Local Education Agencies - As enacted, authorizes an 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. - Amends TCA Title 49.

SB 729 allows Tennessee school districts (Local Education Agencies or LEAs) to create merit-based pay systems that reward high-performing educators with additional compensation, such as bonuses or salary increases. This applies to licensed educators and requires that any merit pay increase comes only from new state funds - districts may skip merit pay in a year if they don’t receive additional state funding compared to the prior year. School districts are not required to use local funds to maintain merit pay awarded in previous years. The law takes effect for the 2025-2026 school year and beyond.