authorizer may withhold funds to cover the costs of those services. Any services the public charter school chooses to purchase from the authorizer may also exist in a separate services contract between the public charter school and the authorizer. However, approval of a separate services contract shall not be a condition of approval of the charter agreement. If a services contract is executed with the authorizer, the authorizer may withhold funds to cover the costs of those services.
   16. (j) Pursuant to T.C.A. § 49-13-124, the authorizer may endorse the submission of the qualified zone academy bond application to the local taxing authority. The authorizer may endorse such a bond application submitted by the public charter school governing body, or the authorizer may include the public charter school’s project as part of the authorizer’s bond application.
   17. (k) If public charter schools provide school nutrition programs, they may provide their own programs in compliance with United States Department of Agriculture regulations and state law or they may contract with the authorizer for the provision of school nutrition programs.

Authority: T.C.A. §§ 49-1-302, 49-2-203, 49-3-101, et seq., 49-3-105, 49-3-316, 49-6-2101, et seq., 49- 13-112, 49-13-114, 49-13-124, and 49-13-126. Administrative History: Original rule filed March 25, 2010; effective August 29, 2010. Repeal and new rule filed March 21, 2012; effective August 29, 2012. Amendments filed September 22, 2017; effective December 21, 2017. Amendments filed September 29, 2020; effective December 28, 2020. Amendments filed November 30, 2020; effective February 28, 2021. Amendments filed March 8, 2023; effective June 6, 2023. Amendments filed March 12, 2024; effective June 10, 2024. Emergency rules filed January 31, 2025; effective through July 30, 2025. Emergency rules expired effective July 31, 2025, and the rules reverted to their previous statuses. Emergency rule filed August 13, 2025; effective through February 9, 2026. Emergency rule expired effective February 10, 2026, and the rule reverted to its previous status. Amendments filed January 7, 2026; effective April 7, 2026.