As the spring semester draws to a close, it seems important to provide you
with an update on recent developments in Nashville. The best way to
describe the current situation is to suggest that we have actually arrived
at the proverbial "fork in the road" and will be moving down one of the two
paths by the time that fall semester starts in August.

Every time I go to Nashville to talk with legislators, as I will again this
week, I am convinced they understand our situation and want to help us. I'm
also convinced they are hearing from folks back home saying "enough is
enough" and it's time to make some decisions. It is my hope that they will
choose the "fork of investment" rather than the "fork of decline," but the
decision is far from assured. Two complementary developments emerged this
past week that underscore the clear choices that our state legislators
have.

The Tennessee Higher Education Commission adopted in principle a "Plan of
Action" in the event that the funding issues are not resolved this year. In
my comments at the Commission meeting, I noted that I had resisted this
effort for about a year but now recognized that actions of this type must
be considered if new funding is not provided. Final details of the plan
will be worked-out over the next few months by THEC, UT and Tennessee Board
of Regents staff, along with members of our respective boards. A final vote
on the plan is expected at the THEC meeting on July 11 or earlier. This
far-reaching proposal has very significant implications for UT. (You can
access a copy at
http://www.state.tn.us/thec/april_18_02/THEC_Plan_of_Action.pdf.

* It would establish enrollment ranges for every college and university in
Tennessee and impose penalties if institutions enrolled more students than
the ranges allowed. In a state that needs 200,000 more Tennesseans with
college degrees to reach the national average, this is an unbelievable step
in the wrong direction.

* It would limit the creation of new doctoral programs to UTK, the
University of Memphis and Tennessee State University under certain
conditions mandated by the Geier desegregation agreement. This would have
implications for UTC in our system and Middle Tennessee State University in
the TBR system.

* It would impact intercollegiate athletics by requiring that all programs
operate as auxiliary enterprises at a minimum and be self-supporting (no
state funding) at the most extreme. In UT's case, only the athletics
programs at Knoxville are self-supporting.

* It would eliminate any state funding for remedial programs at all two-
and four-year institutions and all developmental courses at four-year
institutions. This proposal has limited impact on UTC and UTM.

* It would call for a peer review initially of two academic areas -
engineering/engineering technology and agriculture/human ecology. Again, we
have programs in each of these areas.

The plan has 11 principles, all designed to assure that we do not further
impact quality if the state fails to provide adequate funding. This is a
very valid position, one that we must endorse even with the implications
that it carries for UT. I'm reminded of the philosophy espoused by
President Designate John Shumaker in this regard: we want to provide the
very best university that Tennessee can afford while encouraging
Tennesseans to want to afford more.

As THEC moves to finalize the details between now and July, UT
administrators as well as members of the Board of Trustees will be actively
involved in the discussions, and all of us will work to keep key campus
constituencies informed.

Against this backdrop of recognizing that we cannot keep doing "business as
usual," House Speaker Jimmy Naifeh unveiled his proposal for a flat rate
income tax generating about $1.1 billion. He also noted the alternatives
are a uniform statewide sales tax raising an equivalent amount of money or
one of the "no new revenue" budgets. I am convinced that the majority of
Senators and Representatives absolutely abhor the thought of the cuts that
a "no new revenue" budget would force on higher education ($73 to $91
million) and K-12 education ($400 million or more).

Any solution to our funding needs must start with support for significant
new revenues from the delegations representing university campuses. UT has
not taken a position on a particular revenue plan and will not. However,
unless we want to begin the unthinkable, like limiting enrollments in the
future, it is imperative that the General Assembly find 50 votes in the
House and 17 in the Senate for a viable revenue proposal this year. I
encourage you to again make your thoughts on this issue known to your local
legislators before the semester ends.

Thanks so much for all that you do for UT and for continuing to keep the
faith.