March Revenues Show Mixed Results

The State’s March revenue figures were released this week, showing mixed results and a continued trend of lower than expected revenue collection.

“March collections continued to reflect weaker than anticipated revenues from the corporate sector, while sales tax collections were stronger,” State Finance and Administration Commissioner Larry Martin said. “We believe the recent increase in retail spending is a reflection of renewed consumer confidence and indicates that the economy is slowly recovering. This growth is important in meeting current revenue projections on which the approved budget amendment was based.

“About a fourth of our corporate income taxes often - but not always – occur in the month of April. We will work with the legislature and others to manage the state’s spending and resources regardless of the economic climate, as the state has always done.”

On an accrual basis, March is the eighth month in the 2013-2014 fiscal year. Total tax collections in March were 2.10% above the previous year.  The general fund was under collected by $4.1 million and the four other funds were over collected by $6.9 million.

Year-to-date collections show that the general fund has been under collected by $263.9 million, and that total collections are $257.0 million less than budgeted estimates.

These numbers should provide some context to the recently passed state budget.

Tennessee Promise Passes House, Heads to Governor’s Desk

The Tennessee Promise Scholarship Act of 2014 was passed by the House of Representatives last night on an 87-8 vote.  Members voting no included Representatives Joe Carr (R-Lascassas), Glen Casada (R-Franklin), Jeremy Durham (R-Franklin), Andy Holt (R-Dresden), Judd Matheny (R-Tullahoma), Cameron Sexton (R-Crossville), Billy Spivey (R-Lewisburg), and Rick Womick (R-Rockvale).

The legislation passed in the Senate earlier this week and now heads to the Governor’s desk, his signature being the final step in the lawmaking process.

The Tennessee Promise is a key component of Governor Haslam’s Drive to 55 Initiative, the goal of which is raising higher education attainment from the current level of 32 percent to 55 percent by the year 2025.  The Promise Scholarship will serve as a “last dollar” award, to be applied after all other scholarships and financial aid towards the cost of tuition and fees for first-time Tennessee freshman students pursuing an associates degree or technical certificate.

But the legislation also includes provisions aimed specifically at helping students at four-year universities.

Currently, HOPE scholarship eligibility is capped at 120 attempted semester hours or when a degree is earned, whichever of the two comes first.  If a student attempts 120 hours, yet still hasn’t attained a degree, their eligibility for the HOPE ceases.

The Tennessee Promise legislation changes this.  The legislation allows students to remain eligible for the HOPE scholarship for 8 full semesters (taking as many hours as they wish within that period), or to use the standard 120 semester hour cap.  In short, students will receive more flexibility in retaining their scholarships.

As with most policy changes, the change in HOPE Scholarship terminating events comes with a price tag.  To cover the cost of making this change, The Tennessee Promise legislation changes HOPE Scholarship award amounts.

At four-year universities, freshmen and sophomores eligible for the HOPE award will receive $3,500 annually.  HOPE eligible juniors and seniors will receive $4,500 annually.

Tennessee Promise Scholarship Sails Through Senate

Driveto55VerticalLogoThe Tennessee Promise Scholarship Act of 2014 passed the state Senate last night by a 30-1 vote. The Promise, a key component of Governor Haslam’s Drive to 55 Initiative, will be used to provide “last dollar” scholarship awards (after all other scholarships and financial aid are applied) towards the cost of tuition and fees for first-time Tennessee freshman students pursuing an associates degree or technical certificate.

The legislation also has provisions aimed specifically at university students. A couple of years ago, the legislature adopted changes to the HOPE Lottery Scholarship program that would allow students to receive their awards for the summer terms in addition to the traditional Fall and Spring semesters. When the change was implemented, modifications were made to the terminating events for the Lottery Scholarship.  Rather than students being eligible for a full five years, the award was capped at 120 attempted semester hours or when a degree was earned, whichever of the two came first.

The Tennessee Promise legislation contains a significant change to current law surrounding HOPE Scholarships:  The change will allow students to take advantage of 8 full semesters of HOPE eligibility (taking as many hours as they wish within that period) or to use the standard 120 semester hour cap.  Students will retain their scholarship for eight semesters or 120 semester hours, whichever occurs last.

As with most policy changes, the change in HOPE Scholarship terminating events comes with a price tag.  To cover the cost of making this change, The Tennessee Promise legislation changes HOPE Scholarship award amounts.

At four-year universities, freshmen and sophomores eligible for the HOPE award will receive $3,500 annually.  HOPE eligible juniors and seniors will see an increase in their current award amount to $4,500 annually.

The Tennessee Promise has not yet come up for a vote on the House floor.  It is expected to be heard in the coming days as lawmakers wrap up the legislative session.

 

Legislators Pass $32 Billion State Spending Plan: No Raises for State Employees, No Complete College Tennessee Outcomes Funding

The House and Senate passed the state’s FY14-15 budget this week as legislators rapidly approach the end of session.

According to an article by Knoxville News Sentinel reporter Tom Humphrey, House Finance Committee Chairman Charles Sargent (R-Franklin) said that this budget marks the “first time in institutional memory” that the General Assembly has approved a state budget without adopting any amendments proposed by individual legislators.

Although they ultimately failed, legislators filed several amendments as attempts to provide some type of state employee raise as well as full funding for the Complete College Tennessee outcomes-based formula.

These amendments included ones filed by Sen. Mark Norris (R-Collierville) and Rep. Mike Harrison (R-Rogersville), which appropriated over $20 million the Complete College funding formula if tax revenues rebounded.  These measures were ultimately withdrawn.

Simply put:  The budget, which now heads to the Governor’s desk, includes no state dollars for higher education employee salary increases or the outcomes-based funding formula for the coming fiscal year.  These items, although included in the original budget proposal, were removed primarily due to lower than anticipated state revenues.

The Tennessee Higher Education Commission recommended in November that $29.6 million be provided to fund the Complete College formula to meet the production and outcomes successes of the top performing Tennessee higher education institutions.

Senators File Budget Amendments

The Senate Budget Subcommittee met last week to hear budget amendments filed by members.  The amendments, 154 in all, were voted on by committee members this week.

Below are the Senate amendments that would have impacted the University of Tennessee System.  None of the amendments passed, dying either from the lack of a motion or the sponsor’s decision to withdraw.

Senate Amendment

Senate Sponsor

Purpose

Recurring

Nonrecurring

11 Norris Funds the higher education funding formula from any excess revenue collections $20,310,200  
19 Burks Funds the higher education funding formula at THEC recommendation $29,600,000
28 Gresham Purchase of Lone Oaks Farm/TN 4-H Camp $50,000
72 Summerville Eliminate funding for UT Access and Diversity Initiative -$5,688,900
73 Summerville Reduce funding for UT University-Wide Administration -$1,000,000
119 Finney Supporting institutional missions at all academic formula units (THEC recommendation) $29,600,000