On Monday evening, Governor Bill Haslam delivered his last State of the State Address of his first term. The State of the State outlines the Governor’s priorities for the upcoming year and is given in conjunction with the release of his proposed budget.
Relating to higher education, this year’s address focused predominately on community colleges and technology centers, key components to the Governor’s Drive to 55 Initiative. Below, we’ve culled through both the address and the budget to provide you with major proposals that impact the University of Tennessee.
There is no doubt that it was a tough budget year for the State. Revenues have been consistently below budgeted estimates, making the proposed FY15 budget even more difficult to prepare. All in all, the University of Tennessee was spared from any budget cuts, while the entire state budget took a 2.4% reduction.
Complete College Tennessee Outcomes Funding Formula
The Complete College Tennessee Act of 2010 changed the way colleges and universities were funded to reflect how well they perform rather than how many students they enroll.
Under the first three years of the new model, the “outcomes” funding formula has been fully funded as recommended by the Tennessee Higher Education Commission (THEC). This year, the Governor’s budget has the formula funded at less than 33% of the $29.6 million THEC recommendation.
Specifically, the Governor’s budget proposes $9.3 million in funding for “formula units.” This funding represents the total of new operating dollars to be allocated across 9 state universities, 13 community colleges, and 27 Colleges of Applied Technology. Additionally, a $3.6 million increase is proposed to be distributed amongst all non-formula units (including the UT Institute of Agriculture, UT Institute for Public Service, and the UT Health Science Center).
It is important to note how the Governor’s CCTA funding recommendation was derived. Rather than putting General Fund money into the funding formula, the Governor has opted to use the funding that would have otherwise provided the state’s portion (55%) of a 1% salary increase to higher education employees. The state portion (the $9.3 million) represents the only new monies toward the funding formula this year. Higher education has historically been expected to leverage the remaining 45% of any salary increase pool through future tuition increases.
THEC is responsible for establishing the capital project priority list for all of higher education. That this list has historically been addressed in priority order. The Governor’s budget includes only capital outlay for two community college projects. This leapfrogs the #1 THEC priority—a UTK Science Laboratory Facility. While there is no capital outlay funding for new UT buildings in the proposed budget, there is $39.4 million of needed funding included to maintain existing UT facilities.
Tennessee Promise Scholarship
The Governor also proposed a last-dollar scholarship—the Tennessee Promise. Under the proposal, Tennessee students seeking to attend community colleges and technology centers would be able to complete two years of education at no cost to the student. After all financial aid and scholarships are utilized (i.e. Pell Grants, HOPE scholarships, etc.), the Tennessee Promise would cover students’ remaining costs. The proposal is estimated to cost $34 million annually, and calls for moving roughly $300 million from the Lottery Reserve Fund into a new endowment. The current Reserve Fund sits at roughly $400 million and the change will leave $110 million in reserves for HOPE Lottery scholarships. At this point, the impact of the Tennessee Promise Scholarship on the University of Tennessee is somewhat unknown. While UT supports the intent of the proposal, it is unclear how it might impact enrollment at regional institutions such as UT Chattanooga and UT Martin.
8-Semester Lottery Eligibility
The Governor’s budget calls for changing the terminating event for HOPE lottery scholarships from 120 hours (with exceptions for some majors) to 120 hours or 8 semesters, whichever occurs last. This change allows for students to more easily double major, pursue a complex minor, or exceed minimum requirements for degree completion while maintaining their HOPE for a 8-semester (four-year) period.
This change is coupled with an alteration to the current structure of HOPE scholarships. Right now, eligible students receive $4,000 annually at four-year institutions. Under the proposal, freshman and sophomores attending four-year schools would receive $3,000 annually. Juniors and seniors would receive $5,000 annually.
$3 million is included in the Governor’s budget to continue the state’s 5-year, $15 million funding commitment for UT Peds—a joint pediatric research venture for the UT Health Science Center, Le Bonheur Children’s Hospital, and St. Jude Children’s Research Hospital. This is the second year of the state’s 5-year commitment.