Haslam to Deliver State of the State Tonight

Tonight, Governor Bill Haslam will address a joint session of the House and Senate in his annual State of the State address to kick off the first regular session of the 109th General Assembly.

The yearly address is an important part of the legislative process, formalizing Gov. Haslam’s policy priorities and setting the tone for the next few months of legislative debate and action. The governor has already indicated that, following the failure of Insure Tennessee, his main objective is to tackle issues surrounding the state’s educational system and K-12 educational standards.

The State of the State typically marks the official release of the Governor’s budget, which certainly will impact the University of Tennessee.

You can follow the address and session online at www.tn.gov/stateofthestate.  The joint session is to convene at 5:45 p.m. CST with Governor Haslam’s address to follow at 6 p.m CST.

We’ll post an update focusing on higher education items included in the State of the State that impact the University of Tennessee as soon as possible.

Governor Haslam Delivering the 2014 State of the State Address

Governor Haslam Delivering the 2014 State of the State Address

State Revenue Update

The first three months of the State’s fiscal year, which began in August, held good news:  revenues bounced upward, a welcome trend after lagging revenues plagued the 2013-2014 fiscal year.

However, the most recently released figures from November mark the first point in the 2014-2015 fiscal year where revenues were less than the budgeted estimate:  $6.1 million less to be precise.  The gap is mostly attributed to a volatile situation surrounding the State’s franchise and excise taxes.

The State Funding Board released a consensus report this month showing that 2015-2016 fiscal year revenues are generally expected to grow at slower rates than in previous years.  They anticipate overall growth for FY 2015-2016 between 2.55 and 2.95 percent, with growth in the general fund ranging from 2.6 to 3 percent.

For contrast, final projections for the current fiscal year have overall total tax revenue growing in the range of 3.45 to 3.8 percent, and the general funding growing between 3.85 to 4.2 percent.

These revenue figures and projections are significant because they will, in large part, require the Governor and legislature to craft a more conservative budget than in years past (assuming the absence of any new revenue).

Several revenue measures have been publicly discussed by key legislators, including an increase to the gas tax and tightening loopholes in the franchise and excise tax structure.

We will keep you updated on the revenue situation as it relates to the State budget and the funding of public higher education.  Much more will be known once the Governor releases his proposed budget, which typically occurs after the State of the State address in late January or early February.

5 Things You Should Know About the Governor’s Budget Hearings

1. The Governor’s budget hearings are where the state budget process begins.
The Governor’s budget hearings serve as a launch point for the State’s budgeting process. All state departments, agencies and entities, including the University of Tennessee System, will lay out their funding requests for the state’s next budget year—requests that the Governor will ultimately weigh as he compiles his 2015-2016 budget proposal. That proposal ultimately will be presented to the legislature in late January or early February and can be amended or passed into law in its proposed form.

2. The Governor’s budget proposal is taken seriously by the Legislature.
In Tennessee’s recent history, the legislature typically has not made major modifications to the Governor’s proposed budget. In fact, last year the legislature did not pass a single substantive amendment modifying the Governor’s spending plan. The only amendments made were at the request of the Haslam Administration in light of dwindling state revenues. To put it frankly: Recent history and experience suggests that if you want your major priorities to be funded, they typically need to be included in the Governor’s proposed spending plan.

3. Last year’s revenue woes are likely to result in a conservatively crafted budget.
Tennessee’s last budget year closed with a $300 million revenue hole—a hole that may result in up to a 7 percent cut to state departments, agencies, and entities. In fact, at the Governor’s hearings, it is expected that each entity will detail what impact a 7 percent cut would have on its operation.

There is some good news in the state’s revenue numbers for the current fiscal year. General Fund revenue is roughly $91 million over projected levels at this point. But given last year’s mid-session revenue crisis where the Governor had to significantly alter his spending plan, we’re likely to see a more conservatively crafted budget to insulate against the possibility of revenues taking a turn for the worse.

4. There is mounting pressure from all sides.
The Governor is facing mounting pressure on both sides of the budget equation—there is mounting pressure to further cut state taxes, which will in turn limit the state’s ability to fund existing services; and there also is mounting spending pressures behind various state services whose needs have been building for a number of years. For higher education specifically, these needs include, but are not limited to, adequate state funding for the day-to-day operations of campuses, funding to improve academic quality and services to students, to maintain existing buildings, and to address aging infrastructure and growth through the funding of needed new facilities.

5. Higher education’s budget hearing is on December 5 at 2:30 P.M. CST.
You can tune in live to watch UT President Joe DiPietro lay out the University’s key priorities or check back here for coverage. To tune in live, click here.   

One UT Advocate Speaks Out

The column below was written by Bo Roberts and published in The Tennessean on June 2.  Roberts is a Nashville-based marketing consultant who has worked with and consulted for higher education institutions in Tennessee.  He is a Co-Chair of the UTAA Alumni Legislative Council and member of the UT Advocacy Network.

To most of us, $19 million is a whole lot of money; it’s certainly much more than the oft-referenced cost of a cup of coffee.

But, that’s the specific amount sliced from Tennessee’s allocation to public higher education institutions for the fiscal year beginning on July 1. While the governor was forced to reduce his entire budget after a lackluster year in tax revenue collections, $19 million represented a huge number, both literally and psychologically, to college and university administrators throughout the state. They had “earned” that money by excelling at a new system designed to reward productivity. Student enrollment numbers were no longer the ultimate benchmark.

So, just how much is $19 million in the grand budgetary scheme of things? It’s a mere hundredth of 1 percent of the overall $12.7 billion state budget. To put that in perspective, a family with a gross annual income of $100,000 would have to adjust its budget by $150. At approximately one cup of coffee a week, though, most wouldn’t call that a threat to making their mortgage payment.

We all understand that budget choices are agonizing. We’ve been there. Yet it comes down to plain priorities: public higher education has been suffering from a lack of preferential treatment for decades.

I say this while acknowledging that Gov. Bill Haslam has put more emphasis and given more attention to our colleges and universities than any other governor in recent memory. In fact, the budget reduction cited here was made to one of this administration’s strongest new initiatives: an effort to alter the culture of higher education by focusing on results (graduates) rather than enrollment totals. Haslam’s bold approach, coupled with his “Drive for 55” to increase the number of college graduates in the Volunteer State, and his “Tennessee Promise” to make tuition free to community colleges and colleges of applied technology, is indicative of the allegiance this administration has devoted to this particular issue.

However, don’t miss the fact that the governor is battling a funding trend that began many administrations ago. Here’s a tale-telling snapshot of recent history: 20 years ago, tuition covered about one-third of the revenues for public higher education; 10 years later, tuition costs had doubled and the amount students paid was up to 50 percent of the revenues. Today, tuition has quadrupled and covers nearly two-thirds of revenues. As any tuition-paying parent in Tennessee would agree, it’s far more than a casual cup of coffee.

How did this happen? Choices. When crunch time came, it seemed fairly painless for administrations and legislators to resist covering increasing education costs because they fully understood that the institutions could make those costs up by simply increasing tuition. The misery was passed along, so to speak, alleviating any potential hue and cry from the voters about “raising taxes.”

Speaking of suffering, Gov. Haslam was recently quoted as saying “nothing pained him more” than the cuts he had to make to raises for teachers, state employees and to higher education. We can commiserate with him because it has truly been a time of tough decisions.

But, back to choices. My hope is that when the choices are made during the next legislative session, a “cup of coffee” for higher education will take precedence over other, seemingly more important priorities. It should make the final cut. We’ll take the coffee plain, please, no cappuccinos or frills needed.

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.