insights (2006-49)

Gov. Bredesen’s Incrementalism

The advent of a governor’s second term has traditionally been a time for bold initiatives. In 1991, Gov. Ned McWherter called for what became the Education Improvement Act that pumped hundreds of millions of dollars into the state’s public schools under a complex formula known as the BEP. In 1999, Gov. Don Sundquist made tax reform the centerpiece of his second term. Unfortunately, he failed to lay a firm foundation for his proposed state income tax, coupled with sales tax reduction, and its ignominious demise left taxophobes in political ascendance for probably many years to come.

Gov. Phil Bredesen has vowed repeatedly to live within the constraints of the state’s existing revenue structure. Still, the time would seem propitious for bold initiatives on his part as he starts his second term.

A robust economy is generating state revenue growth in excess of five percent for the initial months of the fiscal year that began July 1. When the State Funding Board meets on Dec. 15 to estimate revenues on which the governor will base his budget for the fiscal year ahead, even a four percent growth assumption would yield about $500 million in additional state revenues atop the $12.3 billion projected for the current fiscal year.

At the same time, the singular accomplishment of Bredesen’s first term is the clamp he placed on TennCare, whose rampant outlays had been sucking up an ever-increasing portion of state revenues. So most of the $500 million projected growth next year—and its continuation for as long as the good times continue to roll—should be available for other second-term initiatives, among which Bredesen has long singled out education as his top priority.

His upcoming budget address may bring a call for transformative change—a term he likes to use. Yet to judge by the tenor of his initial budget hearings on education last week, Bredesen seems to be thinking incrementally rather than transformatively.

His Pre-K program, in which he takes the greatest pride, is due to get a further increase from the $55 million that’s presently funding 531 classrooms serving 10,000 four-year-olds. An additional 200 classrooms at a cost of $20 million, he was told, would reach the rest of the children this age who are deemed to be at risk based on family income. And Bredesen vowed to seek removal of a legislative restriction against opening the program to those not at risk. But it wasn’t clear whether the additional $13 million needed to accommodate all four-year-olds whom surveys indicate would participate on a voluntary basis would be included in next year’s budget.

A $90 million increase in this year’s $4.3 billion in K-12 funding will be dictated by the BEP in its present form, due primarily to enrollment increases and inflationary factors. But as Bredesen observed, “The big issue is going to be the BEP funding formula…There’s a real sense of unfairness in some school districts that’s got to be dealt with in some fashion.” However, he doused the idea of reallocations, as recommended by the Tennessee Advisory Commission Intergovernmental Relations and others, to redress inequities in the formula that favor municipal school systems to the detriment of urban county systems such as Knox and Hamilton especially. “It might have been nice to have invented it that way 14 years ago… but it would just be a total disaster to try to make that happen now,” he said.

While the governor said he’s “going to be spending a lot of late nights” on BEP revisions over the next three months, most of the discussion at the budget hearing centered on making supplemental allocations to all school systems based on their enrollments of at-risk students and English language learners. The state has been incrementally increasing the percentage of such students covered by those supplements to 40 percent this year. Covering all of them would cost an additional $120 million, but don’t bet on it happening in a single year or even two. The governor’s other identified priority in the K-12 arena is increasing high school graduation rates from 78 percent at present to a goal of 90 percent statewide. While Bredesen can wax eloquent about the needs for a better-educated workforce, his only concrete proposals to date consist of a rudimentary stick and a somewhat surprising carrot.

The stick is placing an attendance officer in every high school at a cost of some $25 million in the belief that corralling students with high absentee rates will get more of them to graduate. For those who do, he’s proposing to offer free tuition at the state’s community colleges. “You may not qualify for a lottery scholarship, but if you have a coverage or its equivalent, we’ll pay your way to go to a community college and let you get started,” he has said. The governor’s office has placed a $20 million cost on that initiative. What’s surprising about it is that the $2,500 cost per student exceeds the $1,900 lottery scholarships for which A and B students who attend community colleges are eligible.

Where higher education is concerned, Bredesen noted that the state’s public universities are only funded at 84 percent of what it would take to equal their peers in other southern states according to a Tennessee Higher Education Commission formula. THEC has stated that “the state appropriation formula need for FY 2007-08 is $1,129,355,800 which is $220,429,000 or 24 percent greater than the FY 2006-07 recurring appropriations.”

Yet at the budget hearing, THEC only proposed a 4.1 percent, $37 million funding increase, which equals the increase provided by the Legislature for the current fiscal year, and even that exceeded Bredesen’s recommendation.

UT’s share of the $37 million would appear to come close to covering what President John Petersen has made his top state funding priority: namely, a 5 percent faculty pay raise. But this coverage is dependent on Petersen’s assumption that 40 percent of the raises will be derived from tuition increases. For the past two years, Bredesen has been paying lip service to the goal of making UT one of the top 10 public universities in the nation. And it’s true that he has contributed in other ways to furthering the university’s partnership with Oak Ridge National Laboratory by providing funding for new research facilities and a cadre of 15 “world class” scientists only one of whom has been recruited. But it’s going to take a lot more than incremental (i.e. 4 percent) increases in UT’s operating budget to begin to fulfill a top 10 goal.