Governor Haslam presents budget proposal focusing on education and jobs for Tennesseans


Education and jobs were the focus on Capitol Hill this week as Governor Bill Haslam unveiled his proposal to fund state government for the 2015-2016 fiscal year in his annual State of the State Address.  The $33.3 billion balanced budget makes strategic investments in education and workforce development, while continuing a thoughtful approach to making government work more efficiently and effectively.


During the speech, Haslam said nearly 225,000 new private sector jobs have been created in Tennessee since 2011.  Over the past several years, the General Assembly has made great strides in preparing students for the 21st century marketplace and in creating a business-friendly climate which draws new and better paying jobs to our state.  These efforts include passage of a number of job creation initiatives such as tort reform, unemployment reform and workers’ compensation reform.


The governor also announced that out of the 65,000 high school seniors, 58,000 have signed up for Tennessee Promise, the scholarship program which provides last dollar tuition assistance to fill unmet financial needs so students may attend community college or a college of applied technology free of charge.  The General Assembly worked with the governor in passing the scholarship program last Spring.  Tennessee Promise is part of the state’s efforts to ensure a strong workforce by filling the skills gap to bring technologically advanced industries to the state.  It is also part of the Drive to 55 initiative that aims to raise the percentage of Tennesseans with a certificate or degree beyond high school from 32 to 55 by the year 2025.


On K-12 education, Governor Haslam heralded the state’s recent academic achievement gains.  State students had the largest academic growth on the 2013 National Assessment of Educational Progress (NAEP) in the nation, making Tennessee the fastest improving state in the nation.  He also noted that Tennessee “is one of the few states in the country to make significant investments” in funding education improvements.  State spending on K-12 education over the past four years increased at a rate more than double the national average.  The proposed budget includes nearly $44 million in new money to account for growth in the Basic Education Program, $100 million for increasing teacher salaries and $5 million to create the Educators’ Liability Trust fund to offer liability insurance to teachers at no cost.


Other highlights of the governor’s proposed budget include:

  • $260 million for capital projects, including new science facilities at Jackson State Community College and the University of Tennessee, nearly $25 million for improvements to colleges of applied technology across the state and funding for a fine arts classroom building at East Tennessee State University;
  • $25 million to fully fund the Complete College Act formula;
  • $10 million for need-based scholarships for students;
  • $2.5 million for statewide outreach efforts geared toward adult students, technical assistance to local communities that are finding ways to support adult learners, and a one-stop portal for adults;
  • $2.5 million to support the success of the SAILS (Seamless Alignment and Integrated Learning Support) program which address remediation in high school;
  • $1.5 million to provide last dollar scholarships to adults with some post-secondary credit to attend community college;
  • $1 million to establish competitive grants to 2-year and 4-year institutions to develop initiatives specifically designed for veterans;
  • $48 million for state employee pay raises and compensation tied to performance and ongoing market adjustments
  • $4.7 to fund group health insurance cost increases for state employees and $2.5 million to fund their 401 K match plan; and
  • $41.3 million to complete the phase out of Tennessee’s inheritance tax which is set to expire in 2016


The budget reflects $300 million in revenue growth, $500 million in cost increases and $200 million in reductions.  Unlike Washington, Tennessee requires a balanced budget so any increase in spending in excess of available revenues must be off-set with reductions.


Tennessee has the lowest debt per capita of any state and is among the lowest tax rates.   Haslam said that the state will spend $13 million less this year on interest than the previous as a result of reducing the amount of debt.  At the same time, the proposed budget would add $36.5 million to the state’s Rainy Day Fund to bring the total to $528 million, the highest level since 2008.  The Rainy Day Fund acts as the state’s savings account in case of an emergency and helps ensure the state’s financial stability with credit rating agencies.


Tennessee’s sound financial practices have earned the state top-notch credit ratings with Wall Street rating agencies.  This credit rating helps determine how much interest state and local governments must pay when they borrow money to fund projects such as new schools and roads.