Volume 1 Bill Haslam, Governor€¦ · STATE OF TENNESSEE The Budget FISCAL YEAR 2016-2017 Volume 1 Bill Haslam, Governor

STATE OF TENNESSEE

The Budget FISCAL YEAR 2016-2017

Volume 1

Bill Haslam, Governor

Bill Haslam,Governor

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

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

STATE REVENUES ................................................................. A-57

FINANCIAL STATEMENTS ...................................................... A-115

CAPITAL OUTLAY AND FACILITIES PROGRAM ............................. A-129

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

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

EDUCATION ....................................................................... B-77

LAW, SAFETY, AND CORRECTION ............................................ B-193

RESOURCES AND REGULATION ............................................... B-249

BUDGET PROCESS ............................................................... B-325

GLOSSARY AND INDEX ......................................................... B-337

TRANSPORTATION, BUSINESS, AND ECONOMIC DEVELOPMENT ........ B-295

HEALTH AND SOCIAL SERVICES .............................................. B-133

TABLE OF CONTENTS

Table of Contents The Budget

(more detailed contents tables appear under each tab)

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

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

Budget Overview ......................................................................................................................................... A-1 State Revenues ........................................................................................................................................... A-57 Financial Statements ................................................................................................................................ A-115 Capital Outlay and Facilities Program ..................................................................................................... A-129 Program Statements by Functional Area...................................................................................................... B-1

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

Recommended Budget for Fiscal Year 2016-2017 ............................................................................. B-7

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

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

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

Recommended Budget for Fiscal Year 2016-2017 by Funding Source ................................. B-15

Cost Increases for Fiscal Year 2016-2017 ............................................................................. B-16

Program Statements ............................................................................................................... B-25 Legislature .................................................................................................................. B-25 Fiscal Review Committee ........................................................................................... B-28 Secretary of State ....................................................................................................... B-29 Comptroller of the Treasury ....................................................................................... B-34 Treasury Department .................................................................................................. B-41 Claims and Compensation .......................................................................................... B-44 Executive Department ................................................................................................ B-46 Tennessee Human Rights Commission ...................................................................... B-47 Tennessee Regulatory Authority ................................................................................ B-48 Advisory Commission on Intergovernmental Relations ............................................. B-49 Department of Finance and Administration ............................................................... B-50 Department of Human Resources ............................................................................... B-56 Department of General Services ................................................................................. B-59 Department of Veterans Services ............................................................................... B-64 Department of Revenue .............................................................................................. B-65

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(more detailed contents tables appear under each tab)

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

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

Budget Overview ......................................................................................................................................... A-1 State Revenues ........................................................................................................................................... A-57 Financial Statements ................................................................................................................................ A-115 Capital Outlay and Facilities Program ..................................................................................................... A-129 Program Statements by Functional Area...................................................................................................... B-1

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

Recommended Budget for Fiscal Year 2016-2017 ............................................................................. B-7

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

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



Cost Increases for Fiscal Year 2016-2017 ............................................................................. B-16

Program Statements ............................................................................................................... B-25 Legislature .................................................................................................................. B-25 Fiscal Review Committee ........................................................................................... B-28 Secretary of State ....................................................................................................... B-29 Comptroller of the Treasury ....................................................................................... B-34 Treasury Department .................................................................................................. B-41 Claims and Compensation .......................................................................................... B-44 Executive Department ................................................................................................ B-46 Tennessee Human Rights Commission ...................................................................... B-47 Tennessee Regulatory Authority ................................................................................ B-48 Advisory Commission on Intergovernmental Relations ............................................. B-49 Department of Finance and Administration ............................................................... B-50 Department of Human Resources ............................................................................... B-56 Department of General Services ................................................................................. B-59 Department of Veterans Services ............................................................................... B-64 Department of Revenue .............................................................................................. B-65

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Miscellaneous Appropriations .................................................................................... B-71 Emergency and Contingency Fund ............................................................................. B-72 State Building Commission ........................................................................................ B-73

Priority Goals and Measures .................................................................................................. B-74

Education .......................................................................................................................................... B-77

Introduction ........................................................................................................................... B-81



Cost Increases (K-12 Education and Higher Education) for Fiscal Year 2016-2017 ............ B-84

Program Statements ............................................................................................................... B-96 Department of Education (K-12) ................................................................................ B-96 Higher Education ..................................................................................................... B-109 University of Tennessee ........................................................................................... B-115 State University and Community College System .................................................... B-122

Priority Goals and Measures ................................................................................................ B-132

Health and Social Services .............................................................................................................. B-133

Introduction ......................................................................................................................... B-137

Total Personnel and Funding ............................................................................................... B-138

Recommended Budget for Fiscal Year 2016-2017 by Funding Source ............................... B-139

Cost Increases for Fiscal Year 2016-2017 ........................................................................... B-140

Program Statements ............................................................................................................. B-148 Commission on Children and Youth ........................................................................ B-148 Commission on Aging and Disability ....................................................................... B-149 Health Services and Development Agency .............................................................. B-150 Council on Developmental Disabilities .................................................................... B-151 Department of Finance and Administration, Bureau of TennCare ........................... B-152 Department of Mental Health and Substance Abuse Services .................................. B-155 Department of Health ............................................................................................... B-160 Department of Intellectual and Developmental Disabilities ..................................... B-167 Department of Human Services ................................................................................ B-175 Department of Finance and Administration, Strategic Health-Care Programs ......... B-181 Department of Children’s Services .......................................................................... B-183


Law, Safety, and Correction ............................................................................................................ B-193

Introduction ......................................................................................................................... B-197





Program Statements ............................................................................................................. B-205 Court System ............................................................................................................ B-205 Attorney General and Reporter ................................................................................ B-213 District Attorneys General Conference .................................................................... B-215 District Public Defenders Conference ...................................................................... B-217 Office of the Post-Conviction Defender ................................................................... B-219 Alcoholic Beverage Commission ............................................................................. B-220 Tennessee Rehabilitative Initiative in Correction (TRICOR) .................................. B-221 Board of Parole ........................................................................................................ B-222 Department of Correction......................................................................................... B-223 Military Department ................................................................................................. B-237 Tennessee Bureau of Investigation ........................................................................... B-241 Department of Safety ............................................................................................... B-242

Priority Goals and Measures ................................................................................................ B-247 Resources and Regulation ............................................................................................................... B-249

Introduction ......................................................................................................................... B-253




Program Statements ............................................................................................................. B-259 Arts Commission ...................................................................................................... B-259 State Museum ........................................................................................................... B-260 Department of Environment and Conservation ........................................................ B-261 Tennessee Wildlife Resources Agency .................................................................... B-275 Department of Commerce and Insurance ................................................................. B-278 Department of Financial Institutions ........................................................................ B-286 Department of Labor and Workforce Development ................................................. B-287


Transportation, Business, and Economic Development .................................................................. B-295

Introduction ......................................................................................................................... B-299




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Miscellaneous Appropriations .................................................................................... B-71 Emergency and Contingency Fund ............................................................................. B-72 State Building Commission ........................................................................................ B-73

Priority Goals and Measures .................................................................................................. B-74

Education .......................................................................................................................................... B-77

Introduction ........................................................................................................................... B-81



Cost Increases (K-12 Education and Higher Education) for Fiscal Year 2016-2017 ............ B-84

Program Statements ............................................................................................................... B-96 Department of Education (K-12) ................................................................................ B-96 Higher Education ..................................................................................................... B-109 University of Tennessee ........................................................................................... B-115 State University and Community College System .................................................... B-122


Health and Social Services .............................................................................................................. B-133

Introduction ......................................................................................................................... B-137




Program Statements ............................................................................................................. B-148 Commission on Children and Youth ........................................................................ B-148 Commission on Aging and Disability ....................................................................... B-149 Health Services and Development Agency .............................................................. B-150 Council on Developmental Disabilities .................................................................... B-151 Department of Finance and Administration, Bureau of TennCare ........................... B-152 Department of Mental Health and Substance Abuse Services .................................. B-155 Department of Health ............................................................................................... B-160 Department of Intellectual and Developmental Disabilities ..................................... B-167 Department of Human Services ................................................................................ B-175 Department of Finance and Administration, Strategic Health-Care Programs ......... B-181 Department of Children’s Services .......................................................................... B-183


Law, Safety, and Correction ............................................................................................................ B-193

Introduction ......................................................................................................................... B-197





Program Statements ............................................................................................................. B-205 Court System ............................................................................................................ B-205 Attorney General and Reporter ................................................................................ B-213 District Attorneys General Conference .................................................................... B-215 District Public Defenders Conference ...................................................................... B-217 Office of the Post-Conviction Defender ................................................................... B-219 Alcoholic Beverage Commission ............................................................................. B-220 Tennessee Rehabilitative Initiative in Correction (TRICOR) .................................. B-221 Board of Parole ........................................................................................................ B-222 Department of Correction......................................................................................... B-223 Military Department ................................................................................................. B-237 Tennessee Bureau of Investigation ........................................................................... B-241 Department of Safety ............................................................................................... B-242

Priority Goals and Measures ................................................................................................ B-247 Resources and Regulation ............................................................................................................... B-249

Introduction ......................................................................................................................... B-253




Program Statements ............................................................................................................. B-259 Arts Commission ...................................................................................................... B-259 State Museum ........................................................................................................... B-260 Department of Environment and Conservation ........................................................ B-261 Tennessee Wildlife Resources Agency .................................................................... B-275 Department of Commerce and Insurance ................................................................. B-278 Department of Financial Institutions ........................................................................ B-286 Department of Labor and Workforce Development ................................................. B-287


Transportation, Business, and Economic Development .................................................................. B-295

Introduction ......................................................................................................................... B-299




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Program Statements ............................................................................................................. B-304 Tennessee Housing Development Agency ............................................................... B-304 Department of Agriculture ....................................................................................... B-305 Department of Tourist Development ........................................................................ B-310 Department of Economic and Community Development ......................................... B-312 Department of Transportation .................................................................................. B-318

Priority Goals and Measures ................................................................................................ B-321 Budget Process ........................................................................................................................................ B-325

The Budget Process ............................................................................................................. B-329 Basis of Budgeting and Accounting ..................................................................................... B-333

Glossary and Index .................................................................................................................................. B-337 Glossary of Budget Terms ................................................................................................... B-341 Index .................................................................................................................................... B-347


Program Statements ............................................................................................................. B-304 Tennessee Housing Development Agency ............................................................... B-304 Department of Agriculture ....................................................................................... B-305 Department of Tourist Development ........................................................................ B-310 Department of Economic and Community Development ......................................... B-312 Department of Transportation .................................................................................. B-318

Priority Goals and Measures ................................................................................................ B-321 Budget Process ........................................................................................................................................ B-325

The Budget Process ............................................................................................................. B-329 Basis of Budgeting and Accounting ..................................................................................... B-333

Glossary and Index .................................................................................................................................. B-337 Glossary of Budget Terms ................................................................................................... B-341 Index .................................................................................................................................... B-347

Introduction

Introduction Table of Contents

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

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Introduction Table of Contents

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

State of Tennessee

Budget Highlights

Recommended Budget, Fiscal Year 2016-2017

The total recommended state budget for fiscal year 2016-2017 is $34.8 billion, with $16.4 billion from state appropriations, $13.2 billion from federal funds, and $5.2 billion from other departmental revenues, higher education student tuition and fees, and bonds for highway construction. This is an increase of $833.6 million in total funding and $849.7 million in state funding from the revised 2015-2016 spending estimates. Federal funding increased by $429.8 million, other departmental revenues decreased by $12.2 million, and bond funding decreased by $433.7 million. 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 3.40 percent compared with the actual 2014-2015 Department of Revenue collections. For fiscal year 2016-2017, before inter-fund reallocations, general fund taxes are expected to grow by $348.9 million above the revised current-year estimate. This is a 3.25 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 recovery through fiscal year 2015-2016 and beyond.

Plan for Balancing Supplemental appropriations in the current 2015-2016 fiscal year total $48.5 million, $23 million of which is in the Department of Economic and Community Development for infrastructure and job training assistance. Other programs requiring supplemental appropriations include three regional mental health hospitals ($4.5 million), transition costs in the prison system’s food service program ($9 million), the restoration of funds previously reduced in Environment and Conservation’s energy loan program ($3.6 million), Revenue’s new tax system ($2.8 million), litigation pertaining to the Memphis aquifer ($2 million), the restoration of funds in TennCare used to treat opiate addiction ($1.6 million), the restoration of funds for the Court System’s data repository ($1.1 million), statewide performance pay ($828,600), and the restoration of funds in the Treasury Department ($20,000). In fiscal year 2016-2017, the budget is balanced, with recurring revenues fully supporting recurring appropriations. This is accomplished by additional budget reductions in fiscal year 2016-2017. Base budgets in general fund programs throughout state government have been reduced by $38 million and certain other programs have been increased by $5.7 million for a net recurring base reduction of $32.4 million in the general fund. The average general fund recurring reduction is 0.7 percent. (The reductions are detailed in Volume 2: Base Budget Reductions.)

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State of Tennessee

Budget Highlights

Recommended Budget, Fiscal Year 2016-2017

The total recommended state budget for fiscal year 2016-2017 is $34.8 billion, with $16.4 billion from state appropriations, $13.2 billion from federal funds, and $5.2 billion from other departmental revenues, higher education student tuition and fees, and bonds for highway construction. This is an increase of $833.6 million in total funding and $849.7 million in state funding from the revised 2015-2016 spending estimates. Federal funding increased by $429.8 million, other departmental revenues decreased by $12.2 million, and bond funding decreased by $433.7 million. 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 3.40 percent compared with the actual 2014-2015 Department of Revenue collections. For fiscal year 2016-2017, before inter-fund reallocations, general fund taxes are expected to grow by $348.9 million above the revised current-year estimate. This is a 3.25 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 recovery through fiscal year 2015-2016 and beyond.

Plan for Balancing Supplemental appropriations in the current 2015-2016 fiscal year total $48.5 million, $23 million of which is in the Department of Economic and Community Development for infrastructure and job training assistance. Other programs requiring supplemental appropriations include three regional mental health hospitals ($4.5 million), transition costs in the prison system’s food service program ($9 million), the restoration of funds previously reduced in Environment and Conservation’s energy loan program ($3.6 million), Revenue’s new tax system ($2.8 million), litigation pertaining to the Memphis aquifer ($2 million), the restoration of funds in TennCare used to treat opiate addiction ($1.6 million), the restoration of funds for the Court System’s data repository ($1.1 million), statewide performance pay ($828,600), and the restoration of funds in the Treasury Department ($20,000). In fiscal year 2016-2017, the budget is balanced, with recurring revenues fully supporting recurring appropriations. This is accomplished by additional budget reductions in fiscal year 2016-2017. Base budgets in general fund programs throughout state government have been reduced by $38 million and certain other programs have been increased by $5.7 million for a net recurring base reduction of $32.4 million in the general fund. The average general fund recurring reduction is 0.7 percent. (The reductions are detailed in Volume 2: Base Budget Reductions.)

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Budget Highlights

A total of 175 positions will be abolished as a result of reductions implemented in this budget recommendation. At this time, 87 of these positions are filled. Those employees impacted by the position reductions will be eligible for a severance package consisting of a base payment of $3,200 and college tuition assistance for two years to be capped at the average of the highest four-year public Tennessee college undergraduate level. More than three-fourths of the filled position reductions are from one department, Children’s Services, and result from a change in how juvenile offenders are treated.

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 2016-2017, federal participation in certain health care programs is decreasing from 65.035 percent to 64.984 percent. This requires an increase of $3.9 million in state funding to TennCare and $46,200 to the Department of Children’s Services for foster care and adoption assistance to maintain the existing level of service in those programs. A total of $8.5 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 ($77,600), the attorney general ($500), assistant district attorneys and criminal investigators ($1.2 million), assistant public defenders and criminal investigators ($651,700), assistant post-conviction defenders ($34,700), the governor ($500), trooper step increases ($919,400) and border-state survey ($3.3 million), and wildlife officer step increases ($518,900) and border-state survey ($1.8 million). State statutes mandate that teachers at the state-run schools must be compensated based on their training and experience. To fund this requirement, $52,800 is provided to the Department of Children’s Services for the Youth Development Centers and $107,600 to the Department of Education’s 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 $48.8 million. An appropriation of $104.6 million is recommended for salary increases for teachers and other positions funded through the BEP formula, effective July 1, 2016. The amount of the salary increases will depend on each LEA’s salary schedule and structure. To fund the 12th month of the cost of medical insurance for teachers in the BEP, an appropriation of $29.5 million recurring is recommended. Instructional technology and infrastructure improvements to support classroom instruction in the LEAs are funded with $15 million recurring. An appropriation of $13.9 million will increase the number of teachers and translators for English Language Learner students. Adjustments to the BEP,

Budget Highlights

including baseline and stability funding for LEAs and mandatory increases for certain formula components, are funded with a recurring appropriation of $6.5 million. An effort to place special education students in the least restrictive educational setting is funded with $4.8 million recurring. In total, state funding for the operations of local school systems funded by the BEP formula will increase by $223.1 million. New programs and initiatives in K-12 education include a statewide coaching and intervention initiative that will create a network of district literacy coaches and regional coordinators ($9 million); a kindergarten entry screener test to identify, assess, and benchmark children for kindergarten readiness ($1 million); professional development in English and math instruction for teachers ($3.1 million); and comprehensive assessment in grades three through high school ($6.5 million). Administration legislation that eliminates two assessments in grades eight and ten, provides an opportunity to re-take the ACT free of charge, and requires the Education Department to release test questions and student results from the Tennessee Comprehensive Assessment Program (TCAP) tests is funded with $832,100 recurring. Contract services related to the State Board of Education’s charter school authorization activities is funded with $125,000 recurring. Recurring funds of $350,000 are recommended to implement the Individualized Education Act Program, which provides options for parents of certain students with disabilities to choose education opportunities that best meet the needs of their child. Reimbursement for members of the standards review committee is funded with $244,000 non-recurring. An appropriation of $440,000 is recommended for school leadership training for principals. A recommendation of $15.2 million funds the state share of a 6.1 percent group health insurance increase for LEAs effective January 1, 2017. The Save the Children literacy program is funded another year with a $1 million non-recurring grant and the Alliance of Boys and Girls Clubs will receive a $125,000 non-recurring grant. The total amount of new funding requested for K-12 education is $261.1 million.

Higher Education Costs of the proposed Focus On College and University Success (FOCUS) Act are funded with a recurring appropriation of $416,400. The FOCUS Act aims to enhance student success across higher education by providing additional support for community and technical colleges, increasing autonomy and local control of Board of Regents universities, and strengthening the Tennessee Higher Education Commission. The appropriation is for three positions – two academic affairs officers and a capital outlay director. Increased operational costs in the University of Tennessee and Board of Regents systems are funded with a total general fund recurring recommendation of $50 million. These funds may be used for salary increases as well as program improvements that assist the institutions in meeting

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Budget Highlights

A total of 175 positions will be abolished as a result of reductions implemented in this budget recommendation. At this time, 87 of these positions are filled. Those employees impacted by the position reductions will be eligible for a severance package consisting of a base payment of $3,200 and college tuition assistance for two years to be capped at the average of the highest four-year public Tennessee college undergraduate level. More than three-fourths of the filled position reductions are from one department, Children’s Services, and result from a change in how juvenile offenders are treated.

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 2016-2017, federal participation in certain health care programs is decreasing from 65.035 percent to 64.984 percent. This requires an increase of $3.9 million in state funding to TennCare and $46,200 to the Department of Children’s Services for foster care and adoption assistance to maintain the existing level of service in those programs. A total of $8.5 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 ($77,600), the attorney general ($500), assistant district attorneys and criminal investigators ($1.2 million), assistant public defenders and criminal investigators ($651,700), assistant post-conviction defenders ($34,700), the governor ($500), trooper step increases ($919,400) and border-state survey ($3.3 million), and wildlife officer step increases ($518,900) and border-state survey ($1.8 million). State statutes mandate that teachers at the state-run schools must be compensated based on their training and experience. To fund this requirement, $52,800 is provided to the Department of Children’s Services for the Youth Development Centers and $107,600 to the Department of Education’s 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 $48.8 million. An appropriation of $104.6 million is recommended for salary increases for teachers and other positions funded through the BEP formula, effective July 1, 2016. The amount of the salary increases will depend on each LEA’s salary schedule and structure. To fund the 12th month of the cost of medical insurance for teachers in the BEP, an appropriation of $29.5 million recurring is recommended. Instructional technology and infrastructure improvements to support classroom instruction in the LEAs are funded with $15 million recurring. An appropriation of $13.9 million will increase the number of teachers and translators for English Language Learner students. Adjustments to the BEP,

Budget Highlights

including baseline and stability funding for LEAs and mandatory increases for certain formula components, are funded with a recurring appropriation of $6.5 million. An effort to place special education students in the least restrictive educational setting is funded with $4.8 million recurring. In total, state funding for the operations of local school systems funded by the BEP formula will increase by $223.1 million. New programs and initiatives in K-12 education include a statewide coaching and intervention initiative that will create a network of district literacy coaches and regional coordinators ($9 million); a kindergarten entry screener test to identify, assess, and benchmark children for kindergarten readiness ($1 million); professional development in English and math instruction for teachers ($3.1 million); and comprehensive assessment in grades three through high school ($6.5 million). Administration legislation that eliminates two assessments in grades eight and ten, provides an opportunity to re-take the ACT free of charge, and requires the Education Department to release test questions and student results from the Tennessee Comprehensive Assessment Program (TCAP) tests is funded with $832,100 recurring. Contract services related to the State Board of Education’s charter school authorization activities is funded with $125,000 recurring. Recurring funds of $350,000 are recommended to implement the Individualized Education Act Program, which provides options for parents of certain students with disabilities to choose education opportunities that best meet the needs of their child. Reimbursement for members of the standards review committee is funded with $244,000 non-recurring. An appropriation of $440,000 is recommended for school leadership training for principals. A recommendation of $15.2 million funds the state share of a 6.1 percent group health insurance increase for LEAs effective January 1, 2017. The Save the Children literacy program is funded another year with a $1 million non-recurring grant and the Alliance of Boys and Girls Clubs will receive a $125,000 non-recurring grant. The total amount of new funding requested for K-12 education is $261.1 million.

Higher Education Costs of the proposed Focus On College and University Success (FOCUS) Act are funded with a recurring appropriation of $416,400. The FOCUS Act aims to enhance student success across higher education by providing additional support for community and technical colleges, increasing autonomy and local control of Board of Regents universities, and strengthening the Tennessee Higher Education Commission. The appropriation is for three positions – two academic affairs officers and a capital outlay director. Increased operational costs in the University of Tennessee and Board of Regents systems are funded with a total general fund recurring recommendation of $50 million. These funds may be used for salary increases as well as program improvements that assist the institutions in meeting

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Budget Highlights

outcomes such as student progression, degree production, research and service, efficiency metrics, and other outcome measures related to institutional mission. A non-recurring appropriation of $800,000 is recommended to award four to eight competitive grants to colleges and universities that develop action plans for addressing lagging outcomes, goals for increasing these outcomes, and metrics of success. Operating cost increases for non-formula units of higher education are funded with a recurring appropriation of $7.1 million. A 3.5 percent increase in group health insurance premiums effective January 1, 2016, is annualized with $4.1 million. Six months of an anticipated 4.7 percent increase in group health insurance is funded with $5.7 million. To encourage employee retirement savings, a recurring appropriation of $1.6 million maintains the state’s monthly 401(k) match at $50. In the Board of Regents system, an appropriation of $28.7 million non-recurring is recommended for a consolidated enterprise resource planning system for community colleges. A portion of the funds will be paid back beginning in fiscal year 2022 after implementation is complete. A joint effort between the University of Tennessee Health Science Center and St. Jude’s Hospital to recruit pediatric physician scientists is funded with $3 million non-recurring. This is the fourth year of what is expected to be a five-year commitment to this recruiting effort. Recurring funding of $13.2 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 Labor Education Alignment Program (LEAP), which aims to eliminate skills gaps by encouraging collaboration across education and industry, is expanded with $10 million non-recurring. A temporary administrative position is added to the program with a non-recurring appropriation of $96,300. Various grant programs and initiatives for higher education students are funded with a total recommendation of $5.5 million. This amount includes $2.5 million non-recurring and three temporary positions for a College Advisor Corps that will provide one-on-one assistance for students completing college admission forms and financial aid applications; $1 million non-recurring for competitive Veteran Reconnect grants that will be used to train faculty and staff who work with students who have served in the armed forces; $800,000 non-recurring for competitive grants to institutions to develop programs that will recruit and retain students eligible for the Tennessee Promise Scholarship program; $469,100 non-recurring to expand the Seamless Alignment and Integrated Learning Support (SAILS) program to Shelby County; $400,000 non-recurring to address remediation needs of Tennessee Promise students during the summer prior to fall semester enrollment; $200,000 non-recurring to fund two temporary positions in the Adult Learner Program; and $150,000 non-recurring for student outreach and Drive to 55 operations.

Budget Highlights

Recurring funds of $383,300 are recommended to fund administrative functions in the Tennessee Higher Education Commission, Tennessee Student Assistance Corporation, and the Foreign Language Institute.

Health and Social Services An additional $64.3 million in recurring state funding is recommended for the TennCare program to off-set increased costs due to increased enrollment in the program. To manage that enrollment increase, an additional $4.5 million to fund 250 eligibility determination positions is also requested. Increasing pharmaceutical and premium costs in Medicare Part B and Part D are funded with an appropriation of $77.7 million. The higher cost of services provided to members of the Intellectual and Developmental Disabilities waiver is funded with $588,900. A new program for people with intellectual and developmental disabilities is recommended with an appropriation of $19 million and eight positions. The new program, called Employment and Community First (ECF) CHOICES, will promote and support integrated, competitive employment and independent living as the first and preferred option for individuals with intellectual and developmental disabilities. Enrollment in the program will include some individuals currently on the waiting list for services from the state. A reallocation of $5.1 million in existing state funds in the Greene Valley Developmental Center will bring the total appropriation for ECF CHOICES to $24.1 million. In anticipation of an expected change in federal requirements, an appropriation of $1.7 million is requested to transition intellectually and developmentally disabled individuals from facility-based day services. A six month extension allowed under the Clover Bottom Lawsuit Exit Plan is funded with an appropriation of $6.3 million in TennCare and $277,900 in the Department of Intellectual and Developmental Disabilities (DIDD). TennCare’s share of other cost increases in the Department of Children’s Services is funded with $1.7 million recurring. Funding for buprenorphine, a drug used to treat opiate addiction, is restored with $1.6 million. In fiscal year 2015-2016, the use of buprenorphine was limited to two years for TennCare enrollees. Bureau of TennCare general fund cost increases, including the federal match rate change described in the Federal and State Mandates section, total $189.8 million and are matched with $309.6 million in federal funds for a total of $499.4 million in new funding for the state’s TennCare program. In the Department of Health, $1.4 million and eight new positions are recommended to respond to potential outbreaks of Hepatitis C, HCV, and HIV in the state. Emphasis will be on testing individuals and providing educational materials to at-risk populations to prevent those diseases from spreading. Administration legislation pertaining to the training of county medical examiners and death investigators is funded with $527,800.

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Budget Highlights

outcomes such as student progression, degree production, research and service, efficiency metrics, and other outcome measures related to institutional mission. A non-recurring appropriation of $800,000 is recommended to award four to eight competitive grants to colleges and universities that develop action plans for addressing lagging outcomes, goals for increasing these outcomes, and metrics of success. Operating cost increases for non-formula units of higher education are funded with a recurring appropriation of $7.1 million. A 3.5 percent increase in group health insurance premiums effective January 1, 2016, is annualized with $4.1 million. Six months of an anticipated 4.7 percent increase in group health insurance is funded with $5.7 million. To encourage employee retirement savings, a recurring appropriation of $1.6 million maintains the state’s monthly 401(k) match at $50. In the Board of Regents system, an appropriation of $28.7 million non-recurring is recommended for a consolidated enterprise resource planning system for community colleges. A portion of the funds will be paid back beginning in fiscal year 2022 after implementation is complete. A joint effort between the University of Tennessee Health Science Center and St. Jude’s Hospital to recruit pediatric physician scientists is funded with $3 million non-recurring. This is the fourth year of what is expected to be a five-year commitment to this recruiting effort. Recurring funding of $13.2 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 Labor Education Alignment Program (LEAP), which aims to eliminate skills gaps by encouraging collaboration across education and industry, is expanded with $10 million non-recurring. A temporary administrative position is added to the program with a non-recurring appropriation of $96,300. Various grant programs and initiatives for higher education students are funded with a total recommendation of $5.5 million. This amount includes $2.5 million non-recurring and three temporary positions for a College Advisor Corps that will provide one-on-one assistance for students completing college admission forms and financial aid applications; $1 million non-recurring for competitive Veteran Reconnect grants that will be used to train faculty and staff who work with students who have served in the armed forces; $800,000 non-recurring for competitive grants to institutions to develop programs that will recruit and retain students eligible for the Tennessee Promise Scholarship program; $469,100 non-recurring to expand the Seamless Alignment and Integrated Learning Support (SAILS) program to Shelby County; $400,000 non-recurring to address remediation needs of Tennessee Promise students during the summer prior to fall semester enrollment; $200,000 non-recurring to fund two temporary positions in the Adult Learner Program; and $150,000 non-recurring for student outreach and Drive to 55 operations.

Budget Highlights

Recurring funds of $383,300 are recommended to fund administrative functions in the Tennessee Higher Education Commission, Tennessee Student Assistance Corporation, and the Foreign Language Institute.

Health and Social Services An additional $64.3 million in recurring state funding is recommended for the TennCare program to off-set increased costs due to increased enrollment in the program. To manage that enrollment increase, an additional $4.5 million to fund 250 eligibility determination positions is also requested. Increasing pharmaceutical and premium costs in Medicare Part B and Part D are funded with an appropriation of $77.7 million. The higher cost of services provided to members of the Intellectual and Developmental Disabilities waiver is funded with $588,900. A new program for people with intellectual and developmental disabilities is recommended with an appropriation of $19 million and eight positions. The new program, called Employment and Community First (ECF) CHOICES, will promote and support integrated, competitive employment and independent living as the first and preferred option for individuals with intellectual and developmental disabilities. Enrollment in the program will include some individuals currently on the waiting list for services from the state. A reallocation of $5.1 million in existing state funds in the Greene Valley Developmental Center will bring the total appropriation for ECF CHOICES to $24.1 million. In anticipation of an expected change in federal requirements, an appropriation of $1.7 million is requested to transition intellectually and developmentally disabled individuals from facility-based day services. A six month extension allowed under the Clover Bottom Lawsuit Exit Plan is funded with an appropriation of $6.3 million in TennCare and $277,900 in the Department of Intellectual and Developmental Disabilities (DIDD). TennCare’s share of other cost increases in the Department of Children’s Services is funded with $1.7 million recurring. Funding for buprenorphine, a drug used to treat opiate addiction, is restored with $1.6 million. In fiscal year 2015-2016, the use of buprenorphine was limited to two years for TennCare enrollees. Bureau of TennCare general fund cost increases, including the federal match rate change described in the Federal and State Mandates section, total $189.8 million and are matched with $309.6 million in federal funds for a total of $499.4 million in new funding for the state’s TennCare program. In the Department of Health, $1.4 million and eight new positions are recommended to respond to potential outbreaks of Hepatitis C, HCV, and HIV in the state. Emphasis will be on testing individuals and providing educational materials to at-risk populations to prevent those diseases from spreading. Administration legislation pertaining to the training of county medical examiners and death investigators is funded with $527,800.

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Budget Highlights

Various grant programs are funded with non-recurring appropriations, including the Healthy Start ($1.5 million) and Child Health and Development (CHAD) ($450,000) home visitation programs; sickle cell research by the Sickle Cell Foundation of Tennessee ($75,000) and the Methodist Healthcare Foundation ($50,000); the Health and Wellness Foundation ($3 million); the Tennessee Men’s Health Network ($50,000); and epilepsy programs ($103,100). In the Department of Mental Health and Substance Abuse Services, an appropriation of $5.5 million is requested to off-set the loss of revenue associated with changes in insurance trends for patients served at the state’s regional mental health institutes. Efforts to maintain Joint Commission on Accreditation of Healthcare Organizations (JCAHO) standards at Moccasin Bend Mental Health Institute are supported with an additional $1.5 million recurring. Also in the department, $1.3 million is requested to fund nine new drug recovery courts, two new veteran treatment courts, and three existing veteran treatment courts. There are currently 27 counties without access to recovery court services and this appropriation will make those services available to those counties. In the Department of Children’s Services, recurring appropriations of $5.2 million and 60 new positions related to the Brian A. Settlement Agreement are recommended. This amount includes a rate increase for private providers of services to children, a foster care rate increase, funds for growth in the adoption assistance caseload, 52 additional child protective services case managers, and other administrative costs.

Safe Communities An appropriation of $10.2 million and 102 new positions in the Department of Correction is recommended to fund administration legislation that will decrease admissions to state prisons by implementing a graduated sanctions system for violations of community supervision, including probation and parole. The legislation also increases the minimum period of incarceration for certain offenses such as aggravated burglary, drug trafficking, and domestic assault. Of the $10.2 million requested for this legislation, $9.6 million is recurring and $575,000 is non-recurring. Separate pieces of legislation that enhance sentencing for individuals convicted of bringing contraband into a state youth development center and for individuals committing TennCare fraud are funded with $66,300 and $63,100 respectively. Cost increases in contracts with non-state service providers are funded with $2.5 million. These contract increases include Hardeman County–Whiteville ($941,700), South Central Correctional Center ($736,300), and the Hardeman County Incarceration Agreement ($871,000). Cost increases in the state’s sex offender treatment program are funded with an appropriation of $1.3 million. New software for inventory and asset management is funded with $924,000. An amount of $600,000 is recommended to update Hepatitis C standards in the state’s prison system. A recommendation to add 12 state trooper positions to the Highway Patrol is funded with a recurring appropriation of $413,500 and a non-recurring appropriation of $739,200 for a total of $1.2 million. The Department of Safety will use some existing unobligated payroll dollars to

Budget Highlights

fully fund the 12 trooper positions. 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 million in the Department of Safety for maintenance and security upgrades.

Business and Economic Development An appropriation of $70.9 million is recommended for the Jobs4TN program in the Department of Economic and Community Development to create new opportunities for Tennessee’s workforce and to support the growth and retention of the state’s traditional jobs base. Of this amount, $15 million is recurring and $55.9 million is non-recurring. This appropriation is necessary to recruit new businesses and support workforce training, marketing, and education. A new Rural Development Initiative to assist rural communities and distressed counties was announced at the Governor’s Conference on Economic and Community Development in October 2015 and a non-recurring appropriation of $10 million is recommended to fund that assistance. Aid to eligible areas will include help with site development, community asset improvements, marketing, strategic planning, downtown revitalization, and technical assistance. The new initiative will increase the ability of rural communities to attract businesses and enhance local economies. The second year of a five-year commitment to fund manufacturing research at Oak Ridge is funded with a non-recurring grant of $3 million. A recurring appropriation of $95,000 funds an increase in assessment fees from the Federal Delta Regional Authority, which provides economic development assistance to counties in the Mississippi River Delta Region. The fourth year of a tourism marketing task force in the Department of Tourist Development is funded with a $5 million non-recurring appropriation. Six additional positions needed to improve food safety, public health, and consumer protection are funded with an appropriation of $2 million in the Department of Agriculture. The source of this funding is the agricultural regulatory fund. Producer grants given to eligible farmers through the Tennessee Agricultural Enhancement Program are increased by $1.1 million of which $698,300 is from state appropriation and $396,000 is from the agricultural regulatory fund.

Natural Resources and Regulation To reduce the maintenance backlog in state parks, a recurring appropriation of $4 million is recommended. Also in the park system, five positions funded with $441,500 are recommended to supplement existing staff at parks during peak attendance months. These new positions will work at multiple parks as attendance requires. A new preservation specialist position in the Historical Commission to assist in administering the federal National Historic Preservation Act is recommended and funded with $63,600.

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Budget Highlights

Various grant programs are funded with non-recurring appropriations, including the Healthy Start ($1.5 million) and Child Health and Development (CHAD) ($450,000) home visitation programs; sickle cell research by the Sickle Cell Foundation of Tennessee ($75,000) and the Methodist Healthcare Foundation ($50,000); the Health and Wellness Foundation ($3 million); the Tennessee Men’s Health Network ($50,000); and epilepsy programs ($103,100). In the Department of Mental Health and Substance Abuse Services, an appropriation of $5.5 million is requested to off-set the loss of revenue associated with changes in insurance trends for patients served at the state’s regional mental health institutes. Efforts to maintain Joint Commission on Accreditation of Healthcare Organizations (JCAHO) standards at Moccasin Bend Mental Health Institute are supported with an additional $1.5 million recurring. Also in the department, $1.3 million is requested to fund nine new drug recovery courts, two new veteran treatment courts, and three existing veteran treatment courts. There are currently 27 counties without access to recovery court services and this appropriation will make those services available to those counties. In the Department of Children’s Services, recurring appropriations of $5.2 million and 60 new positions related to the Brian A. Settlement Agreement are recommended. This amount includes a rate increase for private providers of services to children, a foster care rate increase, funds for growth in the adoption assistance caseload, 52 additional child protective services case managers, and other administrative costs.

Safe Communities An appropriation of $10.2 million and 102 new positions in the Department of Correction is recommended to fund administration legislation that will decrease admissions to state prisons by implementing a graduated sanctions system for violations of community supervision, including probation and parole. The legislation also increases the minimum period of incarceration for certain offenses such as aggravated burglary, drug trafficking, and domestic assault. Of the $10.2 million requested for this legislation, $9.6 million is recurring and $575,000 is non-recurring. Separate pieces of legislation that enhance sentencing for individuals convicted of bringing contraband into a state youth development center and for individuals committing TennCare fraud are funded with $66,300 and $63,100 respectively. Cost increases in contracts with non-state service providers are funded with $2.5 million. These contract increases include Hardeman County–Whiteville ($941,700), South Central Correctional Center ($736,300), and the Hardeman County Incarceration Agreement ($871,000). Cost increases in the state’s sex offender treatment program are funded with an appropriation of $1.3 million. New software for inventory and asset management is funded with $924,000. An amount of $600,000 is recommended to update Hepatitis C standards in the state’s prison system. A recommendation to add 12 state trooper positions to the Highway Patrol is funded with a recurring appropriation of $413,500 and a non-recurring appropriation of $739,200 for a total of $1.2 million. The Department of Safety will use some existing unobligated payroll dollars to

Budget Highlights

fully fund the 12 trooper positions. 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 million in the Department of Safety for maintenance and security upgrades.

Business and Economic Development An appropriation of $70.9 million is recommended for the Jobs4TN program in the Department of Economic and Community Development to create new opportunities for Tennessee’s workforce and to support the growth and retention of the state’s traditional jobs base. Of this amount, $15 million is recurring and $55.9 million is non-recurring. This appropriation is necessary to recruit new businesses and support workforce training, marketing, and education. A new Rural Development Initiative to assist rural communities and distressed counties was announced at the Governor’s Conference on Economic and Community Development in October 2015 and a non-recurring appropriation of $10 million is recommended to fund that assistance. Aid to eligible areas will include help with site development, community asset improvements, marketing, strategic planning, downtown revitalization, and technical assistance. The new initiative will increase the ability of rural communities to attract businesses and enhance local economies. The second year of a five-year commitment to fund manufacturing research at Oak Ridge is funded with a non-recurring grant of $3 million. A recurring appropriation of $95,000 funds an increase in assessment fees from the Federal Delta Regional Authority, which provides economic development assistance to counties in the Mississippi River Delta Region. The fourth year of a tourism marketing task force in the Department of Tourist Development is funded with a $5 million non-recurring appropriation. Six additional positions needed to improve food safety, public health, and consumer protection are funded with an appropriation of $2 million in the Department of Agriculture. The source of this funding is the agricultural regulatory fund. Producer grants given to eligible farmers through the Tennessee Agricultural Enhancement Program are increased by $1.1 million of which $698,300 is from state appropriation and $396,000 is from the agricultural regulatory fund.

Natural Resources and Regulation To reduce the maintenance backlog in state parks, a recurring appropriation of $4 million is recommended. Also in the park system, five positions funded with $441,500 are recommended to supplement existing staff at parks during peak attendance months. These new positions will work at multiple parks as attendance requires. A new preservation specialist position in the Historical Commission to assist in administering the federal National Historic Preservation Act is recommended and funded with $63,600.

xxvixxvi

Budget Highlights

Proposed administration legislation to assist local governments in the disposal of automotive fluid is funded with a $300,000 appropriation, of which one-half is recurring and the other one-half is non-recurring. Five new positions and $489,600 in non-recurring appropriation is recommended for the Department of Labor and Workforce Development to comply with statutory requirements pertaining to the permitting of certain amusement devices. After two years, the five positions will be funded with program fees. Also in the department, a new statistical research position with funding of $97,500 is recommended in the Division of Workers’ Compensation.

Pay For Performance and Employee Benefits To continue implementing pay for performance in executive branch agencies, an appropriation of $25.8 million is recommended. This amount is the equivalent of a 4 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, 2016, and the resulting salary increases will be effective on January 1, 2017. The six-month cost of these performance-based increases will be $25.8 million in fiscal year 2016-2017 and the annualized cost will be $51.7 million. Salary increases for state employees not covered by the Tennessee Excellence, Accountability, and Management (TEAM) Act will be funded with an appropriation of $4.2 million, which is the equivalent of a 3 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 also be effective January 1, 2017. The annual cost of this recommendation is $8.4 million. Market adjustments for certain job classifications are funded with an appropriation of $36.1 million. These adjustments are recommended to keep state salaries competitive with the salaries of similar jobs in the private sector and other non-state government agencies. Market adjustment salary increases will be effective July 1, 2016. Changes to state employee benefits include a January 1, 2016, 3.5 percent group health insurance premium increase annualized with an appropriation of $4.8 million. Six months of a projected 4.7 percent increase in group health insurance premiums effective January 1, 2017, is funded with $6.6 million. A Medicare supplement for retired teachers and state employees is funded with $8.9 million. That amount is the cost of providing a fixed contribution based on the retiree’s length of service. To encourage employee retirement savings, a recurring appropriation of $2.5 million maintains the state’s 401(k) monthly match at $50. For state employees losing their jobs as a result of position reductions included in the recommended budget, severance packages consisting of a base payment of $3,200 and college tuition assistance for two years (to be capped at the average of the highest four-year public Tennessee college undergraduate level) are funded with a non-recurring appropriation of $900,000.

Budget Highlights

Information Technology This budget recommendation also includes a plan to implement a new management structure for information technology services in state government. The new structure, known as Enterprise Information Technology (EIT) Transformation, was developed after consultation with private sector technology experts, state agencies, and the Office of Information Resources. This new initiative will implement a unified technology services delivery model that upholds uniform processes and standardizes methodologies under a single organizational structure. This will eliminate duplication of effort among state agencies and reduce information technology project failures. Following the recommendations of an information technology consultant, 25 new positions will be established in Business Solutions Delivery (BSD), a division of Finance & Administration. Those positions and recommended NextGen salary upgrades for existing staff will be funded with an appropriation of $5.8 million. The state’s Office of Information Resources will be re-named Strategic Technology Solutions (STS) and an additional seven administrative positions funded by state agencies are recommended for that division. Sixteen state agencies will be transferring approximately 300 existing information technology positions to BSD. NextGen salary increases for staff working on the state’s enterprise resource planning system, Edison, are funded with a revenue estimate of $1.1 million to come from state agencies. The Bureau of TennCare is requesting a new eligibility system to be funded with $8.3 million from the TennCare Reserves and $65.5 million in federal revenue for a total of $73.8 million. Non-recurring funding of $14.6 million is recommended for the Electronic Public Health Information (EPI) System. This new system will track and manage core public health services such as immunizations; primary care patient encounters; client visits; and Women, Infants, and Children (WIC) program clients. The EPI System will also include electronic medical record functionality, something not found in the antiquated Patient Tracking Billing Management Information System (PTBMIS) currently used by the department. An electronic medical records system is also funded in the Department of Mental Health and Substance Abuse Services with a non-recurring appropriation of $5 million and seven positions. This new system will be used by the department’s regional mental health hospitals to improve clinical, administrative, and financial operations. The Department of Revenue requests $12.7 million non-recurring and 16 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 Revenue department anticipates the new system will enhance customer service, increase productivity and efficiency, and offer opportunities to increase revenue collections.

xxviixxvii

Budget Highlights

Proposed administration legislation to assist local governments in the disposal of automotive fluid is funded with a $300,000 appropriation, of which one-half is recurring and the other one-half is non-recurring. Five new positions and $489,600 in non-recurring appropriation is recommended for the Department of Labor and Workforce Development to comply with statutory requirements pertaining to the permitting of certain amusement devices. After two years, the five positions will be funded with program fees. Also in the department, a new statistical research position with funding of $97,500 is recommended in the Division of Workers’ Compensation.

Pay For Performance and Employee Benefits To continue implementing pay for performance in executive branch agencies, an appropriation of $25.8 million is recommended. This amount is the equivalent of a 4 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, 2016, and the resulting salary increases will be effective on January 1, 2017. The six-month cost of these performance-based increases will be $25.8 million in fiscal year 2016-2017 and the annualized cost will be $51.7 million. Salary increases for state employees not covered by the Tennessee Excellence, Accountability, and Management (TEAM) Act will be funded with an appropriation of $4.2 million, which is the equivalent of a 3 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 also be effective January 1, 2017. The annual cost of this recommendation is $8.4 million. Market adjustments for certain job classifications are funded with an appropriation of $36.1 million. These adjustments are recommended to keep state salaries competitive with the salaries of similar jobs in the private sector and other non-state government agencies. Market adjustment salary increases will be effective July 1, 2016. Changes to state employee benefits include a January 1, 2016, 3.5 percent group health insurance premium increase annualized with an appropriation of $4.8 million. Six months of a projected 4.7 percent increase in group health insurance premiums effective January 1, 2017, is funded with $6.6 million. A Medicare supplement for retired teachers and state employees is funded with $8.9 million. That amount is the cost of providing a fixed contribution based on the retiree’s length of service. To encourage employee retirement savings, a recurring appropriation of $2.5 million maintains the state’s 401(k) monthly match at $50. For state employees losing their jobs as a result of position reductions included in the recommended budget, severance packages consisting of a base payment of $3,200 and college tuition assistance for two years (to be capped at the average of the highest four-year public Tennessee college undergraduate level) are funded with a non-recurring appropriation of $900,000.

Budget Highlights

Information Technology This budget recommendation also includes a plan to implement a new management structure for information technology services in state government. The new structure, known as Enterprise Information Technology (EIT) Transformation, was developed after consultation with private sector technology experts, state agencies, and the Office of Information Resources. This new initiative will implement a unified technology services delivery model that upholds uniform processes and standardizes methodologies under a single organizational structure. This will eliminate duplication of effort among state agencies and reduce information technology project failures. Following the recommendations of an information technology consultant, 25 new positions will be established in Business Solutions Delivery (BSD), a division of Finance & Administration. Those positions and recommended NextGen salary upgrades for existing staff will be funded with an appropriation of $5.8 million. The state’s Office of Information Resources will be re-named Strategic Technology Solutions (STS) and an additional seven administrative positions funded by state agencies are recommended for that division. Sixteen state agencies will be transferring approximately 300 existing information technology positions to BSD. NextGen salary increases for staff working on the state’s enterprise resource planning system, Edison, are funded with a revenue estimate of $1.1 million to come from state agencies. The Bureau of TennCare is requesting a new eligibility system to be funded with $8.3 million from the TennCare Reserves and $65.5 million in federal revenue for a total of $73.8 million. Non-recurring funding of $14.6 million is recommended for the Electronic Public Health Information (EPI) System. This new system will track and manage core public health services such as immunizations; primary care patient encounters; client visits; and Women, Infants, and Children (WIC) program clients. The EPI System will also include electronic medical record functionality, something not found in the antiquated Patient Tracking Billing Management Information System (PTBMIS) currently used by the department. An electronic medical records system is also funded in the Department of Mental Health and Substance Abuse Services with a non-recurring appropriation of $5 million and seven positions. This new system will be used by the department’s regional mental health hospitals to improve clinical, administrative, and financial operations. The Department of Revenue requests $12.7 million non-recurring and 16 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 Revenue department anticipates the new system will enhance customer service, increase productivity and efficiency, and offer opportunities to increase revenue collections.

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State of Tennessee

The Budget Document Introduction

Tennessee Code Annotated, Section 9-4-5106, requires that the financial plan of Tennessee's state government be presented in three parts:

1. Financial Policy – The state’s financial policy, contrasting the relationships b

Documents

Volume 1 Bill Haslam, Governor€¦ · STATE OF TENNESSEE The Budget FISCAL YEAR 2016-2017 Volume 1 Bill Haslam, Governor