S The Budget - tn.gov · STATE OF TENNESSEE The Budget FISCAL YEAR 2019-2020 Volume 1 Bill Lee,...

STATE OF TENNESSEE

The Budget FISCAL YEAR 2019-2020

Volume 1

Bill Lee, Governor

Bill Lee, Governor

Bill Lee, Governor

INTRODUCTION ...................................................................... xi

BUDGET OVERVIEW ............................................................... A-1

STATE REVENUES ................................................................. A-55

FINANCIAL STATEMENTS ...................................................... A-111

CAPITAL OUTLAY AND FACILITIES PROGRAM ............................. A-125

PROGRAM STATEMENTS BY FUNCTIONAL AREA .............................. B-1

GENERAL GOVERNMENT ......................................................... B-9

EDUCATION ....................................................................... B-71

LAW, SAFETY, AND CORRECTION ............................................ B-179

RESOURCES AND REGULATION ............................................... B-241

BUDGET PROCESS ............................................................... B-315

GLOSSARY AND INDEX ......................................................... B-327

TRANSPORTATION, BUSINESS, AND ECONOMIC DEVELOPMENT ........ B-287

HEALTH AND SOCIAL SERVICES .............................................. B-125

TABLE OF CONTENTS

Table of Contents The Budget

(more detailed contents tables appear under each tab)

Introduction .................................................................................................................................................... xi

Transmittal Letter, Governor Lee to the General Assembly ................................................................. xv Transmittal Letter, Commissioner of Finance and Administration to Governor Lee .......................... xvii Budget Highlights ................................................................................................................................ xix The Budget Document: Introduction .................................................................................................. xxxi

Budget Overview ......................................................................................................................................... A-1 State Revenues ........................................................................................................................................... A-55 Financial Statements ................................................................................................................................ A-111 Capital Outlay and Facilities Program ..................................................................................................... A-125 Program Statements by Functional Area...................................................................................................... B-1

Tennessee State Government Organizational Chart ............................................................................ B-5

Recommended Budget for Fiscal Year 2019-2020 ............................................................................. B-7

General Government ........................................................................................................................... B-9

Introduction ........................................................................................................................... B-13

Total Personnel and Funding ................................................................................................. B-14

Recommended Budget for Fiscal Year 2019-2020 by Funding Source ................................. B-15

Cost Increases for Fiscal Year 2019-2020 ............................................................................. B-16

Program Statements ............................................................................................................... B-21 Legislature .................................................................................................................. B-21 Fiscal Review Committee ........................................................................................... B-24 Secretary of State ....................................................................................................... B-25 Comptroller of the Treasury ....................................................................................... B-30 Treasury Department .................................................................................................. B-37 Claims and Compensation .......................................................................................... B-40 Executive Department ................................................................................................ B-42 Tennessee Human Rights Commission ...................................................................... B-43 Tennessee Public Utility Commission ........................................................................ B-44 Advisory Commission on Intergovernmental Relations ............................................. B-45 Department of Finance and Administration ............................................................... B-46 Department of Human Resources ............................................................................... B-51 Department of General Services ................................................................................. B-54 Department of Veterans Services ............................................................................... B-59 Department of Revenue .............................................................................................. B-61

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(more detailed contents tables appear under each tab)

Introduction .................................................................................................................................................... xi

Transmittal Letter, Governor Lee to the General Assembly ................................................................. xv Transmittal Letter, Commissioner of Finance and Administration to Governor Lee .......................... xvii Budget Highlights ................................................................................................................................ xix The Budget Document: Introduction .................................................................................................. xxxi

Budget Overview ......................................................................................................................................... A-1 State Revenues ........................................................................................................................................... A-55 Financial Statements ................................................................................................................................ A-111 Capital Outlay and Facilities Program ..................................................................................................... A-125 Program Statements by Functional Area...................................................................................................... B-1

Tennessee State Government Organizational Chart ............................................................................ B-5

Recommended Budget for Fiscal Year 2019-2020 ............................................................................. B-7

General Government ........................................................................................................................... B-9

Introduction ........................................................................................................................... B-13



Cost Increases for Fiscal Year 2019-2020 ............................................................................. B-16

Program Statements ............................................................................................................... B-21 Legislature .................................................................................................................. B-21 Fiscal Review Committee ........................................................................................... B-24 Secretary of State ....................................................................................................... B-25 Comptroller of the Treasury ....................................................................................... B-30 Treasury Department .................................................................................................. B-37 Claims and Compensation .......................................................................................... B-40 Executive Department ................................................................................................ B-42 Tennessee Human Rights Commission ...................................................................... B-43 Tennessee Public Utility Commission ........................................................................ B-44 Advisory Commission on Intergovernmental Relations ............................................. B-45 Department of Finance and Administration ............................................................... B-46 Department of Human Resources ............................................................................... B-51 Department of General Services ................................................................................. B-54 Department of Veterans Services ............................................................................... B-59 Department of Revenue .............................................................................................. B-61

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Miscellaneous Appropriations .................................................................................... B-67 Other Post-Employment Benefits Liability ................................................................ B-68 Emergency and Contingency Fund ............................................................................. B-69 State Building Commission ........................................................................................ B-70

Education .......................................................................................................................................... B-71

Introduction ........................................................................................................................... B-75



Cost Increases (K-12 Education and Higher Education) for Fiscal Year 2019-2020 ............ B-78

Program Statements ............................................................................................................... B-88 Department of Education (K-12) ................................................................................ B-88 Higher Education ..................................................................................................... B-100

State Administered Programs ....................................................................... B-100 University of Tennessee ................................................................................ B-106 State University and Community College System ........................................ B-114

Health and Social Services .............................................................................................................. B-125

Introduction ......................................................................................................................... B-129

Total Personnel and Funding ............................................................................................... B-130

Recommended Budget for Fiscal Year 2019-2020 by Funding Source ............................... B-131

Cost Increases for Fiscal Year 2019-2020 ........................................................................... B-132

Program Statements ............................................................................................................. B-141 Commission on Children and Youth ........................................................................ B-141 Commission on Aging and Disability ....................................................................... B-142 Health Services and Development Agency .............................................................. B-143 Council on Developmental Disabilities .................................................................... B-144 Department of Finance and Administration, Division of TennCare ......................... B-145 Department of Mental Health and Substance Abuse Services .................................. B-148 Department of Health ............................................................................................... B-153 Department of Intellectual and Developmental Disabilities ..................................... B-160 Department of Human Services ................................................................................ B-166 Department of Finance and Administration, Strategic Health-Care Programs ......... B-171 Department of Childrens Services .......................................................................... B-173

Law, Safety, and Correction ............................................................................................................ B-179

Introduction ......................................................................................................................... B-183





Program Statements ............................................................................................................. B-195 Court System ............................................................................................................ B-195 Attorney General and Reporter ................................................................................ B-204 District Attorneys General Conference .................................................................... B-206 District Public Defenders Conference ...................................................................... B-208 Office of the Post-Conviction Defender ................................................................... B-210 Alcoholic Beverage Commission ............................................................................. B-211 Tennessee Rehabilitative Initiative in Correction (TRICOR) .................................. B-212 Board of Parole ........................................................................................................ B-213 Department of Correction......................................................................................... B-214 Military Department ................................................................................................. B-228 Tennessee Bureau of Investigation ........................................................................... B-233 Department of Safety ............................................................................................... B-234

Resources and Regulation ............................................................................................................... B-241

Introduction ......................................................................................................................... B-245




Program Statements ............................................................................................................. B-251 Arts Commission ...................................................................................................... B-251 State Museum ........................................................................................................... B-252 Department of Environment and Conservation ........................................................ B-253 Tennessee Wildlife Resources Agency .................................................................... B-268 Department of Commerce and Insurance ................................................................. B-271 Department of Financial Institutions ........................................................................ B-279 Department of Labor and Workforce Development ................................................. B-280

Transportation, Business, and Economic Development .................................................................. B-287

Introduction ......................................................................................................................... B-291




Program Statements ............................................................................................................. B-297 Tennessee Housing Development Agency ............................................................... B-297 Department of Agriculture ....................................................................................... B-298

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Miscellaneous Appropriations .................................................................................... B-67 Other Post-Employment Benefits Liability ................................................................ B-68 Emergency and Contingency Fund ............................................................................. B-69 State Building Commission ........................................................................................ B-70

Education .......................................................................................................................................... B-71

Introduction ........................................................................................................................... B-75



Cost Increases (K-12 Education and Higher Education) for Fiscal Year 2019-2020 ............ B-78

Program Statements ............................................................................................................... B-88 Department of Education (K-12) ................................................................................ B-88 Higher Education ..................................................................................................... B-100

State Administered Programs ....................................................................... B-100 University of Tennessee ................................................................................ B-106 State University and Community College System ........................................ B-114

Health and Social Services .............................................................................................................. B-125

Introduction ......................................................................................................................... B-129




Program Statements ............................................................................................................. B-141 Commission on Children and Youth ........................................................................ B-141 Commission on Aging and Disability ....................................................................... B-142 Health Services and Development Agency .............................................................. B-143 Council on Developmental Disabilities .................................................................... B-144 Department of Finance and Administration, Division of TennCare ......................... B-145 Department of Mental Health and Substance Abuse Services .................................. B-148 Department of Health ............................................................................................... B-153 Department of Intellectual and Developmental Disabilities ..................................... B-160 Department of Human Services ................................................................................ B-166 Department of Finance and Administration, Strategic Health-Care Programs ......... B-171 Department of Childrens Services .......................................................................... B-173

Law, Safety, and Correction ............................................................................................................ B-179

Introduction ......................................................................................................................... B-183





Program Statements ............................................................................................................. B-195 Court System ............................................................................................................ B-195 Attorney General and Reporter ................................................................................ B-204 District Attorneys General Conference .................................................................... B-206 District Public Defenders Conference ...................................................................... B-208 Office of the Post-Conviction Defender ................................................................... B-210 Alcoholic Beverage Commission ............................................................................. B-211 Tennessee Rehabilitative Initiative in Correction (TRICOR) .................................. B-212 Board of Parole ........................................................................................................ B-213 Department of Correction......................................................................................... B-214 Military Department ................................................................................................. B-228 Tennessee Bureau of Investigation ........................................................................... B-233 Department of Safety ............................................................................................... B-234

Resources and Regulation ............................................................................................................... B-241

Introduction ......................................................................................................................... B-245




Program Statements ............................................................................................................. B-251 Arts Commission ...................................................................................................... B-251 State Museum ........................................................................................................... B-252 Department of Environment and Conservation ........................................................ B-253 Tennessee Wildlife Resources Agency .................................................................... B-268 Department of Commerce and Insurance ................................................................. B-271 Department of Financial Institutions ........................................................................ B-279 Department of Labor and Workforce Development ................................................. B-280

Transportation, Business, and Economic Development .................................................................. B-287

Introduction ......................................................................................................................... B-291




Program Statements ............................................................................................................. B-297 Tennessee Housing Development Agency ............................................................... B-297 Department of Agriculture ....................................................................................... B-298

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Department of Tourist Development ........................................................................ B-303 Department of Economic and Community Development ......................................... B-305 Department of Transportation .................................................................................. B-311

Budget Process ........................................................................................................................................ B-315

The Budget Process ............................................................................................................. B-319 Basis of Budgeting and Accounting ..................................................................................... B-323

Glossary and Index .................................................................................................................................. B-327 Glossary of Budget Terms ................................................................................................... B-331 Index .................................................................................................................................... B-337


Department of Tourist Development ........................................................................ B-303 Department of Economic and Community Development ......................................... B-305 Department of Transportation .................................................................................. B-311

Budget Process ........................................................................................................................................ B-315

The Budget Process ............................................................................................................. B-319 Basis of Budgeting and Accounting ..................................................................................... B-323

Glossary and Index .................................................................................................................................. B-327 Glossary of Budget Terms ................................................................................................... B-331 Index .................................................................................................................................... B-337

Introduction

Introduction Table of Contents

Transmittal Letter, Governor Lee to the General Assembly .......................................................................... xv Transmittal Letter, Commissioner of Finance and Administration to Governor Lee ................................. xvii Budget Highlights ......................................................................................................................................... xix The Budget Document: Introduction .......................................................................................................... xxxi

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Introduction Table of Contents

Transmittal Letter, Governor Lee to the General Assembly .......................................................................... xv Transmittal Letter, Commissioner of Finance and Administration to Governor Lee ................................. xvii Budget Highlights ......................................................................................................................................... xix The Budget Document: Introduction .......................................................................................................... xxxi

State of Tennessee

Budget Highlights

Recommended Budget, Fiscal Year 2019-2020

The total recommended state budget for fiscal year 2019-2020 is $38.6 billion, with $18.6 billion from state appropriations; $14 billion from federal funds; $3.9 billion from other departmental revenues; $1.9 billion from higher education student tuition and fees; and $124 million in bonds. This is an increase of $423.8 million in total funding and an increase of $737.2 million in state funding from the revised current year 2018-2019 spending estimates. Federal revenue is decreasing by $210.7 million, departmental revenue is decreasing by $11.4 million, and capital and highway construction bonds are decreasing by $91.3 million. The estimate for higher education student tuition and fees remains the same. Mid-year review of state tax collections and advice from economists and the State Funding Board suggest that current-year estimates of taxes collected by the Department of Revenue show modest growth. The revised recurring current-year growth rate in the general fund is 2.35 percent compared with the actual 2017-2018 Department of Revenue collections. For fiscal year 2019-2020, before inter-fund reallocations, general fund taxes are expected to grow by $393.1 million above the revised current-year estimate. This is a 3.21 percent general fund growth rate above the revised current-year estimate. Revenue growth rates are within the range of revenue growth recommended by the State Funding Board. The revised revenue estimates for the current year and estimates for next year are based on a steady economic growth through fiscal year 2019-2020 and beyond.

Plan for Balancing General fund supplemental appropriations in the current 2018-2019 fiscal year total $36.1 million, $21.9 million of which is in the Bureau of TennCare to fund increasing program costs in the Department of Childrens Services. Additional programs requiring supplemental appropriations include $2.7 million for the Clean Water and Drinking Water State Revolving Fund, $1.7 million for the Hazardous Waste Remedial Action Fund, $5 million in the Department of Childrens Services for additional costs pertaining to an increase in the number of children in state custody, $2.4 million to the Tennessee Bureau of Investigation to correct a revenue under collection problem, $890,000 for state legal expenses, $750,000 for the Electronic Monitoring Indigency Fund, $500,000 for improvements to the water system in Pikeville, and a $250,000 operating supplement to the Attorney General. In fiscal year 2019-2020, the budget is balanced, with recurring revenues fully supporting recurring appropriations. This is accomplished by additional budget reductions in fiscal year 2019-2020. Base budgets in general fund programs throughout state government have been reduced by $42.3 million in the general fund. The average general fund recurring reduction is 0.7 percent. A total of 37 positions will be reduced as a result of reductions implemented in this budget recommendation. (The reductions are detailed in Volume 2: Base Budget Reductions.)

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State of Tennessee

Budget Highlights

Recommended Budget, Fiscal Year 2019-2020

The total recommended state budget for fiscal year 2019-2020 is $38.6 billion, with $18.6 billion from state appropriations; $14 billion from federal funds; $3.9 billion from other departmental revenues; $1.9 billion from higher education student tuition and fees; and $124 million in bonds. This is an increase of $423.8 million in total funding and an increase of $737.2 million in state funding from the revised current year 2018-2019 spending estimates. Federal revenue is decreasing by $210.7 million, departmental revenue is decreasing by $11.4 million, and capital and highway construction bonds are decreasing by $91.3 million. The estimate for higher education student tuition and fees remains the same. Mid-year review of state tax collections and advice from economists and the State Funding Board suggest that current-year estimates of taxes collected by the Department of Revenue show modest growth. The revised recurring current-year growth rate in the general fund is 2.35 percent compared with the actual 2017-2018 Department of Revenue collections. For fiscal year 2019-2020, before inter-fund reallocations, general fund taxes are expected to grow by $393.1 million above the revised current-year estimate. This is a 3.21 percent general fund growth rate above the revised current-year estimate. Revenue growth rates are within the range of revenue growth recommended by the State Funding Board. The revised revenue estimates for the current year and estimates for next year are based on a steady economic growth through fiscal year 2019-2020 and beyond.

Plan for Balancing General fund supplemental appropriations in the current 2018-2019 fiscal year total $36.1 million, $21.9 million of which is in the Bureau of TennCare to fund increasing program costs in the Department of Childrens Services. Additional programs requiring supplemental appropriations include $2.7 million for the Clean Water and Drinking Water State Revolving Fund, $1.7 million for the Hazardous Waste Remedial Action Fund, $5 million in the Department of Childrens Services for additional costs pertaining to an increase in the number of children in state custody, $2.4 million to the Tennessee Bureau of Investigation to correct a revenue under collection problem, $890,000 for state legal expenses, $750,000 for the Electronic Monitoring Indigency Fund, $500,000 for improvements to the water system in Pikeville, and a $250,000 operating supplement to the Attorney General. In fiscal year 2019-2020, the budget is balanced, with recurring revenues fully supporting recurring appropriations. This is accomplished by additional budget reductions in fiscal year 2019-2020. Base budgets in general fund programs throughout state government have been reduced by $42.3 million in the general fund. The average general fund recurring reduction is 0.7 percent. A total of 37 positions will be reduced as a result of reductions implemented in this budget recommendation. (The reductions are detailed in Volume 2: Base Budget Reductions.)

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Budget Highlights

Federal and State Mandates State expenditures in the TennCare program are matched according to a rate set by the federal government known as the Federal Medical Assistance Percentage (FMAP). The federal government determines this rate for all states based on changes in per-capita income. For fiscal year 2019-2020, federal participation in certain healthcare programs is decreasing from 65.858 percent to 65.375 percent. This creates shortfalls of $41.4 million in state funding in TennCare, $713,400 in CoverKids, and $734,500 in the Department of Childrens Services for foster care and adoption assistance. A total of $42.8 million offsets the loss of federal funding in those programs. A total of $7.5 million in state funding is required to pay salary increases mandated by state law for certain job classifications within state government. These jobs and the state dollars necessary to fund the required increases include state judges ($1,004,500), the attorney general ($5,900), assistant district attorneys and criminal investigators ($1.4 million), assistant public defenders and criminal investigators ($744,700), public defender offices in Shelby and Davidson counties ($187,800), assistant post-conviction defenders ($33,000), the governor ($6,000), trooper step increases ($1.2 million) and border-state survey ($1.4 million), and wildlife officer step increases ($580,000) and border-state survey ($804,400). State statutes mandate that teachers at state-run schools must be compensated based on their training and experience. To fund this requirement, $11,800 is provided to the Department of Childrens Services for the Youth Development schools and $113,800 in the Department of Education for state special schools.

K-12 Education For K-12 education, the cost to maintain full funding of the Basic Education Program (BEP) formula, which provides an equitable state share of K-12 public education funding to Local Education Agencies (LEAs), is $46.2 million. To further support teachers and students, the administration recommends an appropriation of $71.3 million in salary increases for teachers and other positions funded through the BEP formula, effective July 1, 2019. The amount of the salary increases will depend on each LEAs salary schedule and structure, but if applied across-the-board, this would be a 2.5% salary increase. In response to an increased need for services to families with children with disabilities or developmental delays, $3 million of recurring appropriations matches $5 million in federal funding and 65 new positions will be added to the program. A non-recurring $5 million is recommended to support student services and scholastic improvement within the lowest performing 5 percent of schools.

Budget Highlights

To support professional development for educators and school leaders through the Office of Educator Licensure and Preparation (OLEP) program, two positions and $227,000 recurring funding are recommended. A non-recurring investment of $500,000 is recommended to support professional development of rural principals and expansion of the Rural Principal Network. Non-recurring funding of $1.5 million is recommended for Teach For America, which recruits college graduates to serve as teachers in low-income communities across the state. The Governors Civics Initiative to recognize public schools and districts implementing high-quality civic education programs that result in readiness for college, career, and life is funded with $500,000 non-recurring. To strengthen and promote student choice, $12 million non-recurring is recommended for the Charter Schools Facilities fund to assist public charter schools in acquiring and improving property. Education Savings Accounts are funded with a recurring $25.3 million appropriation and non-recurring of $200,000 for program set-up and management. An additional $30 million is provided to the Local Education Agencies for school safety grants. Of that amount, $20 million is non-recurring. Also in the Department of Educations budget recommendation is $2.8 million recurring for the ACT Senior Retake Opportunity, The total amount of new funding requested for K-12 education is $211.1 million.

New Workforce Development Initiatives The administration recommends several new initiatives that will increase career options available to children and adults and provide the skills needed for meaningful, gainful employment. The Governors Investment in Vocational Education (GIVE) is funded in the Tennessee Higher Education Commissions (THECs) budget recommendation with $25 million in non-recurring funds for grants to community partnerships of K-12, higher education institutions, and local industry. The initiative aims to eliminate skills gaps in a proactive, data-driven, and coordinated manner by encouraging collaboration across education and industry. A recurring appropriation of $4 million from lottery funds will be used for dual enrollment courses for trade and technical programs for high school juniors and seniors. The Supporting Postsecondary Access in Rural Communities (SPARC) initiative is funded with $2 million non-recurring. The appropriation will be used to provide career and technical education (CTE) equipment and instruction in rural distressed counties. The Governors Future Workforce Initiative will provide technical assistance to school districts and establish new training and professional development resources for educators and instructors. An appropriation of $1.1 million in the recommendation for the Department of Education will be used to expand science, technology, engineering, and math (STEM) programs statewide. The expansion will include additional computer science courses and standards training, STEM-

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Budget Highlights

Federal and State Mandates State expenditures in the TennCare program are matched according to a rate set by the federal government known as the Federal Medical Assistance Percentage (FMAP). The federal government determines this rate for all states based on changes in per-capita income. For fiscal year 2019-2020, federal participation in certain healthcare programs is decreasing from 65.858 percent to 65.375 percent. This creates shortfalls of $41.4 million in state funding in TennCare, $713,400 in CoverKids, and $734,500 in the Department of Childrens Services for foster care and adoption assistance. A total of $42.8 million offsets the loss of federal funding in those programs. A total of $7.5 million in state funding is required to pay salary increases mandated by state law for certain job classifications within state government. These jobs and the state dollars necessary to fund the required increases include state judges ($1,004,500), the attorney general ($5,900), assistant district attorneys and criminal investigators ($1.4 million), assistant public defenders and criminal investigators ($744,700), public defender offices in Shelby and Davidson counties ($187,800), assistant post-conviction defenders ($33,000), the governor ($6,000), trooper step increases ($1.2 million) and border-state survey ($1.4 million), and wildlife officer step increases ($580,000) and border-state survey ($804,400). State statutes mandate that teachers at state-run schools must be compensated based on their training and experience. To fund this requirement, $11,800 is provided to the Department of Childrens Services for the Youth Development schools and $113,800 in the Department of Education for state special schools.

K-12 Education For K-12 education, the cost to maintain full funding of the Basic Education Program (BEP) formula, which provides an equitable state share of K-12 public education funding to Local Education Agencies (LEAs), is $46.2 million. To further support teachers and students, the administration recommends an appropriation of $71.3 million in salary increases for teachers and other positions funded through the BEP formula, effective July 1, 2019. The amount of the salary increases will depend on each LEAs salary schedule and structure, but if applied across-the-board, this would be a 2.5% salary increase. In response to an increased need for services to families with children with disabilities or developmental delays, $3 million of recurring appropriations matches $5 million in federal funding and 65 new positions will be added to the program. A non-recurring $5 million is recommended to support student services and scholastic improvement within the lowest performing 5 percent of schools.

Budget Highlights

To support professional development for educators and school leaders through the Office of Educator Licensure and Preparation (OLEP) program, two positions and $227,000 recurring funding are recommended. A non-recurring investment of $500,000 is recommended to support professional development of rural principals and expansion of the Rural Principal Network. Non-recurring funding of $1.5 million is recommended for Teach For America, which recruits college graduates to serve as teachers in low-income communities across the state. The Governors Civics Initiative to recognize public schools and districts implementing high-quality civic education programs that result in readiness for college, career, and life is funded with $500,000 non-recurring. To strengthen and promote student choice, $12 million non-recurring is recommended for the Charter Schools Facilities fund to assist public charter schools in acquiring and improving property. Education Savings Accounts are funded with a recurring $25.3 million appropriation and non-recurring of $200,000 for program set-up and management. An additional $30 million is provided to the Local Education Agencies for school safety grants. Of that amount, $20 million is non-recurring. Also in the Department of Educations budget recommendation is $2.8 million recurring for the ACT Senior Retake Opportunity, The total amount of new funding requested for K-12 education is $211.1 million.

New Workforce Development Initiatives The administration recommends several new initiatives that will increase career options available to children and adults and provide the skills needed for meaningful, gainful employment. The Governors Investment in Vocational Education (GIVE) is funded in the Tennessee Higher Education Commissions (THECs) budget recommendation with $25 million in non-recurring funds for grants to community partnerships of K-12, higher education institutions, and local industry. The initiative aims to eliminate skills gaps in a proactive, data-driven, and coordinated manner by encouraging collaboration across education and industry. A recurring appropriation of $4 million from lottery funds will be used for dual enrollment courses for trade and technical programs for high school juniors and seniors. The Supporting Postsecondary Access in Rural Communities (SPARC) initiative is funded with $2 million non-recurring. The appropriation will be used to provide career and technical education (CTE) equipment and instruction in rural distressed counties. The Governors Future Workforce Initiative will provide technical assistance to school districts and establish new training and professional development resources for educators and instructors. An appropriation of $1.1 million in the recommendation for the Department of Education will be used to expand science, technology, engineering, and math (STEM) programs statewide. The expansion will include additional computer science courses and standards training, STEM-

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Budget Highlights

focused professional development and micro-credentialing, direct support to LEAs pursuing a STEM designation, and a grant to the Tennessee STEM Innovation Network (TSIN). This appropriation includes $150,000 recurring and $950,000 in non-recurring funds. Education funding of $900,000 recurring and $1.6 million non-recurring is recommended to build new capacity for Early Postsecondary Opportunities (EPSO) in high schools and to expand the reach of STEM dual credit, college level, and advanced placement courses statewide. Assistance will include exam fee support and a student aptitude and career development assessment pilot program. Also under the Future Workforce Initiative is a recommendation of $750,000 non-recurring funds for CTE start-up grants in middle schools, including $500,000 for STEM and $250,000 for non-STEM. Funding of $1.6 million and one position in the Department of Education is recommended to create and administer an Occupational License Teacher Loan Forgiveness program. This new initiative will focus on recruitment and retention of occupational licensed teachers and will include loan forgiveness and technical assistance for district-led education preparation programs. The appropriation consists of $1.5 million non-recurring and $100,000 recurring funds. In the Department of Agricultures request, $600,000 recurring is recommended for the Future Farmers of America and the 4-H Foundation.

Higher Education A general fund recurring recommendation of $56 million funds increased operational costs in the University of Tennessee system ($16.5 million), Locally Governed Institutions ($21.8 million), and the Board of Regents ($17.8 million). These funds may be used for salary increases as well as program improvements that assist the institutions in meeting outcomes such as student progression, degree production, research and service, efficiency metrics, and other outcome measures related to institutional mission. A 2.0 percent salary pool for employees working in non-formula units of higher education is funded with $8.5 million. Recurring funding of $12.3 million is recommended for need-based financial aid to serve eligible students through the Tennessee Student Assistance Awards (TSAA) program. This program provides grants to financially needy undergraduate students who are residents of Tennessee and who are attending in-state institutions. The appropriation increase will fund an additional 6,900 students, bringing the total number of students with assistance to 63,900. Security upgrades at various campuses are funded with $10 million for the University of Tennessee and $2 million for the Board of Regents, both non-recurring. Tennessee State University will receive $2 million non-recurring to support retention of highly qualified students from underserved populations and $1.1 million recurring to expand capacity into new food and agricultural research areas. The total amount of new funding requested for higher education is $130.7 million.

Budget Highlights

Health and Mental Health Services for Under-Served Populations The states behavioral health safety net is expanded with $5 million recurring funding in the Department of Mental Health and Substance Abuse Services that will provide services to an additional 7,000 uninsured adults with a serious mental illness. Increased operational costs at the states four regional mental health institutes are funded with $6.2 million recurring. A new Creating Homes Initiative (CHI) that will provide regional housing facilitators and additional seed money for recovery housing for those living with substance use disorder is funded with $3 million recurring. The program will be administered by Mental Health and Substance Abuse Services. In an effort to reduce the number of suicides in the state, $625,000 recurring will be used to expand the Tennessee Suicide Prevention Network (TSPN) and $500,000 recurring will be used to expand and enhance suicide prevention and mental health awareness and promotion activities. These funds will also be appropriated to the Department of Mental Health and Substance Abuse Services. To increase the number of primary care providers in underserved rural areas of the state, a recurring appropriation of $3 million is recommended to match $5.7 million federal for the Graduate Medical Education (GME) program in the Bureau of TennCare. GME provides financial assistance to students in medical school who agree to work in medically underserved areas. Health services offered by faith-based providers and federally qualified health centers are enhanced with an appropriation of $2 million recurring to the Department of Health. In the Department of Economic & Community Development, $1 million in non-recurring funds is recommended to support rural hospital interventions pursuant to the Rural Hospital Transformation Act. These funds will used to help support rural hospitals in assessing viability and identifying new delivery models, strategic partnerships, and operational changes that enable the continuation of needed healthcare services in rural communities. An additional 300 enrollees will participate in the Employment and Community First (ECF) program with a recurring appropriation of $9.3 million that will be used to match $17.5 million of federal funding.

New and Enhanced Opioid Initiatives In response to the states opioid crisis, the administration recommends an appropriation of $25.3 million for treatment, education, and law enforcement initiatives. The Department of Mental Health and Substance Abuse Services will receive $1 million recurring to expand a pilot program that supplies recovery courts with injectable pharmaceuticals that effectively treat opioid dependence; $3 million recurring for the Creating Homes Initiative that will provide regional

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Budget Highlights

focused professional development and micro-credentialing, direct support to LEAs pursuing a STEM designation, and a grant to the Tennessee STEM Innovation Network (TSIN). This appropriation includes $150,000 recurring and $950,000 in non-recurring funds. Education funding of $900,000 recurring and $1.6 million non-recurring is recommended to build new capacity for Early Postsecondary Opportunities (EPSO) in high schools and to expand the reach of STEM dual credit, college level, and advanced placement courses statewide. Assistance will include exam fee support and a student aptitude and career development assessment pilot program. Also under the Future Workforce Initiative is a recommendation of $750,000 non-recurring funds for CTE start-up grants in middle schools, including $500,000 for STEM and $250,000 for non-STEM. Funding of $1.6 million and one position in the Department of Education is recommended to create and administer an Occupational License Teacher Loan Forgiveness program. This new initiative will focus on recruitment and retention of occupational licensed teachers and will include loan forgiveness and technical assistance for district-led education preparation programs. The appropriation consists of $1.5 million non-recurring and $100,000 recurring funds. In the Department of Agricultures request, $600,000 recurring is recommended for the Future Farmers of America and the 4-H Foundation.

Higher Education A general fund recurring recommendation of $56 million funds increased operational costs in the University of Tennessee system ($16.5 million), Locally Governed Institutions ($21.8 million), and the Board of Regents ($17.8 million). These funds may be used for salary increases as well as program improvements that assist the institutions in meeting outcomes such as student progression, degree production, research and service, efficiency metrics, and other outcome measures related to institutional mission. A 2.0 percent salary pool for employees working in non-formula units of higher education is funded with $8.5 million. Recurring funding of $12.3 million is recommended for need-based financial aid to serve eligible students through the Tennessee Student Assistance Awards (TSAA) program. This program provides grants to financially needy undergraduate students who are residents of Tennessee and who are attending in-state institutions. The appropriation increase will fund an additional 6,900 students, bringing the total number of students with assistance to 63,900. Security upgrades at various campuses are funded with $10 million for the University of Tennessee and $2 million for the Board of Regents, both non-recurring. Tennessee State University will receive $2 million non-recurring to support retention of highly qualified students from underserved populations and $1.1 million recurring to expand capacity into new food and agricultural research areas. The total amount of new funding requested for higher education is $130.7 million.

Budget Highlights

Health and Mental Health Services for Under-Served Populations The states behavioral health safety net is expanded with $5 million recurring funding in the Department of Mental Health and Substance Abuse Services that will provide services to an additional 7,000 uninsured adults with a serious mental illness. Increased operational costs at the states four regional mental health institutes are funded with $6.2 million recurring. A new Creating Homes Initiative (CHI) that will provide regional housing facilitators and additional seed money for recovery housing for those living with substance use disorder is funded with $3 million recurring. The program will be administered by Mental Health and Substance Abuse Services. In an effort to reduce the number of suicides in the state, $625,000 recurring will be used to expand the Tennessee Suicide Prevention Network (TSPN) and $500,000 recurring will be used to expand and enhance suicide prevention and mental health awareness and promotion activities. These funds will also be appropriated to the Department of Mental Health and Substance Abuse Services. To increase the number of primary care providers in underserved rural areas of the state, a recurring appropriation of $3 million is recommended to match $5.7 million federal for the Graduate Medical Education (GME) program in the Bureau of TennCare. GME provides financial assistance to students in medical school who agree to work in medically underserved areas. Health services offered by faith-based providers and federally qualified health centers are enhanced with an appropriation of $2 million recurring to the Department of Health. In the Department of Economic & Community Development, $1 million in non-recurring funds is recommended to support rural hospital interventions pursuant to the Rural Hospital Transformation Act. These funds will used to help support rural hospitals in assessing viability and identifying new delivery models, strategic partnerships, and operational changes that enable the continuation of needed healthcare services in rural communities. An additional 300 enrollees will participate in the Employment and Community First (ECF) program with a recurring appropriation of $9.3 million that will be used to match $17.5 million of federal funding.

New and Enhanced Opioid Initiatives In response to the states opioid crisis, the administration recommends an appropriation of $25.3 million for treatment, education, and law enforcement initiatives. The Department of Mental Health and Substance Abuse Services will receive $1 million recurring to expand a pilot program that supplies recovery courts with injectable pharmaceuticals that effectively treat opioid dependence; $3 million recurring for the Creating Homes Initiative that will provide regional

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housing facilitators and additional seed money for recovery housing for those living with substance use disorder; $1.5 million recurring and $500,000 non-recurring for a new Womens Residential Recovery Court; $1.7 million recurring to expand recovery courts across the state; $1 million recurring to increase contracts for criminal justice liaisons and to serve additional counties; and $600,000 recurring to fund six additional Tennessee Recovery Oriented Compliance Strategy (TN-ROCS) court-initiated diversion programs. In the Department of Health, recommendations include $1 million recurring for Federally Qualified Health Centers (FQHCs) and $1 million recurring for faith-based clinics. In the Department of Childrens Services, $5 million recurring is recommended to serve additional children coming into state custody for treatment and $500,000 recurring will fund up to five additional Safe Baby Courts that provide services to drug-exposed children and their families. To fund law enforcement expenditures that are part of this initiative, $1 million recurring is recommended for the Department of Correction to adjust the penalty schedule for fentanyl and its derivatives to align them with those for heroin. An additional $500,000 recurring for the Tennessee Bureau of Investigation is requested to fund the Overdose Death and Violent Crime task forces. In the Departments of Education, TennCare, and Childrens Services, a total of $6.7 million recurring is recommended to account for additional children served by the Tennessee Early Intervention Services Program.

Health and Social Services An additional $59.9 million in recurring state funding is recommended for the TennCare program to offset increased costs due to a 2.1 percent medical inflation and utilization rate increase. The continued development of a new Medicaid eligibility system is funded with $7.2 million and $7.6 million is recommended to modernize the Medicaid management information system. An appropriation of $1.7 million funds the third year of the medication therapy management pilot program. TennCare general fund cost increases total $165 million and are matched with $255 million in federal funds and $5.6 million in other funding for a total of $425.7 million in new funding for the program. The Pre-Arrest Diversion program in the Department of Mental Health is funded with $1.5 million non-recurring. This program re-directs non-violent individuals from the criminal justice system to community-based treatments and supports in underserved counties. An appropriation of $15 million recurring to the Department of Childrens Services is recommended to continue the same level of services to an increased number of children in state custody. The federal waiver program for Title IV-E requirements is ending, and that will require

Budget Highlights

the state to replace federal funds. Recurring funds of $5 million are recommended for an increasing number of children in custody receiving treatment and recurring appropriations of $1.6 million are recommended to provide support to an increasing number of children adopted in the state. The total amount of new funding requested for health and social services is $217.8 million.

New Investments in Criminal Justice Reform To support the men and women working in criminal justice and to successfully re-introduce incarcerated individuals into society, the administration recommends new investments in several criminal justice areas. A recurring appropriation of $15.6 million is recommended in the Department of Correction to increase the starting salaries of correctional officers. The salary increase is aimed at reducing the extremely high turnover rate of these positions. An additional 40 probation and parole officers and managers in Correction are funded with a recurring appropriation of $2,170,500 and non-recurring of $250,000. These new positions reduce current caseload levels and bring supervision standards in-line with industry best practices. A new Correctional Education Investment initiative is funded with an appropriation of $3.6 million. This is the first year of a three-year initiative to expand adult basic education and, in partnership with THEC, to introduce new higher education programming and re-entry navigators in state correctional facilities. The goal of the program is to expand educational opportunities for incarcerated individuals and reduce recidivism by better preparing inmates for jobs outside of the correctional facilities. In the Department of Correction, recurring funds of $150,000 are requested for two positions to administer the program and non-recurring of $1.4 million to be used for equipment. Also in Correction, $250,000 non-recurring is recommended for programs and services that provide access to on-site, degree-bearing higher education opportunities. THECs budget request includes $1.4 million for the Correctional Education Investment Initiative. Of that amount, $426,000 recurring is for six re-entry navigator positions and $975,000 non-recurring will be used for equipment. The Board of Regents recommendation includes six TCAT positions and $426,000 recurring for this initiative. In response to the increased demand for services that support justice-involved women and their families, the administration recommends additional investments in the following programs: The Department of Mental Health and Substance Abuse Services will establish and manage a womens statewide residential recovery court with an appropriation of $2 million, of which $500,000 is non-recurring. Recurring funding of $285,000 for a judge and a legal secretary is included in the recommendation for the Administrative Office of the Courts. Up to five additional Safe Baby Courts are funded with $500,000 recurring in the Department of Childrens Services.

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housing facilitators and additional seed money for recovery housing for those living with substance use disorder; $1.5 million recurring and $500,000 non-recurring for a new Womens Residential Recovery Court; $1.7 million recurring to expand recovery courts across the state; $1 million recurring to increase contracts for criminal justice liaisons and to serve additional counties; and $600,000 recurring to fund six additional Tennessee Recovery Oriented Compliance Strategy (TN-ROCS) court-initiated diversion programs. In the Department of Health, recommendations include $1 million recurring for Federally Qualified Health Centers (FQHCs) and $1 million recurring for faith-based clinics. In the Department of Childrens Services, $5 million recurring is recommended to serve additional children coming into state custody for treatment and $500,000 recurring will fund up to five additional Safe Baby Courts that provide services to drug-exposed children and their families. To fund law enforcement expenditures that are part of this initiative, $1 million recurring is recommended for the Department of Correction to adjust the penalty schedule for fentanyl and its derivatives to align them with those for heroin. An additional $500,000 recurring for the Tennessee Bureau of Investigation is requested to fund the Overdose Death and Violent Crime task forces. In the Departments of Education, TennCare, and Childrens Services, a total of $6.7 million recurring is recommended to account for additional children served by the Tennessee Early Intervention Services Program.

Health and Social Services An additional $59.9 million in recurring state funding is recommended for the TennCare program to offset increased costs due to a 2.1 percent medical inflation and utilization rate increase. The continued development of a new Medicaid eligibility system is funded with $7.2 million and $7.6 million is recommended to modernize the Medicaid management information system. An appropriation of $1.7 million funds the third year of the medication therapy management pilot program. TennCare general fund cost increases total $165 million and are matched with $255 million in federal funds and $5.6 million in other funding for a total of $425.7 million in new funding for the program. The Pre-Arrest Diversion program in the Department of Mental Health is funded with $1.5 million non-recurring. This program re-directs non-violent individuals from the criminal justice system to community-based treatments and supports in underserved counties. An appropriation of $15 million recurring to the Department of Childrens Services is recommended to continue the same level of services to an increased number of children in state custody. The federal waiver program for Title IV-E requirements is ending, and that will require

Budget Highlights

the state to replace federal funds. Recurring funds of $5 million are recommended for an increasing number of children in custody receiving treatment and recurring appropriations of $1.6 million are recommended to provide support to an increasing number of children adopted in the state. The total amount of new funding requested for health and social services is $217.8 million.

New Investments in Criminal Justice Reform To support the men and women working in criminal justice and to successfully re-introduce incarcerated individuals into society, the administration recommends new investments in several criminal justice areas. A recurring appropriation of $15.6 million is recommended in the Department of Correction to increase the starting salaries of correctional officers. The salary increase is aimed at reducing the extremely high turnover rate of these positions. An additional 40 probation and parole officers and managers in Correction are funded with a recurring appropriation of $2,170,500 and non-recurring of $250,000. These new positions reduce current caseload levels and bring supervision standards in-line with industry best practices. A new Correctional Education Investment initiative is funded with an appropriation of $3.6 million. This is the first year of a three-year initiative to expand adult basic education and, in partnership with THEC, to introduce new higher education programming and re-entry navigators in state correctional facilities. The goal of the program is to expand educational opportunities for incarcerated individuals and reduce recidivism by better preparing inmates for jobs outside of the correctional facilities. In the Department of Correction, recurring funds of $150,000 are requested for two positions to administer the program and non-recurring of $1.4 million to be used for equipment. Also in Correction, $250,000 non-recurring is recommended for programs and services that provide access to on-site, degree-bearing higher education opportunities. THECs budget request includes $1.4 million for the Correctional Education Investment Initiative. Of that amount, $426,000 recurring is for six re-entry navigator positions and $975,000 non-recurring will be used for equipment. The Board of Regents recommendation includes six TCAT positions and $426,000 recurring for this initiative. In response to the increased demand for services that support justice-involved women and their families, the administration recommends additional investments in the following programs: The Department of Mental Health and Substance Abuse Services will establish and manage a womens statewide residential recovery court with an appropriation of $2 million, of which $500,000 is non-recurring. Recurring funding of $285,000 for a judge and a legal secretary is included in the recommendation for the Administrative Office of the Courts. Up to five additional Safe Baby Courts are funded with $500,000 recurring in the Department of Childrens Services.

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To support judicial efforts to reduce the pre-trial incarceration of low-risk offenders, $1 million in non-recurring funds are recommended for the Office of Criminal Justice Programs in the Department of Finance & Administration to support new pilot programs in pre-trial services and risk assessment. A non-recurring appropriation of $1.5 million is recommended for the Electronic Monitoring Indigency Fund administered by the Treasury Department. The additional funds are for alternatives to pre-trial incarceration such as ignition interlock devices, transdermal patches, and other alcohol and drug monitoring devices for low-income individuals.

Safe Communities In the Department of Correction, an inflator in a contract providing medical services to inmates is funded with a recurring recommendation of $5.6 million. Increased pharmaceutical costs are funded with $5.4 million recurring. Cost increases in contracts with non-state service providers are funded with $3.5 million recurring. These contract increases include Trousdale County Incarceration Agreement ($1.4 million), Hardeman County AgreementWhiteville ($875,800), South Central Correctional Facility ($691,100), and the Hardeman County Incarceration Agreement ($492,400). Recurring funding of $2 million is recommended for updated Hepatitis C treatment standards. A Federal Communications Commission (FCC) requirement to operate all radios on a 6.25 KHz digital bandwidth is funded with a recurring appropriation of $1.6 million in the Department of Safety for maintenance and security upgrades. The total amount of new funding requested for safe communities is $52.1 million.

Rural Initiatives The third year of the Broadband Initiative, an effort to increase broadband accessibility through grants and tax credits, is funded with $20 million non-recurring. Grants and services to assist rural communities and distressed counties are funded with $13.5 million non-recurring. This amount includes $10.5 million for the Rural Development Fund for help with site development, community asset improvements, marketing, strategic planning, downtown revitalization, and technical assistance. The Rural Opportunity Fund, a public-private partnership that provides loans and technical assistance to small, minority, and women-owned rural businesses that are unable to access traditional loan capital, is funded with $3 million non-recurring.

Business and Economic Development A non-recurring appropriation of $75 million is recommended for the Jobs4TN program in the Department of Economic and Community Development to create new opportunities for Tennessees workforce and to support the growth and retention of the states traditional jobs

Budget Highlights

base. This appropriation is necessary to recruit new businesses and support workforce training, marketing, and education. Launch Tennessee Grants, a program that promotes innovation and entrepreneurship through the distribution of grants aimed at increasing new businesses from research and development activities, is funded with $1.5 million, of which $1.2 million is non-recurring. The fifth year of a five-year commitment to fund advanced manufacturing research at Oak Ridge is funded with a non-recurring grant of $3 million Funding of $500,000 recurring and $500,000 non-recurring is recommended for the Department of Agricultures rural development grants to rural communities and distressed counties. The seventh year of a tourism marketing task force in the Department of Tourist Development is funded with a $4 million non-recurring appropriation. Also in Tourist Development, a new Tennessee Office of Rural Initiatives that will assist distressed and at-risk counties with marketing, grants, and educational outreach is funded with $524,800 recurring and four positions. The total amount of new funding requested for Business and Economic Development is $122.6 million.

Resources and Regulation In the Department of Environment & Conservation, $2 million non-recurring is recommended for the Hazardous Waste Remedial Action Fund for remediation of National Priority and superfund sites. In the Department of Commerce & Insurance, $2.9 million recurring is recommended to increase the local law officer pay supplements and $1.4 million recurring to increase local firefighter pay supplements. Both supplements will increase from $600 to $800. The total amount of new funding requested for Resources and Regulation is $7.9 million.

Pay for Performance and Employee Benefits To continue implementing Pay for Performance in executive branch agencies, an appropriation of $14.4 million is recommended. This amount is the equivalent of a 2 percent across-the-board increase; however, the percentage increase each employee receives will be based on an evaluation score of valued, advanced, or outstanding. Employee evaluations will be completed on September 30, 2019, and the resulting salary increases will be effective on January 1, 2020. The six-month cost of these performance-based increases will be $14.4 million in fiscal year

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Budget Highlights

To support judicial efforts to reduce the pre-trial incarceration of low-risk offenders, $1 million in non-recurring funds are recommended for the Office of Criminal Justice Programs in the Department of Finance & Administration to support new pilot programs in pre-trial services and risk assessment. A non-recurring appropriation of $1.5 million is recommended for the Electronic Monitoring Indigency Fund administered by the Treasury Department. The additional funds are for alternatives to pre-trial incarceration such as ignition interlock devices, transdermal patches, and other alcohol and drug monitoring devices for low-income individuals.

Safe Communities In the Department of Correction, an inflator in a contract providing medical services to inmates is funded with a recurring recommendation of $5.6 million. Increased pharmaceutical costs are funded with $5.4 million recurring. Cost increases in contracts with non-state service providers are funded with $3.5 million recurring. These contract increases include Trousdale County Incarceration Agreement ($1.4 million), Hardeman County AgreementWhiteville ($875,800), South Central Correctional Facility ($691,100), and the Hardeman County Incarceration Agreement ($492,400). Recurring funding of $2 million is recommended for updated Hepatitis C treatment standards. A Federal Communications Commission (FCC) requirement to operate all radios on a 6.25 KHz digital bandwidth is funded with a recurring appropriation of $1.6 million in the Department of Safety for maintenance and security upgrades. The total amount of new funding requested for safe communities is $52.1 million.

Rural Initiatives The third year of the Broadband Initiative, an effort to increase broadband accessibility through grants and tax credits, is funded with $20 million non-recurring. Grants and services to assist rural communities and distressed counties are funded with $13.5 million non-recurring. This amount includes $10.5 million for the Rural Development Fund for help with site development, community asset improvements, marketing, strategic planning, downtown revitalization, and technical assistance. The Rural Opportunity Fund, a public-private partnership that provides loans and technical assistance to small, minority, and women-owned rural businesses that are unable to access traditional loan capital, is funded with $3 million non-recurring.

Business and Economic Development A non-recurring appropriation of $75 million is recommended for the Jobs4TN program in the Department of Economic and Community Development to create new opportunities for Tennessees workforce and to support the growth and retention of the states traditional jobs

Budget Highlights

base. This appropriation is necessary to recruit new businesses and support workforce training, marketing, and education. Launch Tennessee Grants, a program that promotes innovation and entrepreneurship through the distribution of grants aimed at increasing new businesses from research and development activities, is funded with $1.5 million, of which $1.2 million is non-recurring. The fifth year of a five-year commitment to fund advanced manufacturing research at Oak Ridge is funded with a non-recurring grant of $3 million Funding of $500,000 recurring and $500,000 non-recurring is recommended for the Department of Agricultures rural development grants to rural communities and distressed counties. The seventh year of a tourism marketing task force in the Department of Tourist Development is funded with a $4 million non-recurring appropriation. Also in Tourist Development, a new Tennessee Office of Rural Initiatives that will assist distressed and at-risk counties with marketing, grants, and educational outreach is funded with $524,800 recurring and four positions. The total amount of new funding requested for Business and Economic Development is $122.6 million.

Resources and Regulation In the Department of Environment & Conservation, $2 million non-recurring is recommended for the Hazardous Waste Remedial Action Fund for remediation of National Priority and superfund sites. In the Department of Commerce & Insurance, $2.9 million recurring is recommended to increase the local law officer pay supplements and $1.4 million recurring to increase local firefighter pay supplements. Both supplements will increase from $600 to $800. The total amount of new funding requested for Resources and Regulation is $7.9 million.

Pay for Performance and Employee Benefits To continue implementing Pay for Performance in executive branch agencies, an appropriation of $14.4 million is recommended. This amount is the equivalent of a 2 percent across-the-board increase; however, the percentage increase each employee receives will be based on an evaluation score of valued, advanced, or outstanding. Employee evaluations will be completed on September 30, 2019, and the resulting salary increases will be effective on January 1, 2020. The six-month cost of these performance-based increases will be $14.4 million in fiscal year

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Budget Highlights

2019-2020 and the annualized cost will be $28.8 million. Recurring funding for salary market adjustments is recommended at $18.5 million. Salary increases for state employees not covered by the Tennessee Excellence, Accountability, and Management (TEAM) Act will be funded with an appropriation of $6.7 million, which is the equivalent of a 2 percent across-the-board increase. The amount of increase each employee receives will be decided by the appointing authorities of those agencies and those increases will be effective July 1, 2019. Changes to state employee benefits including retirement and other post-employment benefit (OPEB) liabilities are funded with a recommendation of $20 million recurring for retirement and $12 million recurring for OPEB.

Information Technology The Microsoft Corporation is requiring all users of Microsoft Office to pay for the software on an annual basis instead of a one-time purchase price. To pay for this new billing methodology, $2.7 million is appropriated and that appropriation will generate enough federal and other revenue to pay the annual cost of $5 million. The Department of Revenue requests $11.1 million non-recurring and 11 temporary positions for a new revenue and tax collection computer system. The new system is a commercial off-the-shelf product called GenTax that has already been implemented in 20 states. It will replace the existing COBOL-based Revenue Integrated Tax System (RITS), which was implemented over 20 years ago. The new system will enhance customer service, increase productivity and efficiency, and offer opportunities to increase revenue collections.

Capital Outlay Capital outlay in fiscal year 2019-2020 totals $417 million, including $313.1 million in non-recurring current funds and $103.9 million from federal and other sources. An appropriation of $40.5 million is recommended for statewide capital maintenance, including $7.1 million for general government, $720,000 for the Board of Regents, $1.4 million for the University of Tennessee, and $31.3 million for Locally Governed Higher Education Institutions. Sentencing Act funds are the source of $24.6 million for capital maintenance in the Department of Correction. The Facilities Revolving Fund (FRF) capital budget provides an additional $48 million for projects and maintenance of state office buildings and similar facilities maintained through agency rent payments. .

Budget Highlights

Revenue Fluctuation and TennCare Reserves The revenue fluctuation reserve, commonly referred to as the Rainy Day Fund, allows services to be maintained when revenue growth is slower than estimated in the budget, mainly during economic downturns. The revenue fluctuation reserve was $800 million on June 30, 2018, and is estimated to be $875 million on June 30, 2019 including an additional deposit of $14 million. A recommended deposit to the fund of $225 million in fiscal year 2018-2019 will have the total revenue fluctuation reserve at $1.1 billion on June 30, 2020. At the end of fiscal year 2019-2020, the Rainy Day Fund will be at record level ($1.1 billion) after the largest single deposit ($225 million) in the history of the fund with that deposit also being the largest percent (7.3) of revenues. The TennCare reserve consists of prior-year unspent funds appropriated to the TennCare program. The unobligated reserve, as of June 30, 2018, is $311.3 million and it is expected to be $311.3 million on June 30, 2018 and June 30, 2019.

Conclusion The Budget Document includes narrative program statements for each of the line-item programs for which funds are recommended. In addition, detailed statements explain the recommended cost increases. Volume 2: Base Budget Reductions describes the reductions in recurring funding by program.

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2019-2020 and the annualized cost will be $28.8 million. Recurring funding for salary market adjustments is recommended at $18.5 million. Salary increases for state employees not covered by the Tennessee Excellence, Accountability, and Management (TEAM) Act will be funded with an appropriation of $6.7 million, which is the equivalent of a 2 percent across-the-board increase. The amount of increase each employee receives will be decided by the appointing authorities of those agencies and those increases will be effective July 1, 2019. Changes to state employee benefits including retirement and other post-employment benefit (OPEB) liabilities are funded with a recommendation of $20 million recurring for retirement and $12 million recurring for OPEB.

Information Technology The Microsoft Corporation is requiring all users of Microsoft Office to pay for the software on an annual basis instead of a one-time purchase price. To pay for this new billing methodology, $2.7 million is appropriated and that appropriation will generate enough federal and other revenue to pay the annual cost of $5 million. The Department of Revenue requests $11.1 million non-recurring and 11 temporary positions for a new revenue and tax collection computer system. The new system is a commercial off-the-shelf product called GenTax that has already been implemented in 20 states. It will replace the existing COBOL-based Revenue Integrated Tax System (RITS), which was implemented over 20 years ago. The new system will enhance customer service, increase productivity and efficiency, and offer opportunities to increase revenue collections.

Capital Outlay Capital outlay in fiscal year 2019-2020 totals $417 million, including $313.1 million in non-recurring current funds and $103.9 million from federal and other sources. An appropriation of $40.5 million is recommended for statewide capital maintenance, including $7.1 million for general government, $720,000 for the Board of Regents, $1.4 million for the University of Tennessee, and $31.3 million for Locally Governed Higher Education Institutions. Sentencing Act funds are the source of $24.6 million for capital maintenance in the Department

S The Budget - tn.gov · STATE OF TENNESSEE The Budget FISCAL YEAR 2019-2020 Volume 1 Bill Lee,...

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