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Business and Economy Education News Tax and Budget

Haslam Takes Up Task of Trimming Down Spending

Gov. Bill Haslam kicked off a four-day stretch of departmental hearings Monday as a warm-up to drafting his first state budget.

The new governor digested spending-plan projections from some heavy fiscal hitters right off the bat, including the Departments of Health, Education and Higher Education, which all had to present budget scenarios with reductions of 1 percent and 2 percent.

“We have 23 departments, if you add up all the requests, it will be a number obviously that we can’t fund,” Haslam said during a short break between hearings. “It’s their job to request that and to prioritize that … and then we have to wade through that at the end of the day.”

Haslam said he’s confident there’ll be fewer employees on the state payroll under his budget plan. But he said reductions need to be made “surgically” instead of by slashing staff with massive layoffs.

Haslam also heard from the Departments of Tourist Development and Financial Institutions Monday. On Tuesday, he is scheduled to hear from the Education Lottery Corporation and the Departments of Environment and Conservation, Transportation, Labor and Workforce Development, Corrections, Veterans Affairs, General Services, Commerce and Insurance, and Economic and Community Development. Hearings are expected to continue through Thursday morning.

Here are some highlights from Monday’s hearings:

Education

Education officials proposed an increase of $423 million in the state-funded portion of its budget, bringing the overall budget to $5.1 billion. Acting Education Commissioner Patrick Smith said the increase includes pay rasies and increased state funding to schools mandated by inflation and the state’s school funding formula.

Haslam told reporters that he’s committed to fully funding schools as called for under the formula, known as the Basic Education Program.

“If you look at new dollars that are available in the state, at the end of the day, about half of them will be end up taken up in (Basic Education Program) formula and TennCare increases, just by formula, not by doing anything different,” he said.

Smith outlined about $3.5 million in possible cuts, which would eliminate positions and supply costs. The proposal would also reduce operating costs for the state’s schools for the blind and deaf, cut grants that support public television stations operated by schools and reduce other programs. Without additional funds, about $70 million in other programs and grants paid for with one-time money will be cut.

The total education budget is estimated to decrease this year by about $510 million because of a $1 billion reduction in federal funds.

Tourist Development

State tourism officials say they want to build two new “Welcome Centers,” even though all departments have been asked to propose reductions to their annual budget as one-time federal stimulus dollars run out this year. According to the department, the state currently operates 14 Welcome Centers across the state.

They described plans to build a center as part of a solar farm in Haywood County, and another visitor center along I-26 in Sullivan County.

Haslam questioned the expansion plans: “I’m just wondering why, in tight times, we’re adding them.”

The centers had “been on the books for 10 years,” and the planning and funding had been approved for several years as well, Department Commissioner Susan Whitaker said.

Health

Haslam opened his first budget hearing with Commissioner of Health Susan Cooper, who emphasized the department’s role in instilling good health into all environments and not specifically focused on individual clinical care. She addressed disease prevention and outbreak investigations, immunizations, licensing facilities and emergency preparedness.

The department employs roughly 3,000 people.

She noted that in 2005 the state ranked 48th in the nation in health status but is now 42nd, crediting decreased use of tobacco and returns on investment in community efforts to fight diabetes.

Haslam set the tone early that he would ask many questions along the way, frequently interjecting and asking if stimulus funds had been involved in expenditures.

Cooper noted that good health factors can be attractive to new businesses. She outlined a base budget of $539 million.

The department offered several potential budget reduction areas such as travel, cutting communications costs, abolishing a few positions and eliminating a hemophilia program, which she quickly added would require a change in statute.

Higher Education

Joe DiPietro, president of the University of Tennessee, and John Morgan, chancellor of the Tennessee Board of Regents made their first budget appearances since taking their new positions. The message they gave Haslam was that while there are great financial challenges facing the system, the state has high value in its higher education institutions.

Richard G. Rhoda, executive director of the Tennessee Higher Education Commission led off the presentation and underscored the financial crunch by telling Haslam that in the last 10 years enrollment at the state’s four-year schools has gone up 22 percent but that they have seen appropriations fall 33 percent. At the same time, tuition and fees have risen 74 percent.

Meanwhile, Rhoda said, enrollment at two-year schools is up 38 percent during that period while appropriations are down 26 percent. But in that time, tuition and fees for those schools have risen 126 percent.

Morgan said space constraints are a serious problem at many of the state’s technology centers. DiPietro said one issue facing UT is that some buildings are over 40 years old and in need of repairs. When Haslam asked the higher ed panel if they had any creative ideas to address the financial stress on the system, one possibility Morgan raised was to apply means-testing to the HOPE scholarships derived from the state’s lottery. Haslam said after the hearing he is not ready to take such a step.

Reid Akins and Mike Morrow contributed to this report.

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Press Releases

Haslam Appoints Georgia Corrections Official to Top DOC Post

Press Release from Gov.-elect Bill Haslam; Jan. 7, 2011:

NASHVILLE – Tennessee Governor-elect Bill Haslam today announced Georgia Department of Corrections Assistant Commissioner and Chief of Staff Derrick Schofield as Commissioner of the Tennessee Department of Correction.

Schofield will oversee the state’s corrections system comprised of 14 prisons, more than 20,000 inmates of varying needs and more than 5,000 employees.

“I’m incredibly pleased that someone of Derrick’s talent has agreed to be a part of my team,” Haslam said. “Housing and rehabilitating our state prisoners is an enormous responsibility, and I believe Derrick is the right man for this important job.”

Schofield was named Georgia Assistant Commissioner of Corrections in 2009 and has 19 years total experience in the field working his way up and gaining more and more responsibility in Georgia Corrections as his career progressed.

“I’m honored and humbled to come to the great state of Tennessee and to serve with Gov.-elect Haslam,” Schofield said. “I look forward to having a long-term relationship with the department and with Tennesseans.”

Schofield is a native Georgian and received a bachelor’s degree in Political Science from Fort Valley State University. He then spent eight years with the U.S. Army and reached the rank of Captain. He also has a master’s degree in Public Administration from Georgia’s Law Enforcement Command College and Columbus State University.

Schofield, 50, and his wife of 20 years, LaTrese, have three children.

For more information, please visit www.billhaslam.org.

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News

Lawmakers Eye Cuts To Inmate Worker Program

Legislators looking for places to arrest government spending may target a program that modestly compensates prison inmates for performing job-like duties while serving time.

The $4.2 million program pays inmates between 17 cents and 59 cents an hour to perform menial work like kitchen clean-up and custodial jobs, according to the Tennessee Department of Corrections.

“We do think it provides an incentive for inmates to participate fully in programs and their work assignments. It gives them the opportunity to purchase items from the commissary, purchase books, different things and pay some obligations that they have,” Debra Inglis, DOC general counsel,  told lawmakers at the House Consumer and Employee Affairs committee last week.

But “given the financial situation of the state,” lawmakers should reexamine the necessity of the inmate workers program, said Rep. Donna Rowland, R-Murfreesboro.

“I’d really like to look at things we’re spending money on that are not required by us, by law, to do,” said Rowland, secretary of the consumer and employee committee.

Corrections pays out about $350,000 a month to non-maximum security inmates for working several assigned duties during their sentence. Those jobs range from washing laundry and doing yard work to operating as library assistants, recreation specialists and barbers.

The money they make, which is deposited monthly into an inmate’s trust fund, helps pay for items like stamps, copies of legal documents, court costs and outside obligations such as child support.

“That’s a pretty good chunk for people who are really costing our system, isn’t it?” asked Rep. Stacey Campfield, R-Knoxville.

Corrections has been paying inmates for at least the last 40 years, said Dorinda Carter, a department spokeswoman. She said the program combats inmate idleness and assists in rehabilitation by creating a solid work ethic.

“This is the first time some of the inmates have ever worked in their lives so hopefully they will use these skills upon release,” she said.

Between the state’s 14 prisons, 15,482 inmates participate in the program. Corrections currently houses 20,194 total inmates.

Rep. Johnnie Turner, a Memphis Democrat, said it’s important that the state find ways to motivate inmates to become productive citizens. She said she liked that this program was one of them.

Lawmakers are currently molding next year’s $28.4 budget. The fiscal year begins July 1, and lawmakers hope to decide on a budget by the end of April.

High unemployment numbers, lower-than-expected tax collections and an anticipated drop off of federal stimulus funds are throwing this and the next state budget about $1.5 billion out of whack. Now lawmakers have to figure out how to bring the budget into balance, given the gap between anticipated revenues and state spending.

State revenues are $232 million less than expected this fiscal year. The state still has five months left to go before closing out the budget cycle.

Economic prognosticators expect next year’s revenues to also be lower than normal.

Gov. Phil Bredesen proposed chopping off $394.2 million from next year’s budget, which includes a $6.3 million cut in the Department of Corrections.

Andrea Zelinski can be reached at andreazelinski@tnreport.com.