Since January 2011, nearly 80,000 new jobs have been created in Tennessee, and the unemployment rate is the lowest it's been since October 2008. Tennessee ranks first in the Southeast in new manufacturing jobs created and first in the growth of manufacturing jobs in 2012. That's good news, but it doesn't mean we can take our foot off of the gas.
You've heard me say many times before that I don't believe government creates jobs, but I do believe it's our role to create an environment that encourages investment. Jobs are created when people are willing to risk capital. We want Tennessee to be as low of a risk as possible.
To provide certainty to businesses, we overhauled our tort laws. To build on those efforts, this year we're proposing legislation to reform our worker's compensation laws. During my first year in office, I held business roundtables across the state where we heard from businesses over and over that worker's comp is an issue in Tennessee. We spent last year working with stakeholders to find ways to improve our system with a focus on fairness to both the employee and employer, and we believe the worker's comp bill we're proposing does just that.
There are a lot of reasons for people to come to our state. From blues on Beale Street to racing in Bristol; from Dollywood and the Great Smoky Mountain National Park, to Market Square in Knoxville, to the Chattanooga Aquarium, to the Grand Ole Opry in Nashville and thousands of places in between. In Tennessee, tourism equals jobs. We have unique and popular assets across the state, and it's time that we do a better job of not only working to attract people to specific sites but to leverage our resources and have a strategic plan to market our state and tourist attractions. We are including $8 million for a statewide tourism fund to support the work of the tourism commission I appointed shortly after taking office. The industry is already working together in ways that have never happened before.
In everything we do, we look through the lens of delivering state services in the most efficient and effective way possible.
We've put a strong emphasis on customer service. As state employees, our job is to provide services to taxpayers that they can't get on their own.
Through the TEAM Act, we tackled state government's antiquated employment system and shifted our culture from an emphasis on seniority to a focus on performance. We're allowing managers to recruit the best and brightest to serve in state government, and we're establishing a merit-based pay system instead of only generic, across the board cost of living adjustments.
Now we're taking the next step in our mission to attract and reward top-notch employees. We want to continue attracting employees like Dr. Marion Kainer, an epidemiologist with the Department of Health.
Dr. Kainer played a central role in identifying the cause of the nationwide meningitis outbreak and getting the Centers for Disease Control and Prevention involved. Dr. Kainer camped out in her Nashville office, and worked around the clock for weeks. She told ABC News back in November, "I brought in an exercise mat, with a pillow and a blanket and a change of clothes."
Dr. Kainer, we'd like to thank you for your service to our state and to our nation during what was an extremely tense and scary time. Thank you.
And we know that Dr. Kainer wasn't the only one sleeping in her office over those weeks. She represents a team of hundreds of Department of Health employees who were committed to understanding a complex situation with a lot of moving parts, and communicating quickly to patients, colleagues, other states, citizens and the media as appropriate. I think that they saved countless lives.
To help us attract and maintain the best and brightest employees throughout all levels of state government, we have to look at compensation. This year we are including an across the board pay raise for state employees of one and a half percent. We've also followed through on our commitment to conduct a salary survey to identify positions throughout state government where we're not competing with the private sector. We're including a total of nearly $60 million to address necessary salary adjustments resulting from the salary study.
Our employees deal with complex issues. As we raise the bar in terms of expectations, we also have to be ready to pay them more.
As part of this process, the Treasurer has reminded us that the sustainability of our state pension plan has to be part of an overall review, so we will be working with him as we evaluate compensation and benefits.
I can stand up here all night and tell you what we're accomplishing, but what I think really matters is that we're measuring our results. Shortly after the State of the State last year, we unveiled a dashboard that tracks key indicators to measure how we're doing compared to other states. While state government doesn't directly impact all of the measures, we believe each one of them is an important benchmark to gauge the overall welfare of our citizens. Many of you know that I'm a runner and a bike rider. Although, one that's getting a little bit older. I can always talk myself into thinking I'm as athletic as I used to be, but my watch tells me I'm not. It instantly holds me accountable. This is what the dashboard will do. You can find it on our state's website at tn.gov.
Yogi Berra said it best, "If you don't know where you are going, you might wind up someplace else." It reminds me of when I coached pee wee T-ball. One of my five-year-olds made contact with the ball for the first time and ran straight to third base. That's not where we want to be as a state.
When we talk about where we are going, one of the most critical drivers is the state budget. How we spend taxpayer dollars should clearly reflect our priorities. These days it is hard to tell what may or may not come out of Washington. The federal government is famous for creating a program and then withdrawing the funds years later, which leaves state governments on the hook. Our philosophy is that if the federal government decides to quit funding a program, then unless there is an exceptional reason, we will not continue to fund that program with state dollars.
There has to be serious thought given to how government provides services, and in Tennessee we've started that process. But it can't be a matter of chipping away at the edges of business as usual or trimming back budgets.
A primary example is Medicaid. In this budget, TennCare costs will be $350 million dollars more this year than last year. That increase takes into account the higher cost of medical care, more people who qualify for Medicaid in tough economic times, and primarily, the impact of the Affordable Care Act. Expanding Medicaid is not reflected in this year's budget. I am hesitant to commit additional dollars to Medicaid when it's already eating up so much of our budget, and we have to remember what the state went through seven years ago when it made the difficult decision to cut a lot of people from the TennCare rolls.
We have to be very deliberate about making a decision to add that many and more back to the rolls, but I also understand that the decision isn't just as easy as standing here today and saying, "We're not going to expand Medicaid." There are hospitals across this state, many of them in rural communities, that are going to struggle if not close under the health care law without expansion, and that's not something to take lightly. Most of us in this room don't like the Affordable Care Act, but the decision to expand Medicaid isn't as basic as saying, "No ObamaCare, No expansion."
I plan to gather all of the information possible to understand the impact on our budget, the impact on community hospitals, the impact on health care in Tennessee, and the impact on our citizens. This decision is too important not to do that.
As we talk about health care costs, we also have to talk about the health of our citizens. This year Tennessee ranked 39th in overall health compared to 41st in 2011, and we rank 35th in obesity, which is also an improvement, but not good enough. When we talk about Medicaid costs consuming so much of our budget, improving the health of our citizens isn't only about their welfare but it's also about dollars and cents. We are in the process of working with local communities and business leaders to figure out how we can better partner to encourage healthy lifestyles across the state.
We are also supporting a partnership project between the University of Tennessee's Health Science Center in Memphis and St. Jude Hospital to recruit leading researchers from across the country to address critical issues such as childhood obesity.
We expect to receive funds relating to the tobacco arbitration settlement, and we are proposing to designate those dollars for programs that address health concerns related to disease prevention and also to air, water and environmental concerns, such as replacing the University of Tennessee's steam plant in Knoxville, one of the largest sources of pollution in Knox County.
Along with health care, other mandatory costs that often impact the state budget over a number of years are lawsuits. One of those lawsuits involves the Arlington Developmental Center in Memphis and has been ongoing for over 20 years. I am pleased to announce that the state has reached an agreement with the U.S. Department of Justice and the plaintiffs which was approved by the court just last week. Our budget includes $10 million for the Department of Intellectual and Developmental Disabilities to carry out the terms of the settlement agreement. Over the past two decades, this lawsuit has cost the state hundreds of millions of dollars. We are committed to care for Tennessee's most vulnerable citizens, and will continue to do so earnestly. I am grateful for Commissioner Jim Henry, the Attorney General's Office and the TennCare Bureau for all of their efforts to accomplish this significant milestone in moving past this lawsuit.
We are spending $48 million in Correction to compensate our local jails for housing more state prisoners. The department is working on a strategic plan to better predict and plan for our inmate population moving forward. These costs are another example of why our focus on education is crucial. The more educated our citizens are, the less problems we'll have with crime.
The rankings vary, but Tennessee was either first or second in violent crime last year. That is not something we are proud of and something we have to change. Shortly after taking office, I appointed a working group to take a comprehensive look at public safety issues. The group came up with a multi-year action plan to address three main goals: significantly reducing drug abuse and drug trafficking; curbing violent crime; and cutting the rate of repeat offenders.
The plan resulted in legislation last year focused on prescription drug abuse, domestic violence offenders, and violent offenders. This year we are proposing legislation to clarify the definition of gang offenses in actually making a list of them instead of relying on a vague interpretation of the current law. We believe this will give law enforcement more tools to curb gang violence. And we still have work to do on fighting meth and prescription drug abuse.
As we continue to fight the prescription drug abuse epidemic we face in Tennessee, we have to attack it from as many fronts as possible. We have model drug court programs in this state that are working, so our budget includes funding to expand these programs.
We are also investing in crisis stabilization units. We were all shocked by the events last December in Connecticut, and seeing those young faces and the faces of the teachers who sacrificed so much was heart wrenching. In the aftermath there has been a lot of talk about guns and schools, which is valid, but I also think there needs to be a larger conversation about mental health issues, identifying warning signs and getting people the help they need. These tragedies are larger than schools or movie theaters, and we want to commit resources to areas that will make a difference.
While we talk a lot about education, jobs and efficient and effective government, we also realize it's our job to provide vital services for those who can't provide for themselves — often times our most vulnerable citizens. We don't take that responsibility lightly. While we may have been elected on different issues and might focus on different missions, we all came to serve. I think we can all agree that caring for citizens who need it the most is a very important part of why we're here.
The Department of Children's Services will be upgrading nearly 200 case manager positions. This won't just be a matter of paying current employees more but raising the qualifications for those positions. Children's services deals with very difficult family situations, and we ask a lot of our caseworkers who are walking straight into these homes to protect Tennessee children. We should be paying them more, and we should also do a better job of setting them up for success by making sure they have the skills and experience it takes to do these emotional and difficult jobs. We are also putting more resources toward investigations and assessments in our Child Protective Services division.
Our military veterans have sacrificed more than most of us can ever begin to imagine. Veterans have more than earned our respect, gratitude and support. For those in this room that have served our country, I'd like to ask you to stand, so we can thank you for your service.
In continuing our commitment to a project we started last year, this budget includes more than $4 million for the Montgomery County veteran's home.
Another responsibility we take seriously is the long term fiscal health of our state. We understand the importance of saving for the future.
In 2008, the state's Rainy Day Fund was $750 million dollars. During the recession, it was taken down to $257 million. Working with the General Assembly, we've added nearly $100 million back to the fund over the two years we have been in office. I am proposing to put $100 million more into the Rainy Day Fund in this budget with the goal of ultimately reaching pre-recession levels. We've seen the realities of rainy days, and it is our responsibility to make sure the state is prepared for them in the future.
When dealing with serious issues that face our state, our approach is always going to be to put a lot of thought in getting to the right answer. Many times we're dealing with a conflict between two conservative principles, or situations where the answer might seem easy on the face of it but can have unintended consequences. Having strong values and principles doesn't preclude any of us from being deliberate and thoughtful.
For example, when it comes to judicial selection, it's no secret that I am strongly opposed to partisan, contested elections. And since taking office, my experience has been that the judicial selection commission has done its job in providing quality candidates. So for me this issue isn't about fixing something that isn't working, but instead, it is about hearing legitimate concerns and providing clarity.
A resolution will be before you this session to amend our Constitution. The amendment will do three things. It will continue judicial appointments by the governor, and our process will still be based on merit; it will preserve retention elections; and it will give the Legislature a process to confirm the appointments. I believe this provides clarity for those who have concerns about our current process. I also believe that it makes sense to preserve the current process until the people have a chance to vote in 2014. Making changes in the meantime does nothing but confuse the situation further.
Tennessee is unique in so many ways. We have so much going for us, and we know what our weaknesses are. It is up to us to address those weaknesses; those issues that Tennesseans care about. People want good quality jobs. People want their children to have the best education possible, and as a state we should want the same for those kids. One day they're going to be the ones that we hand the reins to. And taxpayers expect us to be good stewards of the taxes they pay.
People are disheartened by what happens — or it's probably more accurate to say what doesn't happen — in Washington. They're tired of all the talk about the problems our nation faces with not many people trying to work together to find solutions. Tennessee is different in that regard, and we want to keep it that way. Here in Tennessee, we're willing to make the tough decisions. We're willing to put politics aside and really focus on what's right for our state and citizens. That makes us different, and we shouldn't lose sight of those unique qualities.
One of my favorite movies is Butch Cassidy and the Sundance Kid, and one of the most memorable scenes is when Butch and Sundance are trapped at the edge of a cliff, high above a river, when the posse that's been pursuing them for hundreds of miles catches up.
Butch says, "Alright, I'll jump first." Sundance replies, "No."
"Then you jump first," Butch says, but Sundance says, "No."
"What's the matter with you?" Butch asks. "I can't swim," Sundance says.
"Are you crazy," Butch says, "The fall will probably kill you."
Sundance was caught up in his own issues and missed the big picture. It's our job to identify and focus on the real problems. We have this rare opportunity to make a difference. I know you feel like I do that every day we come to work in this building is a blessing and a privilege.
Let's remember what makes Tennessee so special. It's our responsibility to the citizens of this state to get it right, and this is our opportunity to be a part of something bigger than ourselves. That truly is service in the best meaning of the word.
Thank you and thanks for caring enough to give of yourself for a better Tennessee.