FISCAL YEAR 2019 RECOMMENDED BUDGET...14 •Adds additional treatment, prevention, & law enforcement options to address the opioid crisis. •Funds increasing healthcare costs for

FISCAL YEAR 2019 RECOMMENDED BUDGET

FY19 Budget Objectives

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• Address opioid crisis.

• Improve education funding, including teacher compensation.

• Fund increasing healthcare costs.

• Increase pay of health & social services care providers.

• Reduce deferred maintenance backlog.

• Increase Rainy Day Fund.

• Reduce long-term vacant positions.

• Follow guidelines to maintain AAA bond rating.

FY19 Budget Overview (millions)

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Revenues & Expenditures Recurring Non-

Recurring

Available Revenues $460.2 $436.6

Cost Increases ($568.0) ($475.6)

Preliminary Base Adjustments $29.5 $0

Budget Reductions $78.6 $40.0

Balance $0.3 $1.0

Tennessee Together Opioid Initiative

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Treatment $10,225,000 Law Enforcement $2,441,300 Prevention $1,857,500

Total Tennessee Together $14,523,800

* An additional $15.4 million is available from existing funding and federal resources.

K-12 Education Investments (millions) Total New State Funding: $211.8

BEP Teacher Compensation $55.1 BEP Retirement & Insurance $50.0 BEP Growth & Inflation $48.8 BEP Current Year Enrollment Growth $18.0 BEP Response to Intervention $13.3 Priority Schools Improvement Grants $10.0 Charter Schools Facility Fund $6.0 Read To Be Ready – Year Three $4.5

Highlights

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Higher Education Investments (millions)

2.5% Salary Pool $37.0 Operational Costs $28.6 Student Assistance Awards $10.0 Group Health Insurance $6.1 University Research Fund $5.0 Advise TN $2.5 College Coaching $1.3 Veteran Reconnect Grants $1.0

Total New State Funding: $99.1 Highlights

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TennCare Investment (millions) Total New State Funding: $140.3

Medical Inflation & Utilization $51.4 Eligibility Systems Development $36.7 Increased Pharmaceutical Costs $17.1 Health Insurer Fee $11.1 Medicaid Management Information System (MMIS) $10.9 ECF CHOICES – Additional Slots $7.3 Medication Therapy Management $1.7

Highlights

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Job Growth Investments (millions)

FastTrack Job Development $80.0 Rural Development Fund $12.5 St. Jude’s Children’s Hospital $12.0 Broadband Accessibility Grants $10.0 Film & Entertainment Commission $3.2 Launch TN Grants $3.0 Oak Ridge Manufacturing Research Grant $3.0 Rural Opportunity Fund $2.0

Total New State Funding: $128.3 Highlights

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Other Key Investments (millions) State Employee Health Insurance & Retirement $31.8 State Employee 2.5% Salary Pool $25.8 New Inmate Medical Contract $15.5 Revenue & Tax Collection System Replacement $10.6 Private Providers of DIDD, MHSAS, & DCS Services $10.5 Aeronautics Economic Development Fund $10.0 Indigent Defense & Guardians ad Litem Rate Increase $9.7 Tobacco Prevention Grants To Counties $4.0 New State Museum Operational Costs $3.5 Courtroom Security Grants $1.0

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Capital Investments (millions)

Capital Recurring Non-

Recurring Total

Improvements $13.0 $96.2 $109.2

Maintenance $0 $88.4 $88.4

Total Capital Investments $13.0 $184.6 $197.6

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Rainy Day Fund (millions)

$453

$284 $306 $356

$456 $492

$568

$668

$800 $850

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

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FY18 Supplemental Appropriations (millions)

Capital Grant – DENSO $20.0

FastTrack Grant – Tyson Foods $18.0 Health Access Incentive Program $3.0 Rent Adjustment – Cordell Hull Building $1.6 Middle TN RMHI - Accreditation $1.2 Historic Preservation – Restoration of Reserve $1.2 Legal Expenses – Pending Lawsuit $1.0

Total Supplemental Funding: $46.0

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Funding By Fiscal Year (billions)

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$16.0 $17.9 $17.7

$12.3 $13.6 $13.9 $5.6

$5.8 $5.9

$0

$10

$20

$30

$40

Actual FY17 Estimated FY18 Recommended FY19

State Federal Other

$37.3 $37.5 $33.9

Key Takeaways

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• Adds additional treatment, prevention, & law enforcement options to address the opioid crisis.

• Funds increasing healthcare costs for state employees and clients of the state.

• Improves funding for K-12, Higher Education, & Job Growth.

• Reduces state appropriations by $216.6 million and base positions by 335.

• Increases Rainy Day Fund to $850 million.