(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:
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:
\nHighlights of capital investments to support higher education include:
\nNotable K-12 investments include: