Here is the full text of Gov. Bill Haslam's prepared remarks in his State of the State address to a joint session of the General Assembly on Monday:
Lt. Gov. Ramsey, Speaker Harwell, Speaker Pro Tem Watson, Speaker Pro Tem Johnson, members of the 108th General Assembly, justices, constitutional officers, commissioners, friends, guests, fellow Tennesseans, and always my favorite first lady, Crissy:
Every day, I feel honored and blessed to have the opportunity to serve as governor of this great state, and I particularly appreciate the invitation by the 108th General Assembly tonight to report on the state of our State.
I'll begin with something we all know - Tennessee is different. We're known as the Volunteer State. We have a history of independence and service. Over the years, we've been intentional about avoiding the traps that Washington, D.C. and other states have fallen into that have gotten them in trouble time and time again.
Unlike the news coming out of our nation's capital and so many other states around the country, good things are happening in Tennessee. Barron's Magazine has named us the third best-managed state in the country. We are ranked among the lowest when it comes to the state and local tax burden on our citizens as well as the debt per capita. We are a triple-A rated state, and our most recent bond sale was done at the lowest interest rates in recorded history. The unemployment rate continues to fall, and family incomes continue to rise. CNBC ranks us 4th in America for transportation and infrastructure and 2nd in cost of living. And we've been ranked the best place in the country to retire. Tennesseans are some of the most generous in the United States - we rank 4th in charitable giving.
So what makes Tennessee different? Why are we coming out of one of the worst recessions this country has ever seen in a place of strength? I believe it's because we think differently. We have a long history of fiscal restraint that crosses party lines. We have been deliberate about not spending money that we don't have and in making a concerted effort to save for the future. A good example was last year when there was temptation for some to quickly commit and spend funds that were coming in above estimates, but in the tradition of our state's discretion, we held the line. And now we are well-positioned to continue to invest in a thoughtful, strategic manner.
Unlike Congress, this body is willing to make hard decisions. You've voted to cut the budget; you've voted to make key investments; and you've voted to set reserves aside for the future. You've also given Tennesseans their money back by cutting taxes, and you've given the executive branch the necessary tools to run government better.
We are committed to transforming state government so that our customers, Tennessee's taxpayers, are the primary focus. A good example is our driver's license centers. The budget I'm proposing tonight contains funding to put more resources toward lowering wait times across the state.
Two years ago, I stood up here and said that we would be working hard to speed up the process to receive a license, and we're making progress. At the Fayette County center, wait times went from an average of 38 minutes in 2011, to 30 minutes in 2012, and only 18 minutes in the month of December. Tonight, I'd like you to meet Patsy Echols, the manager of that center, named Center of the Year for 2012. Patsy, thanks to you and your team for giving our customers — Tennessee's taxpayers — great service.
In Tennessee, we are different. We have a lot to brag about, but this isn't the time to coast along or to be satisfied. This is a time to take advantage of our strengths and face our challenges head on, and I look forward to the executive and legislative branches working together on the issues that matter to Tennesseans.
I believe we have to begin this evening by addressing the elephant in the room — or I guess I should say the elephants in the room. There are a lot of expectations and preconceived notions about how our Republican supermajority is going to govern. There is a narrative already being written for us this legislative session: Republicans will be fighting internally, and Democrats will be focused solely on playing politics instead of working across the aisle to find common ground for good government. But I think that makes caricatures out of us and sells all of us short.
We're not always going to agree on what good policy is, and the way democracy works is that people in this room were elected for different reasons and often times because of specific issues, but can't we all agree that in the end, the focus should be and will be on a better Tennessee?
Howard Baker, a senior statesman from Tennessee who served as Majority Leader of the U.S. Senate and chief of staff to Pres. Ronald Reagan always says, anytime he was sitting across the desk from someone in disagreement, he told himself to keep in mind, "You know — the other fellow might be right."
As we go through this legislative session, I ask everyone in this chamber this evening to keep in mind what Senator Baker said: "The other fellow might be right." Tennesseans don't want us to be like Washington. They don't want continuous conflict. They do want principled problem solving.
Over the past two years, we've made a lot of progress in working together. We balanced two budgets in tough economic times with less funding from the federal government, which by the way I believe is a good thing. It's critical that Washington gets serious about getting our country's financial house in order. And in Tennessee, we're prepared to manage state government accordingly.
In talking about the budget, it's also important to talk about what we did not do to balance the budget the past two years. We didn't raise taxes. In fact, we lowered them. We cut the state portion of the sales tax on food from five and a half percent to five and a quarter percent, and we're proposing to lower it to five percent this year. We're phasing out the inheritance tax, eliminating it entirely by the year 2016 to help small business owners and family farmers keep those businesses in the family from generation to generation. We've eliminated the gift tax, and in 2011, we reduced the burden of the Hall Income Tax on seniors.
We are proposing to cut the Hall tax even further this year by raising the exemption level for people over 65 from $26,000 to $33,000 for individuals and $37,000 to $59,000 for joint filers. We are also providing tax relief for low-income seniors, veterans and the disabled by fully funding the growth of the property tax relief program.
Another important thing we did not do to balance the budget was to cut education funding. Not only did we not cut funding, we had the second largest increase in state K-12 expenditures of all 50 states in fiscal year 2012. I'm not sure that Tennessee has ever been able to say that before. The average increase was nearly 3 percent. Ours grew almost 12 percent in state education funding. Education is another example of how in Tennessee we're distinguishing ourselves as different from the rest of the country.
Some have said that this administration and General Assembly aren't committed to public education, but that could not be further from the truth. We are literally putting our money where our mouth is, even when other states haven't done so through tough budget times. This administration is absolutely committed to public education and understands that the large majority of our students attends public schools and always will.
That's why we've fully funded the Basic Education Program the past two years and are doing so again this year. That's why tonight I'm announcing that we will invest $51 million to assist locals in paying for technology transition upgrades in schools across the state — a substantial and strategic investment in our schools. Another $34 million is budgeted to address ongoing capital needs that can be used for increased security measures if local officials decide to do so. And more than $35 million is budgeted for teacher salaries. We're also providing $22 million for a new high school for the Tennessee School for the Deaf in Knoxville.
Our administration's three budgets have certainly supported our commitment to public education, but I also think it's important to note that we're not just throwing money at it. Dollars alone don't lead to improvement. There has to be a plan. Along with strategic investments, we're pursuing real reform in education that is producing results.
We've addressed tenure so that a principal doesn't have to decide after three years to either fire a teacher or grant tenure. There is now a five year time period for the principal to use data more effectively to assess a teacher's performance and then allow time to give that teacher the additional support that he or she needs to improve to earn tenure.
We've expanded charter schools to eliminate the cap on the number that we can have in Tennessee and to offer more students the opportunity to attend a charter school.
This year we're proposing to offer another option for school choice through a program to allow low-income students in our lowest performing schools a chance to receive a better education. I've heard the argument that this kind of program will drain resources in the schools that need them the most, but we're focusing resources on those schools. Last year, we committed $38 million over three years to schools in the bottom 5 percent of the state. This year we're adding $9 million more. So we're investing $47 million, over and above annual funding, to those schools to help them improve. Not only are we not draining resources from them, we're giving them additional support.
I expect this proposal will be hotly debated, but after taking a careful look at the issue and how a program might work in Tennessee, I believe a limited approach that gives more choice to parents and students stuck in difficult situations makes a lot of sense. If we can help our lowest income students in our lowest performing schools, why wouldn't we?
To us education should be first and foremost about our students, it's not about systems. And in the end we know that all of the money or education reforms in the world aren't ultimately what impact the education of our children. It is the great teacher that stands before a classroom every day and commits to making sure the children in his or her classroom are learning.
It hasn't always been easy as we've moved to higher standards of accountability. But shouldn't we all — parents, educators, legislators, and the governor — be accountable when something as important as our children's future is at stake?
In Tennessee, 55,000 more students are proficient or advanced in 3rd through 8th grade math than they were two years ago. There are 38,000 more students that are proficient or advanced in science. Tennessee is one of only two states making double-digit gains in high school graduation rates, and we saw the largest aggregate gains ever in our TCAP testing scores last year.
Tonight, I'd like for you to meet one of the many teachers across the state on the front lines of making this happen. Hope Malone is a 5th grade teacher at Avoca Elementary School in Bristol. She is a reward school ambassador that will spend this year sharing best teaching practices with other teachers and schools across the state. After moving from teaching 2nd grade to 5th grade several years ago, she had a tough adjustment period. She pursued technical assistance and grew to become a level 5 teacher — the highest rating in our evaluation system — in two years. Hope, thank you for your commitment to your students and for your willingness to share what you've learned with others.
With the progress we're seeing in K-12 education, the time is right to include post-secondary education in our focus. Over the past 30 years, Medicaid costs have continued to squeeze out other priorities, and higher education has been an area that has suffered as a result.
With repeated tuition increases year after year, we risk pricing middle class families out of the market for a college education. We must address cost. We have to make a college education more accessible, and we have to make sure that we have quality programs in Tennessee.
I've spent a lot of time over the past year learning all I can about these issues — on a national level and what's happening here in Tennessee. These aren't challenges that we're going to solve overnight.
But like in K-12 education, Tennessee is getting attention on a national level for our efforts in higher education. Last fall, Time Magazine highlighted our Complete College program as a model for other states. In the past, the state has provided funding for our colleges and universities based on enrollment. Today, we base funding on the number of students who are actually graduating. This shift puts the focus where it should be — on graduates. And because we're seeing results, this year's budget fully funds, for the first time, the Complete College Act outcomes formula.
The leaders of the Tennessee Board of Regents and UT system have pledged that because of this funding, they will limit tuition increases to no more than 6 percent at four-year schools and no more than 3 percent at two-year schools. That will provide relief to Tennessee families that have faced double digit tuition increases for too long.
But even with this progress, we still have a lot of work ahead of us. Only 32 percent of Tennesseans have earned an associates' degree or higher. That's not good enough. Our goal is to move the needle so that Tennessee is on track to raise that number to 55 percent by 2025. Tonight we begin our "drive to 55" — a strategic initiative to have the best trained workforce in America.
To do that, we must improve affordability and access in higher education. To help us achieve this goal, we're partnering with Western Governors University to establish "WGU Tennessee." It is an online, competency-based university that is geared to the 800,000 adult Tennesseans that have some college credit but didn't graduate with an associate or four-year degree. The program is unique because of its competency-based curriculum but also because of an emphasis on mentors who guide those adults through the academic process.
On the affordability front, we are proposing to establish an endowment of $35 million using operational reserve funds from the Tennessee Student Assistance Corporation (TSAC). It is designed to provide nearly $2 million each year to support scholarships for "last dollar" scholarship programs such as tnAchieves. These scholarships fill the gaps between students' financial aid and the real costs of college including books, supplies, room and board.
Last summer, I traveled the state visiting with employers and educators about ways we can do a better job of matching the skills we're teaching our students with the real-life skills that employers are looking for to fill jobs. Out of those conversations, one thing I heard consistently is that our technology centers are having a lot of success. They're graduating nearly 79 percent of their students, and close to 80 percent are getting jobs, and there are jobs available for the specific skills they're preparing their students for in communities across the state. Their challenges are with capacity and equipment. To help them train more people to fill demand of Tennessee employers, $16.5 million are in the budget for equipment and technology related to workforce development programs at our technology centers and community colleges.
We're also funding a new technical education complex at Northeast State Community College in the Tri-Cities that will be directly tied to advanced manufacturing in the region. The budget also allows for a much-needed multi-purpose classroom and lab building at Nashville State Community College as it continues to grow exponentially in Middle Tennessee.
Another constant theme we heard in our statewide discussions is that there is no substitute for direct and timely communication and cooperation between businesses and educational institutions. I am really excited about a new state-of-the-art technology center in Smyrna that represents a unique public-private partnership with Nissan. The center won't only be committed to training employees to work at Nissan but will teach the skills that other area businesses need as well. This project is exactly what we need to be doing across the state to directly link Tennesseans to high quality jobs by being deliberate in providing relevant training for those jobs.
And there are other good things happening in Tennessee in this regard, such as, The Degree Compass program at Austin Peay University. This program is designed to predict the subjects and majors in which students will be most successful. The model combines hundreds of thousands of past students' grades with current students' transcripts to make an individualized recommendation. It's inspired by companies like Netflix, Amazon and Pandora that tailor their recommendations to what their customers are looking for. That's exactly what we should be doing. Helping our students find the subjects and skills that are avenues for success.
The Degree Compass system has gotten national attention. I'd like to take this opportunity to recognize Austin Peay Provost Dr. Tristan Denley for his innovation in developing this system. Thank you for being here and for your efforts on behalf of our students.
We are continuing our commitment to put dollars toward strategic capital investments that have been on hold for far too long. We're putting $60 million toward maintenance of our educational institutions across the state, and nearly $250 million is budgeted to fund key projects. Along with the technology center and community college projects I mentioned earlier, the budget includes nearly $45 million to build a new Community Health Facility at the University of Memphis for audiology, speech pathology and nursing.
The University of Tennessee Health Sciences Center in Memphis will receive nearly $62 million to renovate a four building complex that will house research labs and administrative offices.