Today, only three of the 24 components in Tennessee’s funding formula relate to workforce outcomes. The high-need premium, one of the formula’s central workforce components, too often incentivizes programs that don’t lead to high-wage, high-demand jobs. At the same time, many impact credentials with proven career and workforce value go unrewarded in the current formula.
This memo identifies two key opportunities for action during the current formula review window:
- Reimagine the high-need premium. Replace the premium with a tiered impact credential bonus that drives the attainment of credentials aligned to high wages, job growth, and stackability.
- Streamline the formula. Simplify measures in the formula and sharpen the focus on credential impact so that institutions are clearly incentivized to connect students to pathways that lead to workforce opportunity.
Beginning in 2025, the comprehensive review of the funding formula is an opportunity Tennessee cannot afford to miss. Now is the time to strengthen the state’s commitment to rigorous outcomes-based funding so that every credential leads to greater opportunity, higher earnings, and long-term success for Tennessee students and the state’s workforce.