2008 state of the state, fy 08-09 budget

8/14/2019 2008 State of the State, FY 08-09 Budget

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FOR IMMEDIATE RELEASE CONTACT: LYDIA LENKERJANUARY 28, 2008 615.741.3763 (OFFICE)

615.289.9375 (CELL)

BREDESEN DELIVERS 2008 STATE OF THE STATE ADDRESS

6TH BALANCED BUDGET CONTAINS NO NEW TAXES;FOCUSES ON BASICS IN EDUCATION, SAFETY, JOBS AND HEALTH

Nashville Governor Phil Bredesen today delivered his 2008 State of the State Address and Fiscal Year2008-2009 budget proposal to the 105 th Tennessee General Assembly. The common sense, no growthbudget, which calls for no new taxes, commits the majority of new state dollars to education and jobcreation.

What I am proposing in this budget is to concentrate on the basics, putting our full attention tothose things that we need to do well to keep Tennessee moving forward in education, safety, jobsand health, Bredesen said.

For the second consecutive year, the largest portion of the $27.88 billion budget including $13.84billion in state dollars will fund Pre-K-12 education and higher education. With a combinedappropriation of $8.41 billion, education represents 30 percent of the total budget.

Bredesens proposed budget commits $287 million in improvements for education, including:

$25 million to fund up to 250 new Pre-K classrooms $5.3 million to increase retention of HOPE Scholarships by adjusting the required GPA for

scholarship recipients to 2.75

$27 million to establish an endowment to provide need-based financial aid to 15,000 moreTennesseans who want to go to college

The total FY 2008-2009 budget is a 0.61 decrease over FY 2007-2008, with conservative budget growthof 0.38% in state funding. Federal funding growth also remains flat in FY 09 at less than one percent.

Other features of the budget proposal include:

$12 million to expand home and community based health care services $29.3 million for an economic development jobs package $1.3 million for a new TBI lab in Knoxville $1 3 million for DNA analysis under the Johnia Berry Act of 2007


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Ive made clear my commitment to running government in a competent and businesslike manner,Bredesen said. One of the legacies I would like to leave as Governor is the certainty that we can

manage as responsibly through the good times as the bad. The steps weve taken over the past fiveyears have positioned us to weather the current national economic slowdown. Tennessee is ready,prepared to live within its means, and we will make this budget work.

Bredesens 2008 State of the State Address, proposed 2008-2009 budget and other related materialscan be found at www.tn.gov; click on State of the State Address 2008.

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EMBARGOED UNTIL 6 P.M. CST CONTACT: LYDIA LENKERJANUARY 28, 2008 615.741.3763 (OFFICE)

615.289.9375 (CELL)

STATE OF THE STATE ADDRESS BACK TO BASICSGOVERNOR PHIL BREDESEN

JANUARY 28, 2008

Lieutenant Governor Ramsey, Speaker Naifeh, Speaker Pro Tem DeBerry, Members of the 105th GeneralAssembly, Justices, Constitutional Officers, friends, guests and my fellow Tennesseans.

Once again I stand before you, my sixth time, to report on the State of our State and to present a

budget prepared in accordance with the requirements of our Constitution. I recognize that the nationaleconomy is slowing, and Im proud that the soundness of our fiscal situationa soundness we have builttogetherhelps us navigate these stormy waters safely. The budget I am recommending is a back tobasics one. It is realistic for the times, it is honestly balanced, it does not call on reserves, and it callsfor no new taxes.

As I have done each year, I want to begin with the recognition that tonight there are thousands ofTennesseans serving our nation abroad. As of this evening 95 of these soldiers have lost their lives inthis service, 19 of them since I addressed you last year.

Would you join me in honoring these fallen Tennesseans, these Tennessee heroes, with a moment ofsilence?

To honor the many thousands of Tennessee National Guard soldiers who have served and who continueto serve our nation, we have invited here this evening two soldiers who have recently returned fromservice in Iraq:

Representing the Tennessee Air National Guard, we are joined by the senior enlisted officer ofthe One-eighteenth Civil Engineering Squadron. This squadron of 64 airmen returned on January19th from Iraq, where in a four month period they completed over 700 missions. Please join mein showing our appreciation to Staff Sergeant Craig Miller from Murfreesboro and all those herepresents this evening.

Representing the Tennessee Army National Guard we have with us the commander of A Battery


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As you know, a Tennessean, Al Gore, won the Nobel Peace Prize this past year. The General Assembly

formally honored him, as it should, and we are all proud of what he has achieved. Al Gore shared thatPeace Prize with the Intergovernmental Panel on Climate Change, headquartered in Geneva,Switzerland.

What is less known here in Tennessee is that five of the scientists who did the work to earn that othershare of the prize are also Tennesseans, working at Oak Ridge. Two of them have joined us here thisevening; Dr. Thomas Wilbanks and Dr. David Greene, both geographers. Would you join me in showingour respect and admiration for these Tennessee scientists and their colleagues?

This past November, I had the honor of joining Dr. Ben Hooks of Memphis in attending the ceremony atthe White House in which the President presented him the Presidential Medal of Freedom. This is ournations highest civilian honor, and recognizes a rich life and great achievement in the field of civilrights. Dr. Hooks couldnt be here this evening, but I would ask you to honor this distinguished man aswell with your applause.

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Before we get down to business tonight, Id like to begin with a small celebration. We all know thatthere is plenty to do, everywhere, but lets take a moment and reflect on some things that we havedone.

Security and preparedness. This is a bedrock responsibility of any Governor. This past summerTennessee was named by the U.S. Department of Homeland Security as one of the ten states in thenation to achieve their highest ranking for our disaster response plans. And we were one of eight statesto get a perfect score10 out of 10from the Trust for Americas Health for emergency preparedness.

To David Mitchell and Jim Basham and Gus Hargett and Susan Cooper, and to all your supporters in theGeneral Assembly, thank you.

Economic development. Jobs. Tennessee is a good place to do business. One of the objective ways tomeasure how well our businesses are doing is to measure and compare the bottom linehow much theper capita corporate income tax base has actually grown. The answer is impressive. If you take outstates that enacted new taxes, which we did not, we rank 15th nationally, and we rank first in theSoutheast. This is good news for our economy and for the creation of the skilled and high-paying jobsthat we are seeking. To Matt Kisber and Regan Farr and Jim Neeley, and to all those who support you in

the cabinet and in the General Assembly, thank you.

The Environment. Not so many years ago, some of our state parks had padlocks on the front gates,others had fees to get in. This year they are open, free and just won the Gold Medal from the NationalRecreation and Park Association for the best state park system in America. To Jim Fyke and to all thosewho support you in the General Assembly, thank you.


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Believe me, these kinds of grades and rankings should always be taken with a grain of salt, and theydont always capture what is most important. But Ill confess to you that it was nice to look it over this

year. Were still in the 40s on school finance, 41st to be exact. But this year for the first time theyranked states on overall scoresthe measure that tries to take everything into accountachievement,standards, transitions, teachers, financethe bottom line. In that ranking, this January, were not inthe 40s. Were not in the 30s. Were not in the 20s even. Tennessee is ranked this year #16 in thenation.

In areas we have focused on, we do even better. In the category of Standards, Assessments andAccountability, were ranked number 10 in the nation. After the actions that our State School Boardtook last week to further raise standards, I expect this to climb even higher in the years ahead.And my personal favorite ranking. In one of the six categories they look at, Education AlignmentPoliciesthis is where pre-K liveswe know we still have lots to do here, but in 2008 our EducationWeek rank nationally is one.

We are making progress in education. There are a lot of people to thank for this, most especially thewonderful teachers we have across our state. Our teachers have responded enthusiastically andcompletely to the challenges we have placed before them, and speaking as Governor for all of ourcitizens, we thank you.

Please allow me a moment however to thank one person specifically. Im losing her this week, she ismoving on to new challenges and her leaving is a sore loss to me and our state. There is no singleperson more responsible for the progress we have made; please join me in saying thanks and Godspeedto our Commissioner of Education, Lana Seivers.

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Now down to business.

Each of you here this evening knows that the economy of our nation and our state has softened in thepast six months. Changes in the economy always have to be blamed on something, and the problemsour nation is experiencing with sub-prime mortgages are the popular explanation for what is happeningright now. But even more fundamental is the reality that the business cycle has not gone away, wellhave better years and worse years for a long time to come. Theres no tax policy that will fix this; infact states with income taxes typically experience bigger swings than we do when the economy changes.

We just have to learn to live with this reality and most importantly, learn to manage through it.I want you to think this evening about our job as if we were the officers and crew of a sailing shipwellcall her the Tennessee. In the first year we crewed together, we had a full-blown storm to navigate.The next couple of years were in calmer waters, and last year was positively bright and sunny and with afollowing wind. This year, so far, weve got some heavy seas once again; not a real storm yet, butdefinitely some attention-getting waves.


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You know my commitment to running governmentto sailing this shipin a competent and businesslikemanner. One of my goals as governor is to leave my state with as many tools as I can to help it navigate

through smooth waters and storms and everything in between. Build on the sunny daysweve donethat. Trim your sails when theres a storm on the horizonwere doing that. Most of all, make sure theday you finally walk off the bridge the ship is tighter and sounder and better prepared than you foundherwere going to do that.

We expect our revenues this year to fall at least $180 million below the final projection you adoptedlast spring, and the budget being presented to you tonight is about $400 million below what it wouldhave been without this years shortfall and with what would be normal growth next year.

The current years shortfall is being handled fine. TennCare in particular ran well below its budget lastyear, and we were able to both return some appropriation to the general fund and further buildTennCare reserves. It is a welcome change that TennCare can be part of the solution. I thank DarinGordon and his staff for what they have accomplished, which is remarkable.

We have also increased our departments reversion targetsthe amounts they are asked to return to thegeneral fund at the end of the year. This amounts in its effect to reductions in their budgets, whileleaving our commissioners the flexibility to handle reductions as they see fit. We expect to smoothly

finish the year within the reduced revenues; we will not call upon the rainy day fund absent somedramatic change in circumstances. In fact, well continue to grow it.

Next year presents a greater challenge, and we need to do the same thing as that sailing ship does whenthe waters get rougher; focus, concentrate on basic seamanship. Weve had some good weather,especially the past couple of years, and weve used the time and our good fortune to make some muchneeded repairs and improvements to the good ship Tennessee. Weve made major capital investments,for example, over $1 billion in higher education capital projects alone.

But nows the time, nows the weather, to come down from the mast, to put away the paint and thepolish, and concentrate on basic seamanship, on basic statesmanship. There are still a lot of thingswed like to do. We leave them for another day, and put our full attention to those things that we needto do to keep Tennessee safe and moving forward.

I want to talk with you about four of those areas: education, crime, jobs, and health.

Education. In my address to you last year, I spoke entirely about education, and asked that we make

some major changes. Together, we have done that. The BEP distribution formula has been reworked tomake it simpler, and more important, much fairer. We called it BEP 2.0. Our budgets contained largeincreases in K-12 funding, and we agreed upon and set in law a framework for even furtherimprovements in funding in the future. This framework is a far more sensible approach than picking andchoosing items to fund year by year. We made major improvements in accountability, in local schoolboards flexibility to manage their systems, and most importantly in standards. Tennessee, as part of


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Let me address one issue head on. I have followed some of the discussion about halting the furtherfunding of pre-K insofar as it serves any children other than the poor, the so-called at-risk students.

This would be a terrible mistake, and I ask those of you who are espousing this to reconsider.

How do you say to a middle class family with children in the public schools: Yes you pay taxes forthese classrooms; yes, they are public schools; but no, those classrooms arent open to your children?

I hope to live to see the day when we stop dividing our children up into poor and rich. These are allGods children, these are all Americas and Tennessees children; we run the schools, they are publicschools, they are a public responsibility, they need to be open to the public.

The budget that I am proposing also contains two changes to the lottery scholarship program. I believein the merit concept behind the Hope scholarships, and want to retain it. But when nearly 80% of thescholarship winners lose their scholarship during their time in college, something is wrong.

Its time to fix this, and I have proposed in this budget that we change the grade point average forretention of the scholarship from 3.0 to 2.75.

This has a simple and I think compelling rationale; the average grade point average in college of

scholarship winners is about three tenths of a point less than it was in high school. In other words,college is harder than high school, and the student who achieved a 3.1 in high school will on averageachieve a 2.8 in college. Changing the retention level in this way says to the student, If you work ashard in college as you did in high school to earn the scholarship in the first place, you can keep it.

I know there is a lot of interest in the lottery reserves, and I agree that they have grown beyond what isreasonably needed to operate the lottery. Id like to suggest an approach as to how we might employthem usefully but conservatively.

First, a short story. A week ago last Fridaythe Friday before Martin Luther King DayI spent part ofthe morning at Overton High School here in Nashville, with a high school history class, talking with themabout Dr. King. These students were a delight to be with. Of the twenty or so students in the class,there were four or five who always had their hands up. They were probably A students, and will likelyearn one of our Hope scholarships.

There were also another half-dozen students who were more reserved, more reticent, who didntexpress themselves quite as readily, but who when you listened to them had thoughtful and interesting

and perceptive things to say. I walked out of there understanding that those students likely B andC students, Id guesshave a voice worth hearing too, have a voice that can contribute to this world ifthey have doors open for them as well.

In our state we have a lot of these students, who may not earn a Hope scholarship, but who want to goto college and need financial help to do so. Over 80,000 students apply each year to our own Tennessee


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Tennessee has some wonderful, successful students who we know have a bright future. With our lotteryscholarships, for them weve straightened and smoothed the road to a college education. Now, lets

open our hearts, lets widen that road and let more of the others on it as well.

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Another basic in both sunny and stormy weather is public safety; reducing crime and keeping ourcitizens safe. There are three new items in the budget that address the safety of our citizens.

First, this budget contains the additional money that is needed to fully implement the Johnia Berry Act.It funds the lab work that is necessary to quickly process the DNA samples that we will take as a resultof this act.

Second, we are proposing and have budgeted the required funding to implement Administrative LicenseRevocation for drivers who are arrested for drunk driving. This was a key recommendation of my drunkdriving task force, and I believe will reduce the number of drunk drivers on our roads.

And third, this budget contains substantial new money to staff the additional prison beds that are beingbuilt in conjunction with Brushy Mountain. One of the ways to prevent crime is to make sure we have

the space to keep those who commit it behind bars.

I know this chamber is filled with people who are committed to fighting crime, and I respectfully askyou to fund these requests so that we may continue the fight.

Education, and public safety. Another basic is jobs; making sure our economy continues to grow andproduce good jobs. Even though the year is tight, we continue in this budget to appropriate money tothe funds that allow us to offer infrastructure improvements and training to companies looking torelocate or expand here. We continue to place special emphasis on job development in our more ruralareas. I know from the business world that when times get tight, these investments are often the firstto be cut, and I also know that this is almost always a mistake. Here in Tennessee, we have not been asstrongly affected as many other states have by the national slowdown. The reason, in part, is thestrength and diversity of our economy. Our ship is pointed in the right direction here, and I ask you tostay the course.

While Im speaking about jobs, Id like to talk with you about the people we employ right here in stategovernment. My appreciation for the dedication and quality of our state employees has grown with

every year Ive spent as governor. I spoke a moment ago of the importance of keeping economicdevelopment in the top ranks of our lists of the basics. I want to add our own employees to that list aswell; I do think they all too often are the first to bear the brunt of flatter budgets.

This years budget includes an across-the-board 2% raise for our state employees. This is done torecognize that attracting and retaining good employees is just as basic to state government as to any


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Im particularly proud of the efforts that our state is making to fight some of the underlying causes ofserious health problems, particularly in the areas of obesity and smoking. This is the real frontier in

public health, and were starting to show some real successes here; the smoking rate in middle schoolhas declined from 17% to 10% over the past year, for example. That 10% is still 10% too high.

We are also a national leader in e-health, in the use of electronic data and communication technologyto maintain and make accessible to providers a persons health records. There are advantages to boththe cost and quality of health care that flow from this use of technology. We have paid a great deal ofattention to the privacy and security of these records as we have proceeded. The initiative we havedeveloped in conjunction with Vanderbilt University in the greater Memphis area is frequently held up asone of the two or three top e-health efforts in the nation.

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Finally, Id like to talk this evening though about a promise that Ive made and not yet keptexpandingalternatives to nursing homes for our elderly and disabled residents, the so-called home and communitybased services. Tennessee usually ranks dead last among the states in alternatives to nursing homes.This is the year I want to fix that, this is the year I want to fulfill my promise.

In the months ahead, with your help, we are going to fundamentally restructure how long term care ishandled in our TennCare program, and it will be a much better and more humane program as a result.Eligibility is slow today; we are going to speed it up. We need to make it easier to stay at home withmore home and community-based services. We need more residential alternatives to nursing homes andwe need more consumer-directed options such as allowing the consumer to select or even employ his orher own caregivers.

These are not just goals, we will present you with the Long Term Care Community Choices Act of 2008to restructure legislatively this part of TennCare, and TennCare itself will be making changes inconjunction with this to open the doors to a richer set of choices for our citizens.

We cannot of course put significant new dollars into long term care this year. What we will do is torestructure what we have, and provide a framework for the future in much the same way as we did withthe BEP last year. We will not do this independently, but in consultation with members of thelegislature, with the industry itself, and with citizens who have been calling for changes in long termcare for a long time.

There is a growth in my own personal understanding here. It becomes plainer to me every day that ourstate has so many citizens who are elderly and who are beginning to deal with the reality that they canno longer do everything for themselves in quite the way they did twenty years ago. Our state is full ofthe children and grandchildren of these citizens who want the best for them, and are looking for ways toaccomplish that.


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In this years State of the State, Ive carried through a nautical analogy, likening us to the crew of asailing ship navigating heavy seas. I did so because theres a real core of truth there. The publicthosewho have placed their trust with usreally does expect us act like a crew when the seas get heavy.Theres another old saying that I heard years ago, that I think sums it up: The world is not muchinterested in the storms you encountered at sea. The question is: did you bring the ship safely toport.

When it comes to the important things, the people of Tennessee dont really care about governors andlegislatures, dont really care about Democrats and Republicans, arent interested in the day-to-day

challenges we face in government. What they do care about is us getting down to business and sailingthe ship safely and on course through whatever seas she encounters.

The world is not much interested in the storms you encountered at sea. The question is: did you bringthe ship safely to port. Working together, we can bring her safely to port.

Thank you for your courtesy here tonight. May God bless Tennessee and her people, and may Godcontinue to bless and protect the land called America where, working together, dreams come true.

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Administration

Priorities

Stick with the Basics

Governor Bredesen led our state out of bankruptcy and put state Government back on a solid financial footing. He

accomplished this through common sense budget discipline and sound management of our states resources. He hasrebuilt investor confidence, confirmed by upgrades of the states bond rating by Fitch and Standard & Poors in 2006and by Moodys in 2007. To prepare the state to manage as effectively through economic downturns as it does timesof economic prosperity, he has built Tennessees rainy day fund to an all-time high.

The commitment the Governor has made to common sense budgeting, smart investments in education and healthcare, and record rainy day reserves are moving Tennessee in the right direction. The 2008-2009 budget is the sixthbalanced, sensible and well-rounded budget Governor Bredesen has submitted to the General Assembly.

The Governor believes that state government, like a family or business, must live within its available resources. Thisyears budget balances those resources with the need to continue to focus on fundamentals that will moveTennessee forward in education, job creation, health care, safe communities, and conservation of our precious landand energy resources.

Educating our Children

Governor Bredesen has made education Tennessees number one priority. Successes of his administration to date

include a pre-K program that is growing and recognized nationally as a model, last years BEP 2.0 and its substantialincreases in both fairness and funding and our leadership position in the national standards movement. In 2008, weneed to continue to build on this foundation.

The Governor has once again proposed additional funding for pre-K and so we can move beyond so-called at-riskchildren and offer all parents in Tennessee the option of a first class pre-school experience for their children. There iscontinued progress toward full funding of the new BEP 2.0 formula laid out last year. More rigorous high schoolgraduation requirements have been adopted to make sure our graduates are college ready and work ready, andstandards have been revised for math, science and English to make Tennessee more competitive at a national level.

Governor Bredesen is committed to breaking down the barriers and cutting through the red tape to ensure we havethe best possible teachers in the classroom, particularly in critical areas like math and science. Building on thesuccess of Teach Tennessee, the Governor has asked the Tennessee Board of Education to help broaden the poolof great teachers through alternative certification methods. At the same time, he is committed to working with highereducation to revolutionize our traditional teacher training programs to provide more relevant, professional teacher


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The Rural Opportunity Initiative Training program will build on the ROI initiative launched by the Governor inSeptember and the Rural Opportunity Fund, also launched in 2007. The program will provide skills training designedto enhance and improve technology capabilities in communication and marketing, create effective local leadership to

assess, plan and build competitive communities, and strategically prepare for future economic developmentprospects with a focus on rural areas.

Leading Healthier Lives

Leading healthier lives requires changes in lifestyles to reduce disease, access to health care services, andsupporting the needs of the individual through all stages of their life. Cover Tennessees programs are up andrunning successfully, covering more children and working adults than ever before. Tennessees efforts to enact theNon-Smokers Protection Act and increase cigarette taxes took Tennessee to a grade of B from an F in theAmerican Lung Associations latest national report card. Adult smoking rates in Tennessee have already droppedfrom 26.8% in 2006 to 22.6% in 2007. Smoking rates for our youth also improved, with a drop in high school smokingrates from 26.3% to 25.5% and a drop in middle school smoking rates from 16.6% to 9.7%.

In 2008, Governor Bredesen is committed to increasing the home and community based care services available toTennesseans planning long term care for themselves or family. The need for more options in home and communitybased services is clear. Tennessee currently ranks only 44th in the amount of Medicaid home and community basedwaiver services spending, but ranks 16th in nursing facility spending. Rebalancing this system will modernize the

payment structure for nursing facility services with quality care incentives. More importantly, it will give Tennesseansmore options for themselves and their loved ones by incorporating more home and community based services thatmake it possible to stay at home longer.

Making our Communities Safer

Governor Bredesen knows safe communities are vital to maintaining a high quality of life in Tennessee. Legislativeinitiatives like the Meth-Free Tennessee Act of 2005, the Johnia Berry Act of 2007 and the Crooks with Guns bill,turning up the heat on Internet predators and a new TBI Crime Lab in Knoxville are just a few of the initiatives andtools Tennessee has brought to bear to keep our communities safe.

The Governors budget includes continued support for successful programs as well as funding for expanded prisonfacilities in Morgan County, increased funding for local jails and salary increases for judges, district attorneys andcriminal investigators. He has also designated funds for a residential program for at-risk youth ages 16-18 called theNational Guard Youth ChalleNGe program, a tuition assistance program for the Tennessee Air National Guard,resources for TEMAs statewide communications interoperability program, and a DUI drivers license revocationinitiative.

Promoting Energy Independence and Conservation

Governor Bredesens commitment to conservation encompasses protecting our precious land and water resourcesand reducing consumption of energy and other natural resources. His decision to commit more than $70 milliondollars to alternative fuels development last year has truly made Tennessee a leader in the movement away from apetrole m basedeconom In2007 Tennesseealsocompletedahistoric127000 acreacq isitiononthenorthern


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I believe with all my heart that the real change that is needed in education is a focus on theindividual teacher; a commitment to getting the best possible person to teach in each and everyclassroom. It is time we got serious about our teachers about recruiting them, selecting them and

preparing them for the job.~ Governor Phil Bredesen

The following is an overview of Tennessees accomplishments in education under Governor Bredesens leadership.

Pre-Kindergarten Education

With the addition of 257 new classrooms in 2007, Tennessee now operates 934 classes serving over 17,000students in all 95 counties and 133 school systems of the state. In the spring, the National Institute for EarlyEducation Research recognized Tennessee for the second consecutive year for providing one of the best qualitypre-K programs in the nation. Tennessee was ranked based on a comprehensive examination that highlightedrigorous standards for teacher credentials in the classroom and for excellent learning standards aligned to thebehavioral and cognitive needs of a child preparing to enter Kindergarten.

School Funding BEP 2.0

More than $376 million new dollars are being provided for local school districts as a result of 2007 revisions to theBEP funding formula for public schools. Governor Bredesens BEP 2.0 plan revised key components of the formulaand changed the fiscal capacity model used to determine local school funding requirements, creating a fairer andmore equitable funding formula that provides for the increasing demands felt by districts across the state.

The new model provides a clear, fair understanding of each systems ability to pay for schools and raiseadditional revenue. In the fall, districts submitted financial accountability documents outlining exactly how theyappropriated each new dollar received under BEP 2.0. All funds supported classroom instruction by providingadditional teachers and educational specialists, curriculum and supplies.

Teach Tennessee

Governor Bredesens Teach Tennessee program is a unique path to teacher licensure for exceptional mid-careerprofessionals who demonstrate expert knowledge and want to make a positive difference in the lives ofTennessees students. All Teach Tennessee Fellows have academic and workplace expertise in the most difficultto staff subject areas: math, science, and foreign languages. Close to a third of the Governors Teach TennesseeFellows hold advanced degrees in the subject area they intend to teach. Their previous career roles include

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Accountability

With increased school funding in 2007, additional accountability measures were instituted to focus districts ongetting the best results for their students. BEP 2.0 changes required increased accountability for how the newfunds would be used to improve achievement for students at-risk for failure. A matrix designed for each schooldistrict links the new funds received to specific areas in need of improvement at their school or district.

The Department of Education expanded its division for urban education improvement to provide the departmentwith more specialists with knowledge of the unique problems facing these school districts. This division held thefirst summit on urban education last summer to collect best practices from districts and allow them to shareideas and work across the state to focus on the best resources for urban settings.

Tennessee Diploma Project

In January 2007, Governor Bredesen directed the department to join the American Diploma Project Network. Thiscoalition of 29 states is working to align our high school curriculum, standards, assessments and accountabilitypolicies with the demands of college and work in a 21st century economy.

In the spring, information was collected from higher education instructors to determine the skills Tennesseegraduates require to be prepared for and succeed in post secondary work. Governor Bredesen held a series ofroundtable meetings with leaders across the state to ensure that changes made to high school standards andrequirements meet the needs of the modern workplace.

This fall, the Department of Education began distributing new, more rigorous learning standards for all coreacademic subjects in all grades. In order to create a learning path for students that would be successful, allstandards must be aligned and improved to give educators the tools they need to see their students succeed. Thiswinter the states TCAP tests will be re-bid to match the depth and rigor of the new learning standards.

Governors Books From Birth Foundation

In 2007, the GBBF partnered with the Tennessee Department of Human Services to expand the libraries of morethan 2,400 child care agencies serving low-income infants, toddlers and preschoolers across the state. DHS-licensed agencies serving low-income children participating in the subsidy program (also known as the certificateprogram) each received a set of Imagination Library books. Nearly 40,000 children under age five attend theselicensed agencies across the state. One hundred DHS field offices in all 95 counties also received a gift set ofImagination Library books.

School Health

Last year, Tennessee expanded a new school health program to all districts in the state. The Coordinated School

Health program began as a pilot in 10 districts to provide comprehensive and integrated health education tostudents of all ages. In May, an analysis by ETSU of the pilot systems determined that the Coordinated SchoolHealth model provides for greatly improved health outcomes and less risky behavior patterns by students. Thestudy found improved academic performance, less alcohol and drug use, and more community involvement as aresult of the Coordinated School Health program. In August, more than $12 million in grants were distributedacross Tennessee to fund a Coordinated School Health program in every school of the state. Each district hashired a qualified health expert to direct and coordinate all of the resources and activities of the district to


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When it comes to the health care needs of Tennessee, were addressing real-world concerns withreal-world solutions.

~ Governor Phil BredesenThe following is an overview of Tennessees accomplishments in health care under Governor Bredesensleadership.

Covering the Uninsured

In 2007, Governor Bredesen put his idea for helping Tennessees uninsured into action with the launch of CoverTennessee. He centered his vision for Cover Tennessee on four primary principals: create programs that areaccessible; create programs that are affordable and portable; focus on preventive services; and, emphasize

personal responsibility.

Cover Tennessees three insurance programs - CoverTN, CoverKids and AccessTN - and its pharmacy benefitprogram, CoverRx, are providing options to uninsured Tennesseans where no options existed for them before.Furthermore, the Governor was able to launch Cover Tennessee without creating mandates requiring individuals orbusinesses to buy insurance and without any new taxes on individuals, businesses, hospitals or insurancecompanies.

Patterned on a commercial model, Tennessee was able to plan, design, procure and implement Cover Tennessee in

record time and, by the end of the year, more than 63,000 previously uninsured Tennesseans had health insuranceand pharmacy services. Today, all four programs have expanded. CoverKids has added vision benefits for childrenand will soon add dental benefits. CoverTN now offers coverage to small businesses with 50 or fewer employeesand to working individuals whose companies do not provide health insurance. Cover Tennessee is a national modeland an example of how a state can make health insurance affordable, accessible and voluntary so the uninsuredget health care services.

Tobacco Control and Prevention

Tennessee took tremendous strides in 2007 in efforts to curb tobacco use among Tennesseans as well as theirexposure to secondhand smoke. Legislation to prohibit smoking in the majority of workplaces in Tennessee and anincrease in the cigarette tax, coupled with investments in tobacco cessation and prevention programs, are alreadyhaving a positive impact. In fact, Tennessee has moved from the third highest adult smoking rate in the nation to10th in the nation, a significant reflection of the number of Tennesseans who chose to stop tobacco use.

Recent statistics show adult smoking rates dropped from 26 8% in 2006 to 22 6% in 2007 During the same period


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Get Fit Tennessee

In August, Get Fit Tennessee re-launched its Web site www.GetFitTN.com redesigned to give Tennesseans anonline, one-stop resource for nutrition and fitness information as well as local activities and destinations in whichto get fit in communities across the state. The initiative includes members like program spokesperson EddieGeorge, a former Tennessee Titan player and Heisman trophy winner, and University of Tennessee football coachPhil Fulmer. In August 2007, Commissioner of Health Susan Cooper launched a Get Fit Tennessee Back to SchoolTour. By the end of 2007, the team had visited more than 50 school districts across the state to share with childrenin Tennessee the importance of increased physical activity and healthful nutritional choices.

Focus on Diabetes

In November, Tennessee ranked first in the nation for numbers of adults with diabetes who monitor their bloodglucose levels daily, according to the Centers for Disease Control and Preventions Morbidity and Mortality WeeklyReport. Findings of the nationwide study on self-monitoring of blood glucose among adults with diabetes includesignificant increases in daily monitoring from 1997 to 2006, with an average increase of 22 percent. In Tennessee,78.2 percent of adults with diabetes reported monitoring their blood glucose daily in 2006, a 25.8 percent increasefrom 1997.

Local Health Departments Expand State Safety Net

Three newly constructed local health departments opened in 2007 in Blount, Dyer and Maury counties. Each localgovernment was provided $1 million in Safety Net funding from the state to help cover the cost of construction.Expansion grants were also given to establish three federally qualified health centers in counties without safetynet options. The safety net clinic network of public health departments, federally qualified health centers, andcommunity and faith based clinics provided over 500,000 visits for uninsured Tennesseans in 2007.

Better Management in TennCare

TennCare has continued to build a financially viable healthcare program for low-income families. The bureausstrong financial status is the result of TennCare's diligent fiscal stewardship over the past five years. Building on

the programs operational strength, TennCare has focused on increasing accountability with managed careorganizations to improve overall health outcomes for enrollees. Targeted efforts to manage enrollees healthneeds through the whole person model have already resulted in the successful integration of behavioral andphysical health in Middle Tennessee and is moving statewide.

Preparedness

In December, Tennessee achieved 10 out of 10 possible indicators of preparedness to respond to public healthemergencies, according to Ready or Not? Protecting the Publics Health from Disease, Disasters and Bioterrorism,

a report issued by the Trust for Americas Health. Tennessee is one of only seven states with a top score in thisnational assessment.

In August, Tennessee received a score of 85 out of a possible 100 points from the Centers for Disease Control andPrevention for its level of preparedness to receive the Strategic National Stockpile during an act of bioterrorism ora mass casualty event. SNS is a federal program, which aids state governments in establishing pre-positionedcaches of medicines and medical supplies that can be shipped in less than 12 hours in the event of a large-scale


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Tennessee wont be truly strong until each and every county has a strong economic foundation.~ Governor Phil Bredesen

The following is an overview of Tennessees accomplishments in Economic and Community Development reachedunder Bredesens leadership.

Job Creation

Governor Bredesen knows the wealth of the state is in the hard-working Tennesseans who have good jobs with goodfutures and the companies that employ them. He believes job creation is critical to improving our quality of lifewith a focus on developing higher skilled, better paying jobs.

Since taking office, Governor Bredesens programs have generated more than 130,000 new jobs and nearly $20billion in new capital investment in Tennessee. In 2007, Forbes magazine ranked Tennessee the 13th best state inthe nation to do business, up from 20th the year before, tying Tennessee with Washington for the most improvedstate in the nation for business climate.

Rural Opportunity Initiative

At the 2007 Governors Conference on Economic and Community Development, Governor Bredesen unveiled the

Rural Opportunity Initiative, a series of new incentives designed to jump start job growth in Tennessees ruralcounties. The ROI program establishes three tiers of economic distress in Tennessees rural counties and offers aseries of progressive tax credits for companies that locate or expand in counties with historically high rates ofunemployment.

The program is outlined in the Tennessee Tool Kit, the states first ever comprehensive document spelling outeconomic incentives. More than 5,000 Tool Kits were distributed in the first six months of the program and aredownloadable from the ECD Web site.

The program was developed in tandem with the Rural Opportunity Fund, a $12 million dollar capital fund seededwith $2 million in state funding. The fund is designed to provide high potential rural businesses with much neededcapital to fund expansion and job creation. To date, the fund has made four loans and is reviewing the applicationsof 15 more businesses.

Agricultural Enhancement


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In the first six months of Fiscal Year 2008, more than $25 million has been committed in cost share assistance to8,200 Tennessee farmers, a response especially noteworthy in what has been described as one of the worstagricultural production years on record in Tennessee. These public/private investments will help improve farmersbottom lines and help them better manage through difficult growing seasons like the one experienced in 2007.

Helping Small Business

Since taking office in 2003, Governor Bredesens administration has taken the approach that economicdevelopment should serve small, minority and women-owned businesses as well as large corporations. Thats whythe Business Enterprise Resource Office was created. BERO launched a program of business matchmaking eventsacross the state to assist small companies in meeting procurement executives from large corporations andgovernment agencies, executives with whom they would otherwise have difficulty arranging a meeting.

To date, those events have been a resounding success with more than 900 small, minority and women-ownedcompanies taking part in BERO Business Matchmaking events, generating more than $565,000 in new businesscontracts for small business. BERO also provides one-to-one business counseling for small business and in 2007counseled 1,811 companies, a six percent increase over the previous year.

Global Outreach

The state expanded efforts to assist Tennessee companies in taking part in the global economy through a numberof important initiatives in 2007, including Governor Bredesens October 2007 trade mission to the Peoples Republic

of China. The effort developed strong working relationships with Chinese trade officials and raised the profile ofTennessee through the opening of the Tennessee China Development Center, the states first ever trade office inChina.

The Governors trip moved forward several important agreements including Phenotype Screening Corporationscontract with the Chinese Institute of Botany and raised the profile of West Clinic of Memphis opening of a newcancer treatment center in Shanghai. The Governor also held meetings with Chinese health care officials and laidthe groundwork for a visit of Chinese medical experts to Tennessee in 2008 to study rural medicine, health carefinancing and organizational leadership at institutions like the University of Tennessee, East Tennessee State

University, Vanderbilt and the University of Memphis.

Corporate HQ Success

The success of Governor Bredesens focus on higher skilled, better paying jobs is clearly evident in the continuedattraction of new corporate headquarters to the state. In August, Verizon Wireless announced plans to build itsregional headquarters in Franklin, becoming the 31st company to locate a corporate headquarters in Tennesseesince 2003. The state also successfully convinced longstanding corporate citizens like Eastman Chemical andGeneral Motors to continue investing in Tennessee, with $1.3 billion and $800 million in new investment

respectively.

National Recognition

Tennessees unique job creation strategies continue to get the state noticed nationally. In addition to beingrecognized by Forbes as one of the most improved states in the U.S. for business climate, Site Selection magazineranked Tennessee one of the 10 best states in the nation for business for the third consecutive year in 2007


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The need to find alternative sources of energy is a vital issue. It is an issue of national security, anissue of economic responsibility, of environmental stewardship, and of our citizens quality of life.

~ Governor Phil Bredesen

The following is an overview of Tennessees accomplishments in Environment and Conservation under GovernorBredesens leadership.

Tennessee at the Forefront of Biofuels Development

Governor Bredesens decision to commit more than $70 million to alternative fuels development has truly madeTennessee a leader in the movement away from a petroleum-based economy. The Governor created theAlternative Fuels Working Group, an interagency task force designed to look at ways the state can reduce its costsfor energy consumption and launched the BioTENN program, aimed at developing the market for alternative fuelsby increasing alt fuels availability across the state.

Perhaps most significant, however, is the commitment to assist research currently underway at the University ofTennessee and Oak Ridge National Lab to develop cost competitive ethanol from non-food source products likewood chips and switchgrass. With Governor Bredesens support, UT will begin building a pilot ethanolrefinery/research center in East Tennessee. Tennessee's investment was instrumental in the successful bid by ORNLand UT to win a $135 million Bioenergy Research Center that will be located in Oak Ridge. The combination ofstate and federal investments has catapulted Tennessee to the forefront of the emerging bioenergy industry.

Land Conservation

Governor Bredesen continues to make land conservation a priority, announcing in November the completion of ahistoric 127,000-acre acquisition on the northern Cumberland Plateau in Anderson, Campbell, Morgan and Scottcounties. The project, called Connecting the Cumberlands, joins the newly acquired property with other publiclyowned lands to safeguard a 200-square mile swath of forestland for preservation and public enjoyment.

The Heritage Conservation Trust Fund, which Governor Bredesen established in 2005 with support from the GeneralAssembly, has allowed the state to better respond to emerging opportunities for preservation of priority openspaces. In 2007, the Trust Fund awarded 14 grants totaling $17.3 million, leveraging other public and privatedollars to protect more than 22,000 acres.

Environmental Management


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awareness of the importance of watersheds and encourage good stewardship of state water resources. The twoagencies implemented an environmental agreement outlining processes for the two agencies to improveenvironmental protection and efficiency by including environmental officials in road projects earlier in theplanning process. And TDOT launched two new grant programs aimed at reducing emissions from diesel engines toimprove air quality.

Tennessee State Parks

The commitment Governor Bredesen made early in his administration to Tennessees state parks received nationalrecognition in 2007. The Tennessee State Parks system was selected as the best state parks system in the countryby the American Academy for Park and Recreation Administration and the National Recreation and ParkAssociation.

Improved fiscal discipline and management has allowed Tennessee to reopen 14 parks closed by the previous

administration, eliminate access fees at 23 parks that had instituted them in 2002, and make other improvements.With a wide range of recreational and educational opportunities, Tennessee State Parks and Natural Areas also playa key role in the protection of ecologically significant lands and the preservation of state cultural and historic sites.

Protecting Soil and Water Resources

More than $6 million in state cost share assistance was provided to nearly 1,700 landowners in the last fiscal yearto improve water quality and protect soil resources on almost 100,000 acres of farm and forestland in Tennessee.Dollars from the states Agricultural Resources Conservation Fund were also used to leverage an additional $3

million in federal funding to improve another 14,000 acres and to support various water quality projects andeducational programs across the state.

New resources provided to the Department of Environment and Conservation in 2007 were focused on protectingwater quality from erosion and storm water runoff from uncontrolled construction sites, which can pose asignificant threat to the states water resources, damage wildlife habitats and affect drinking water resources.Tennessee also received an EPA grant to fund the first phase of a four-year storm water project designed to helplocal municipalities develop comprehensive strategies to manage water resources at the local level for waterquality protection.

Reducing Emissions to Improve Air Quality

In December, as part of the U.S. Environmental Protection Agencys Clean School Bus USA program, the SoutheastDiesel Collaborative presented the Department of Environment and Conservation with a $250,000 grant to installdiesel retrofit devices on 40 school buses in Sumner County. In June, TDEC awarded nearly $1 million in AlternativeFuels Innovation Grants to 14 recipients. The grant program was created to encourage local governments andpublic universities to assess opportunities to increase the use of alternative fuels in their fleets and measurepositive impacts to state air quality, particularly in areas not attaining federal air quality standards.

In January, the Department of Transportation launched two new grant programs aimed at reducing emissions fromdiesel engines. The program, which provides funds for retrofitting older diesel engines used in locomotives androad construction equipment, has received a National Leadership Recognition Award from EPA. TDOT is alsoimplementing the Green Island Network Corridor program, which provides grants to qualifying retail fuelingstations for the promotion and sale of the biofuels, B20 Biodiesel and E85 Ethanol. The goal of the program is tohelp locate biofuel stations no more than one hundred miles apart along Tennessees interstates and major


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1


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2

Maintain Education as the States Top PriorityStick with the basics Investments inEducation, Health Care, Jobs, Safety andEnvironment

Submit a balanced, fiscally conservativebudget with no new taxes

Budget Principles


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3

6 common sense balanced budgetsConservative budget growthFY09: 0.38% growth state funds; -0.61% total budget

Record savings in Rainy Day Fund$750 Million in FY08; $785 Million in FY09

Improved bond rating (AA+)

Record investments in education since FY03$1.306 Billion in Pre-K-12; $1.038 Billion in higher ed capital funds

Budget Record


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4

TOTAL $27.88 Billion

Total FY 08-09 Budget (including federal dollars)

$ 10.1 BOther

$ 1.8 BTransportation

$ 3.44 BHigher Ed

$ 4.97 BPre K-12

$ 7.57 BTennCare

RECOMMENDED

FY08-09SOURCE

Budget Overview


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5

FY 08-09 Taxpayers Budget (state dollars only)

Budget Overview

864 MState Shared Taxes

$ 497 MOther

174 MBusiness and Economic Dev.

462 MGeneral Government

804.5 MTransportation

406 MResources and Regulation

1.18 BLaw, Safety Correction

3.76 BHealth and Social Services

$ 5.7 BEducation

RECOMMENDED

FY08-09SOURCE

TOTAL $13.84 Billion


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6

(1.5%)3,3373,389Other Departmental

1%1,0201,010Tuition and Fees

(62.03%)112295Bonds

(.61%)$ 27,878$ 28,049TOTAL

.02%9,5649,562Federal Revenue

.38%$ 13,845$ 13,793State Appropriations

CHANGERECOMMENDED

FY08-09ESTIMATED

FY07-08SOURCE (millions)

Revenue (federal and state dollars)

Budget Breakdown

Net decreasein overallstate budget.


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7

(14.7%)168197Facilities Revolving

(49.12%)231454Capital Outlay

2.8%864840Cities & Counties (SST)

(2.4%)321329Debt Service

(.61%)$27,878$ 28,049TOTAL

3.15%1,8021,747Transportation

.04%$24,492$ 24,482General Fund

CHANGERECOMMENDED

FY08-09ESTIMATED

FY07-08FUND (millions)

Breakdown by fund (federal and state dollars)

Budget Breakdown


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8

Federal Funding Challenges

Flat Federal Funding Growth FY09


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9

(7.69 %)1213Facilities Revolving

6.21 %804757Transportation

(2.43 %)321329Debt Service

(37.88 %)164264Capital Outlay

2.86 %864840Cities & Counties (SST)

(16.80 %)406488Resources & Regulation

0.51 %1,1831,177Law, Safety & Correction

(18.31 %)174213Business & Economic Dev.

(1.44 %)3,7553,810Health and Social Services

0.38 %$ 13,845$ 13,793TOTAL

4.47 %5,7005,456Education *

3.59 %$ 462$ 446General Government

CHANGE

RECOMMENDED

FY08-09

ESTIMATED

FY07-08APPROPRIATIONS (millions)

GEN

ERAL

FUND

Appropriations (state dollars only)

Budget Breakdown

* Includes education lottery appropriations


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10

2.63%$ 12,759$ 12,432TOTAL

(3.35%)922954Other State Rev.

3.79%1014977Other

(3.78%)305317Privilege

1.54%263259Motor Vehicle Reg.

5.19%284270Gross Receipts

.70%864858Gas

3.13%$ 11,837$ 11,478SUBTOTAL

1.98%1,8011,766Franchise & Excise

3.91%$ 7,306$ 7,031Sales

CHANGEESTIMATED

FY08-09ESTIMATED

FY07-08

SOURCE(millions)

State tax collections

Dept.ofRevenueC

ollections

Budget Breakdown


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11

Base Budget Cuts

TennCare $ 26.9 M

Cover Tennessee $ 23 M Correction $ 6.2 M

Human Services $ 4.3 M

Childrens Services $ 1.6 M TCRS Rate Reduction $ 12.1 M

Miscellaneous $ 11.7 M

Subtotal Base Reductions $ 85.8 M Increase in Over-Appropriation $ 43.4 M

Total Reductions $ 129.2 M


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12

FY09 Improvements

Highlights of Major Improvement Initiatives

Education $ 287 M(Includes BEP, BEP 2.0 Year 2, Pre-K Expansion, Academy for Math & Science Year 2, BooksFrom Birth Match Increase, Save the Children Literacy Program Year 3, FFA and 4H FoundationGrants, HOPE Scholarship Retention, Nursing Loan Forgiveness Program, UT Biofuels Year 2,Teacher Quality Initiative, Teacher and Higher Education Salary Increases)

Job Creation/Rural Development $ 37.6 M(Includes Soil Conservation, Tourism Advertising, Jobs Package, Rural Opportunity Fund)

Home and Community Based Care $ 20.7 M(Includes Home and Community Based Services, Arlington Community Mental Retardation Services,Community Mental Health Services Waiting List Reduction)

Safe Communities $ 41.9 M(Includes Johnia Berry DNA Analysis, Knoxville TBI Lab, Internet Crimes Against Children Task Forces,

Morgan Co. Prison Expansion, National Guard Youth ChalleNGe Program, Communications Interoperability,and Fire-Fighting Communications Equipment)

Energy and Conservation $ 34.5 M(Includes Alternative Fuels Awareness (BioTENN) Year 2, Heritage Conservation Trust Fund, Local Parksand State Lands Acquisition Funds, Water Resource Management, Wetlands Acquisition Fund,UT Biofuels Research Initiative)


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13

Budget BreakdownState Dollars

GENERAL GOVERNMENT TOTAL $ 461.7 M

Finance and Administration $ 37.4 MDept. of Revenue (Includes Title & Registration) $ 86.9 MComptroller $ 86.8 MLegislature $ 39.2 MOther $ 211.4 M

FY 09 IMPROVEMENTS $ 88.3 M

(continued on next slide)


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14


GENERAL GOVERNMENT (cont.)

FY 09 IMPROVEMENTS PAY AND BENEFITS

Employee Pay Raises $ 30.6 M(State Employees 2%)

Group Health Insurance Increase $ 34.8 M

Alternative Fuels Initiative - Year 2 $ 4 M

Internet Crimes Against Children Task Force $ 400 K

Public Records Ombudsman $ 40.5 K(Additional Position)


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15

EDUCATION TOTAL $ 5.7 B

Pre K-12 Education $ 4.019 BHigher Education $ 1.68 B

FY 09 IMPROVEMENTS $ 287 M

Pre K-12 Improvement $ 220 M

Higher Education Improvement $ 67 M


BEP 2.0More than $376 million new dollars are being provided for

local school districts as a result of Governor Bredesens 2007

revisions to the BEP funding formula for public schools.

d kd


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16

EDUCATION (cont.)

FY 09 IMPROVEMENTS Pre-K-12 $ 220 M

Fully Fund BEP Growth $ 83.9 M

BEP 2.0 Year 2 $ 86.5 M

Pre-K Expansion General Fund $ 25.0 M(Adds up to 250 new classrooms)

Governors Academy for Math and Science Year 2 $ 400 K

Governors Books From Birth Foundation $ 500 K

Save the Children Literacy Grant $ 2 M

FFA and 4-H Foundation Grants $ 1 M


d kd


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17

EDUCATION (cont.)

FY 09 IMPROVEMENTS HIGHER EDUCATION $ 67 M

HOPE Scholarship Retention GPA 2.75 $ 5.3 M(5% increase)

Need-Based Student Financial Aid $ 27 M(TSAA $9 M, Lottery for Education $18 M)

Higher Education Salary Increases UT and TBR $ 22.9 M

Nursing Loan Forgiveness Program $ 1.4 M

UT BioFuels Center Year 2 $ 5.6 M

TBR Teacher Quality Initiative $ 500 K



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18

Capital Outlay Budget

CAPITAL OUTLAY $ 230.7 MBonds $ 0 M

Cash $ 163.5 M

Other $ 67.2 M

PROJECTSCorrection $ 120.0 M

K-12 Education (State Special Schools) $ 2.2 M

Higher Education (Maintenance) $ 53.6 M

Mental Retardation $ 11.4 MLibrary & Archives (Planning) $ 2.1 M

State Museum (Planning) $ 2.0 M

B d B kd


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19

HEALTH AND SOCIAL SERVICES TOTAL $ 3.755 B

TennCare $ 2.679 BChildrens Services $ 341.3 MHealth $ 205 MHuman Services $ 183.5 M

Mental Health $ 179.1 MCover Tennessee $ 73.1 MMental Retardation $ 80.5 MOther $ 13.5 M



B d t B kd


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20

HEALTH AND SOCIAL SERVICES (cont.)


Home and Community Based Care Expansion $ 12 M

Smoking Cessation Year 2 $ 10 M

Primary Care Clinic Safety Net Grants $ 6 MHIV/AIDS Ryan White Program $ 3 M

Arlington Area HCBS Transition $ 4.1 M

Mental Retardation Services Waiting List Reduction $ 610 K


B d t B kd


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21

TRANSPORTATION, BUSINESS & ECD TOTAL $ 1.066 B

Transportation $ 892.2 MEconomic and Community Development $ 65.8 MAgriculture $ 94.5 MTourism $ 13.8 M

Housing $ 350 K


Jobs Package $ 29.3 M

Rural Opportunity Fund $ 1.2 M Soil Conservation $ 2.25 MTourism Advertising $ 4.75 M


B d t B kd


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22

LAW, SAFETY AND CORRECTION TOTAL $ 1.183 B

Correction $ 673.8 MSafety $ 123.7 MTBI $ 40.2 MMilitary $ 15.6 M

Other $ 329.7 M




B d t B kd


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23


LAW, SAFETY AND CORRECTION (cont.)


Morgan Co. Prison Expansion $ 6.2 M Local Jail Reimbursements $ 3.2 M

National Guard Youth ChalleNGe $ 1.2 MAir Guard Tuition Assistance $ 310 KCommunications Interoperability $ 201 KDNA Analysis Johnia Berry Act of 2007 $ 1.3 M

Knoxville TBI Lab $ 1 MReal ID Reserve (non-recurring) $ 6.5 MDUI Initiative ALR $ 2.8 M

Budget Breakdown


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24

RESOURCE AND REGULATION TOTAL $ 406.4 M

Environment and Conservation $ 202.6 MCommerce and Insurance $ 87.9 MLabor and Workforce Development $ 43.1 MFinancial Institutions $ 8.2 M

Other $ 64.6 M


Heritage Conservation Trust Fund $ 10 M

Water Resource Management $ 2 M

Lands Acquisition Fund $ 4.9 M

Wetlands Acquisition Fund $ 4.9 M


TennCare Reserves


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25

TennCare Reserves

$598M as of 6/30/07Non-Recurring Commitments $ 48.5 M Essential Access Hospitals/Critical Access $ 30 M

Capital funds for Med and Metro $ 5 M

CoverTN $ 5 M Minimum wages for nursing homes $ 8.5 M

Potential Recurring Problems $ 377 M Certified Public Expenditures $ 200 M Nursing Home CPE $ 67 M Targeted Case Management $ 78 M Graduate Medical Education $ 32 M

Potential Non-Recurring Problems $ 150 M Disallowance of 2006 & 2007 Nursing Home CPE $ 140 M FY08 effect of TCM $ 10 M

Economic Downturn 10,000 new enrollees $ 11.9 M

TennCare Reserves


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26

TennCare Reserves

$598M as of 6/30/07

Settlement of long-standing federal disputes - $133 million

Delay in Medically Needy program - $150 million

One-time retro-active Nursing Home CPE - $73 million

Conservative estimate of federal funds - $131 million

Reduced administrative fees for MCOs - $41 million

Unused HCBS funds - $19 million

Pharmacy Savings - $147 millionControlling utilization trends - $173 million

Where Did the Savings Come From?

Revenue Fluctuation Reserve


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27

Revenue Fluctuation ReserveIn Millions Rainy Day Fund

B d t R


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28

Budget Recap

Tennessee well positioned to weather anticipatednational economic downturn

6th common sense balanced budget

No new taxes

Total budget growth less than 1%

63% of all new state tax dollars in education


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29

A di


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30

Appendix

Available Revenues 2008-09Recurring Non Recurring

Department of Revenue Growth $ 343,700,000 $ -

Recurring Base Adjustment 5,100,000 -

Revenue Base Availability 100,000,000 -Less: Revenue Undercollection Estimate (180,000,000) -

Less: License Plate Production (Transfer to Hwy Fund) (2,400,000) -

Add: Other State Revenue Growth 1,500,000 -

Add: Tobacco Settlement MSA @ $164.5 Million 7,200,000 -

Less: Miscellaneous Revenue Adjustment (100,000) (400,000)

Add: Reserve for Future Requirements @ 6/30/08 - 337,600,000Add: Debt Service Fund Revenue 10,000,000 -

Less: Supplemental Appropriations - (19,600,000)

Add: Base Reductions 85,800,000 -

Less: Base Adjustments (400,000) -

Less: Base Balancing - Highway Fund Issue ($32.8M) (30,800,000) -

Less: ICF-MR Gross Receipts Tax (1,300,000) -

Sub-total Available Revenues $ 338,300,000 $ 317,600,000

Plus: Increase Overappropriation to $120 Million 43,400,000 -

Total Available to Fund Improvements $ 381,700,000 $ 317,600,000

Appendi


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31

Appendix

Non RecurringRecurring

$ 230,400,000$ -Total Other Available Funds

12,100,000-2007-08 Additional Reversion - Other Agencies13.

10,000,000-2007-08 Additional Reversion - State Prosecutions - Estimated Excess12.

37,000,000-2007-08 Reversion - Cover Tennessee - Estimated Excess11.

20,000,000-2007-08 Additional Reversion - TennCare10.

45,300,000-2007-08 TennCare Reversion - Medically Needy @ $45.3 M Budget9.

106,000,000-2007-08 Debt Service Fund Transfer8.

Other Available Funds:B.

$ 280,500,000$ -Total Reserve for Future Requirements @ 6-30-07

(1,100,000)-Other7.

43,400,000-Additional Reversion - Other Agencies6.

171,000,000-TennCare Additional Reversion @ $550.2 M Unearmarked Reserve5.

6,200,000-Tobacco Settlement MSA Overcollection4.

2,700,000-Miscellaneous Revenue Overcollection3.

7,300,000-Other State Revenue Overcollection2.

$ 51,000,000$ -Department of Revenue Overcollection1.

Reserve for Future Requirements @ 6-30-07:A.

$ 510,900,000$ -Available Revenue (A + B):I.

2007-2008 and 2008-2009Additional Requirements Reserve for Future Requirements at 6-30-08

Appendix


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32

Appendix

$ 491,037,400$ (173,000,000)Budget Surplus / (Deficit) = $318 M - Reserve @ June 30, 2008III.

3,000,000Plus: 2007-2008 Sales Tax Reconciliation - Telecomm. Ad Valorem Tax Reduction19.

-4,700,000Plus: 2007-2008 Tobacco MSA @ $162.018.

(19,565,100)-Less: 2007-2008 Supplemental Appropriations17.(297,500)-Less: 2007-2008 Trauma Center Fund - Due at 6-30-0716.

-(700,000)Less: 2007-08 ICF-MR Gross Receipts Tax ($1.3 M)15.

$ -$ (180,000,000)Less: 2007-08 Revenue Undercollection Estimate14.

$ (19,862,600)$ (173,000,000)Other Adjustments:II.

Appendix


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Appendix

$ 534,346,600Total Recommended Improvements

42,372,000Transportation, Business, and Economic Development

25,263,600Resources and Regulation

36,659,400Law, Safety, and Correction

54,743,800Health and Social Services

287,053,100Education

$ 88,254,700General Government

Funded by State Taxes, Licenses, Fees, and Lottery Proceeds

Improvements by Functional Group

Appendix


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34

Appendix

$ 600,000Call Center Equipment

Revenue

$ 434,200Subtotal Finance and Administration34,200Basic Education Program (BEP) Fiscal Capacity

$ 400,000Internet Crimes Against Children Task Forces

Finance and Administration

$ 40,500Public Records Ombudsman/personComptroller of the Treasury

$ 300,000Library Information Management System

Secretary of State

General Government Improvements

Appendix


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35

Appendix

Miscellaneous Appropriations

$ 30,600,000Salary Increase State Employees

14,500,000Group Health Insurance January 1, 2008

20,300,000Group Health Insurance January 1, 2009

4,000,000Alternative Fuels Year 2

$ 88,254,700Total General Government Improvements

$ 86,880,000Subtotal Miscellaneous Appropriations

500,000Fisk University

75,000State Legislative leaders Foundation

160,000Email Archive

1,700,000State Veterans Homes

1,000,000Federal A-87 Rent Rate

1,600,000Facilities Revolving Fund

3,800,000Enterprise Resource Planning (ERP)

845,000Red Cross in Tennessee

7,800,000Data Center Equipment

Appendix


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36

Appendix

Education Improvements

$ 220,037,300Sub-total Education (K-12)

187,300Teacher Training and Experience - State Special Schools

1,000,000FFA and 4-H Foundation - Year 3

2,000,000Literacy - Year 3

500,000Governor's Books from Birth Foundation

2,700,000Student Management System

1,350,000Comprehensive Assessment Program (TCAP)

3,200,000TCRS (Retirement) Rate Increase - July 1, 2008

5,500,000Group Health Insurance - January 1, 2009

7,800,000Group Health Insurance - January 1, 2008

400,000Governor's Institute for Science and Math

25,000,000Pre-K Program

86,500,000BEP 2.0 - Year 2

$ 83,900,000Basic Education Program (BEP)

Education (K-12)

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$ 287,053,100Total Education Improvements

$ 67,015,800Subtotal Higher Education

$ 13,125,200Sub-total State University and Community College System

500,000Teacher Quality Initiative

$ 12,625,200Salary Increase

State University and Community College System

$ 19,857,400Sub-total University of Tennessee System

5,600,000UT Biofuels Center - Year 2

3,000,000Biocontainment Lab Equipment

1,000,000Mouse Genome Consortium

$ 10,257,400Salary Increase

University of Tennessee System

$ 34,033,200Sub-total Higher Education - State Administered Programs

1,400,000Nursing Loan Forgiveness Program

27,000,000Need-Based Student Financial Aid - Lottery Revenue and Lottery-Funded Endowment

5,300,000HOPE Scholarship Retention - Lottery Source

$ 333,200Salary Increase

Higher Education - State Administered Programs

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$ 22,540,100Sub-total Health

540,100Health-Care Facilities Incident Tracking

1,000,000Medical Examiners Program

2,000,000Meharry Wellness Program (HBCUs) - Year 33,000,000HIV/AIDS

6,000,000Primary-Care Clinics

$ 10,000,000Tobacco-Smoking Cessation - Year 2

Health

$ 19,730,400Sub-total Finance and Administration, Bureau of TennCare1,262,200Human Services

585,800Children's Services

5,348,600Mental Retardation Services

528,500Pediatric Office Visit Rate Increases

944,000HCBS Rate Equalization - TennCare and Aging Commission

933,400HCBS Electronic Visit Verification

$ 10,127,900Home and Community-Based Services (HCBS)

Finance and Administration, Bureau of TennCare

Health and Social Services Improvements

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283,000211 Program Family and Childrens Services 59,700Teacher Training and Experience

Childrens Services

$ 1,386,000Residential Provider Rate Increase

769,700Foster Care and Adoption Assistance Rate Increase

870,200Adoption Assistance Caseload Growth

$ 3,368,600Sub-total Childrens Services

$ 54,743,800Total Health and Social Services Improvements

* Dedicated Appropriation

$ 4,410,300Subtotal Human Services

35,300Child Support - Assistant District Attorneys Step Raises

100,000Individual Development Accounts Year 3

2,104,100Family Assistance Service Center

2,170,900Standard of Need

Human Services

$ 4,694,400Subtotal Finance and Administration, Division of Mental Retardation Services

610,900Waiting List Reduction

$ 4,083,500Arlington Area Home and Community-Based Services

Finance and Administration, Division of Mental Retardation Services

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Law, Safety, and Correction Improvements

$ 14,843,400Sub-total Correction3,212,800Local Jails5,442,100Operational Increase

$ 6,188,500Prison Expansion - Morgan CountyCorrection

$ 133,300Sub-total Office of the Post-Conviction Defender109,300Operational and Staffing

$ 24,000Statutory Salary Step RaisesOffice of the Post-Conviction Defender

$ 556,000Statutory Salary Step RaisesDistrict Public Defenders Conference

$ 1,029,500Statutory Salary Step RaisesDistrict Attorneys General Conference

$ 5,600Statutory Salary IncreaseAttorney General and Reporter

$ 5,972,800Sub-total Court System5,000,000Indigent Defendants and Dependent Children Representation

$ 972,800Mandated Salary IncreaseCourt System

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$ 36,659,400Total Law, Safety, and Correction Improvements

$ 10,088,800Sub-total Safety

2,786,500Administration Legislation - Driver's License Revocation

6,500,000Administration Legislation - Real ID Driver's License

$ 802,300Statutory Salary Step IncreaseSafety

$ 2,318,600Sub-total Tennessee Bureau of Investigation

1,012,500Knoxville TBI Lab

$ 1,306,100DNA Analysis - Violent Felonies - 2007 Johnia Berry ActTennessee Bureau of Investigation

$ 1,711,400Sub-total Military

201,400Communications Interoperability

310,000Administration Legislation - Air Guard Tuition Assistance

$ 1,200,000Youth ChalleNGeMilitary

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$ 25,263,600Total Resources and Regulation Improvements

* From $12 million allocation of the real estate transfer tax ** Dedicated appropriation

$ 8,200Statutory Salary Step Increase

203,900Regulatory Boards

$ 5,409,400Subtotal Tennessee Wildlife Resources Agency

*$ 4,874,400Land Acquisition Funds

E-911 Emergency Communications - Staffing

Commerce and Insurance

533,800Statutory Salary Step Increase

193,500

$ 405,600Subtotal Commerce and Insurance

*$ 4,875,600Wetlands Acquisition FundTennessee Wildlife Resources Agency

$ 19,448,600Subtotal Environment and Conservation

333,200Bicentennial Mall Maintenance

491,000Transportation Projects Environment Support

**1,750,000Watershed Restoration and Study2,000,000Water Resources

10,000,000Heritage Conservation Trust Fund

Environment and Conservation

Resources and Regulation Improvements

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$ 42,372,000Total Transportation, Business, and Economic Development Improvements

$ 30,550,000Subtotal Economic and Community Development

1,250,000Rural Opportunity Fund$ 29,300,000Jobs Package

Economic and Community Development

$ 4,750,000Advertising

Tourist Development

$ 7,072,000Subtotal Agriculture4,822,000Fire-Fighter Communications Equipment Year 2

*$ 2,250,000Soil Conservation - Agricultural Resources Conservation Fund

Agriculture

Transportation, Business, and Economic Development Improvements

* From $12 million allocation of the real estate transfer tax

2008 state of the state, fy 08-09 budget

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