Folks I suggest you read this in addition to Acting President Fly's e-mail.

Marvin

Report to the UT Alumni Public Affairs Committee
From: Tom Ballard, Vice President for Public and Governmental Relations
Date: February 18, 2002
________________________________________________________________________________________
The General Assembly takes a break today to commemorate President's Day,
then begins the seventh week of the second session of the 102nd General
Assembly on Tuesday with committee meetings only. In fact, the House of
Representatives is not scheduled to return for a full floor session until
Monday, March 11. The Senate does not have any floor sessions slated this
week but is scheduled to resume them next week. Senate and House committees
will meet during this unusual three-week period with the House Finance
Committee beginning budget hearings on Wednesday. Higher education's budget
hearing with the House Finance Committee is set for 1:30 p.m. Wednesday,
March 6.

The break comes after initial hopes that the long-standing logjam on
revenue was about to be broken. Many legislators, as well as those who
observe them, pointed to several early signs of progress -- a bipartisan
resolution to legislative redistricting, the series of meetings at the
Executive Residence with the Governor and legislative leaders, and
agreement among those attending these meetings about the amount of revenue
needed for the 2002-2003 budget. However, by early last week, the optimism
had changed, and hopes for an adjournment date in April or early May began
to evaporate. "Rank and file" legislators were even talking about a session
that might last longer than last year's marathon one that produced two
budgets, the last one approved initially on July 12 and again on August 7
in a veto override session.

Amid this environment, House Finance Committee Chair Matt Kisber and Senate
Finance Committee Vice Chair Jim Kyle have announced plans to release "no
new revenue" budgets either this week or next. In the current issue of the
"Nashville Bureau REPORTER" newsletter, Editor Joe White quotes Chairman
Kisber as saying, "It (the 'no new revenue' budget) would be one of the
most irresponsible acts that any member of the legislature could embark
upon if they were to seriously consider this proposal as one that should
get us out of this session and out of next fiscal year." In other
publications, Chairman Kisber has noted that he would not vote for the
plan; it's that bad.

Since the "no new revenue" budgets are likely to be the "talk of the town"
for the next few weeks, I'll try to put them in context for you in terms of
UT. At this stage, we have not seen any of the proposals.

1. First, let's look at what the Governor proposed for UT in his 2002-2003
budget.

It provides $14,617,800 in much needed improvements for colleges and
departments whose operating budgets have been reduced for years.

It provides the second installment of $7,500,000 for the UT research
initiative launched two years ago. (No monies were provided in the
current year's budget, yet the nine centers at Knoxville and Memphis
have already generated almost $53 million in grants.)

It provides about $6,000,000 in funds to replace instructional and
research equipment and to upgrade technology.

It provides funding for the renovation and expansion of the Glocker
Business Administration Building in Knoxville and a first-ever
dedicated building for the College of Pharmacy at Memphis.

It provides a 3.5% salary increase for faculty and staff.

These items are part of the $421 million in "improvements" for all state
programs that the Governor included in his budget recommendation. All of
those for UT would surely go in a "no new revenue" scenario, and the
impact of another year of no improvements would be significant. But
that's not all that could happen to UT.

2. Next, let's consider what the state needs to keep going with no
improvements next year.

By most accounts, the state needs around $850 million in new revenue
next year to:

Address this year's estimated budget shortfall of $350 million;

Offset the $230 million of one-time monies used to fund the current
budget; and

Fund $270 million or so for mandatory increases in court-ordered
programs.

The projected revenue growth from existing sources for next year is
about $190 million. This leaves the legislature having to find a minimum
of $660 million in new revenues or some combination of new revenues and
cuts to existing programs just to keep the state operating at its
current level of services. The options are dismal.

3. Finally, let's consider the implications for "no new revenue."

K-12 and higher education account for 43% of the state's tax
collections. Other major portions of the state tax funded part of the
budget go to health and social services including TennCare (28%); law,
safety and correction (10%); and state-shared taxes to cities and
counties (7%). Together, these four areas account for 88% of the budget.
As Chairman Kisber was quoted as saying in the "Nashville Bureau
REPORTER" article, "You cannot protect education. You have to take money
from higher education as well as from K-12, you have to completely
eliminate (state) departments as well as substantially reduce almost
every department."

Obviously, this is a critical time for our state and higher education. We
urge you to monitor the developments closely. When the "no new revenue"
plans are unveiled, we will advise you immediately of the specific
implications for UT and any actions that we might want you to take. In the
meantime, it is imperative that you continue to talk about the good things
that are happening at UT and the need for long-term investments in our
educational system.