Governor Haslam presents conservative budget proposal prioritizing education and jobs

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(NASHVILLE, Tenn.), February 6, 2014 – The budget moved front and center on Capitol Hill this week as Governor Bill Haslam presented his proposal to fund state government for the 2014-15 fiscal year that will begin in July.  Haslam’s  “State of the State / Budget Address” was also highlighted by the announcement of his “Tennessee Promise” legislation to make two years of state community college or technical schools available free of charge to all graduating high school students.

On Tuesday, the Senate Finance Committee began their task of studying the $32.6 billion appropriations bill, which is $600,000 less than the budget adopted for the current fiscal year.  Haslam said the conservative budget continues to prioritize education and job growth, by focusing on preparing students for the workplace.

Drive to 55 / Tennessee Promise — Building on the Tennessee Complete College Act passed in 2010, the governor launched the ambitious “Drive to 55” initiative last year to bring the percentage of Tennesseans with college degrees or certifications from 32 % to 55% by the year 2025.  The Tennessee Promise proposal aims to boost efforts to reach the 41 percent of Tennessee high school graduates who do not pursue postsecondary education, many of which are due to financial barriers.

“Through the Tennessee Promise, we are fighting the rising cost of higher education, and we are raising our expectations as a state,” Haslam said.  “We are committed to making a clear statement to families that education beyond high school is a priority in the state of Tennessee.”

Under the Tennessee Promise plan, students graduating from a community college could use the state’s transfer pathways program if they choose to attend a four-year school, making it possible to start as a junior.  In order to pay for the plan, the governor has proposed transferring approximately $300 million in lottery reserve funds, which would be added to the $47 million already placed in an endowment for student scholarships.  It is estimated that the cost of the Tennessee Promise scholarships will be approximately $34 million annually.  The governor has recommended $110 million should remain in the lottery reserve fund to help ensure adequate funding moving forward.

Other Drive to 55 efforts this year include:

  • Statewide expansion of the Seamless Alignment of Integrated Learning (SAILS) program to eliminate the need for remedial math courses for students entering college with $2.6 million in the proposed budget.  Currently, 70 percent of high school graduates need remedial classes before they are able to take a college level course.
  • Offering one dual enrollment course to high school students at no cost with discounted courses available after that.  Dual enrollment allows high school students to take college credit courses, and there is a 94 percent probability that those students will go on to college.
  • Expansion of the Degree Compass program that predicts the subjects and majors in which students will be most successful with $300,000 in the proposed budget.
  • Creation of an Adult Student Data System to help state colleges and universities – both public and private – do a better job of identifying and recruiting adults that are most likely to return to college and complete their degree with $300,000 in the proposed budget.
  • Appointment of a new Director of Workforce Alignment that will work with state departments and local officials.
  • Workforce alignment grants to local communities that have strategic plans in place to connect education institutions with employers with a focus on closing the skills gaps in their area with $10 million in the proposed budget.
  • Changing the Tennessee Education Lottery Scholarship allotment to incentivize completion by raising the scholarship for two-year schools from $2,000 to $3,000 and shifting the scholarship for four-year schools from $4,000 to $3,000 the first two years and $5,000 the last two years.  All students currently receiving the scholarships would be grandfathered in at the current rate, as well as all who enter in the 2014-2015 school year.

Budget / Overall — In his budget address, Governor Haslam reiterated that the 2014-2015 budget was challenging as revenue collections over the past several months have not met projections.  However, the governor pointed out that Tennessee is in a better position to balance the budget because the state has been fiscally conservative in years past.  The budget shortfall is expected to be about $116 million by the close of the current fiscal year.

In order to balance the budget, Haslam has proposed selected reductions, including eliminating 664 positions in state government, of which all except 100 are currently vacant.  Some of the other reductions include finding cost savings in the TennCare program and in corrections.

In 2005, the state set a goal of keeping spending for the program at 26%.  TennCare currently consumes about 30% of the state’s general budget.

“We have $260 million in new revenue this year,” said Haslam.  “ Increased TennCare costs will take up $180 million, employee health insurance costs are up $40 million, and $120 million are proposed for education. So, if you’re doing the math at home, before putting anything toward employee salaries, higher education, social services for our most vulnerable citizens, or anything else, we are already $80 million in the red.”

All Senate committees will review the various departmental budgets in depth over the next month.  Traditionally, the budget is one of the last bills voted on during the legislative session.

Other budget highlights include:

  • $1.7 million to fund a new statewide residential drug court in Middle Tennessee;
  • $6.4 million to fund new child protective services and case manager positions as well as other critical children’s services including foster care and adoption assistance;
  • $7 million increase for the Department of Intellectual and Developmental Disabilities to care for some of the state’s most vulnerable citizens;
  • A one percent pay raise for state employees;
  • $40.3 million to the Rainy Day Fund bringing it to $496 million on June 30, 2015;
  • $61 million in Fast Track Infrastructure and Job Training assistance;
  • $6 million for a statewide tourism fund to support the work of the tourism commission.

Highlights of capital investments to support higher education include:

  • $13 million to fund the Complete College Outcomes Formula;
  • $63 million to fund capital maintenance projects at institutions across the state;
  • $36.7 million to fund a new Williamson County campus for Columbia State Community College;
  • $28.7 million to fund a new classroom building at Volunteer State Community College.

Notable K-12 investments include:

  • $63 million to increase teacher salaries as part of the governor’s ongoing effort to make Tennessee the fastest improving state in terms of paying teachers more;
  • $48.6 million dollars to fully fund the BEP formula.