HB 759 - SB 729
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 12, 2025
Fiscal Analyst: Alan Hampton | Email: alan.hampton@capitol.tn.gov | Phone: 615-741-2564
HB 759 - SB 729
SUMMARY OF BILL: Authorizes a local education agency (LEA) to adopt and implement
a merit-based pay structure for educators to award additional compensation to high-performing
educators and to incentivize educators to meet and exceed expectations. Establishes that a merit-
based pay structure may only result in an increase to the compensation of an educator, whether in
the form of a one-time bonus or an increase to the salary payable to the educator in accordance with
the salary schedule approved by the Commissioner for the LEA for the respective school year.
Establishes that an LEA: (1) may decline to award merit pay in any school year for which the LEA
does not receive increased or additional state funds, as compared to a prior year, in an amount
sufficient to award merit pay; and (2) is not required to supplement its local expenditures for salaries
and wages in any school year in order to continue any merit pay an educator received in a prior
school year.
FISCAL IMPACT:
OTHER FISCAL IMPACT
The extent and timing of any permissive impacts to local expenditures cannot be determined with
reasonable certainty.
Assumptions:
• The proposed legislation authorizes an LEA to adopt and implement a merit-based pay
structure for educators. However, LEAs are not required to do so.
• An LEA will be able to use state and local education funding received through the
Tennessee Investment in Student Achievement (TISA) at its discretion to fund a merit-
based pay system.
• It is assumed that an LEA may also contribute additional local funds for such purpose;
however, an LEA is not required to supplement its local expenditures for salaries and wages
in any school year in order to continue any merit pay an educator received in a prior school
year.
• If an LEA implements a merit-based pay structure for educators, an increase in local
expenditures will occur. However, since an LEA may decline to award merit pay in any
school year for which the LEA does not receive increased or additional state funds, there
may be a decrease in local expenditures in such years.
HB 759 - SB 729 2
• Due to multiple unknown factors, the extent and timing of any such permissive impacts to
local expenditures cannot be precisely determined.
• No change to the TISA funding formula.
• No impact to the Department of Education.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director