Education, Higher

Plain English Breakdown

The official summary and text do not provide specific details on enforcement or consequences if institutions fail to meet requirements.

Higher Education Fund Redirection Act

This bill allows Tennessee's colleges and universities to request permission to redirect their capital outlay funds for other purposes under certain conditions.

What This Bill Does

• Allows higher education institutions in Tennessee to request the redirection of their capital outlay funds if they need them for other important projects, subject to appropriation.
• Requires these institutions to submit a detailed plan explaining why the redirected funds are necessary and that no alternative funding is available.
• Necessitates the comptroller, commissioner, and institution to create a memorandum of understanding outlining specific requirements and benchmarks for using the redirected funds.
• Sets up a process where the comptroller and commissioner must approve or deny requests for fund redirection after reviewing them with higher education commission staff.
• Requires quarterly reports on the progress of institutions that have requested redirected funds, which are sent to legislative finance and education committee chairs.

Who It Names or Affects

• Colleges and universities in Tennessee
• The comptroller and commissioner who manage state finances
• Legislative finance and education committee chairs

Terms To Know

capital outlay funds

Money set aside for major purchases or improvements, like buildings or equipment.

memorandum of understanding (MOU)

A formal agreement between parties outlining their responsibilities and the terms of cooperation.

Limits and Unknowns

• The bill does not specify what happens if an institution fails to meet the requirements set in the memorandum of understanding.
• It is unclear how often institutions will be able to request redirection of funds or how many requests are expected annually.
• The effectiveness and impact of this legislation on higher education funding remain to be seen.

Official Summary Text

ON APRIL 15, 2025, THE SEN
ATE ADOPTED AMENDMENTS #1 AND #2 AND PASSED SENATE BILL 1359, AS AMENDED.

AMENDMENT #1 rewrites the bill to, instead, make the following revisions to present law:

CONDITIONS FOR REDIRECTING CAPITAL OUTLAY FUNDS



Authorizes, subject
to appropriation, an institution of higher education
to
request to redirect the institution's capital outlay funds for purposes other than those set out
in the 2022 appropriations act.
An institution
must
submit a request to redirect capital outlay funds to the commissioner

of finance and administration
("commissioner")
. The request to redirect capital outlay funds must include a summary demonstrating that the proposed expenditure is essential to fulfilling the institution's mission and that alternative funding sources are not available.

MEMORANDUM OF UNDERSTANDING
–
REQUIREMENTS FOR FUND REDIRECTION



Requires, upon
receipt of a request to redirect capital outlay funds submitted under
this amendment
, the comptroller
of the treasury ("comptroller")
and the commissioner
to
, in consultation with the institution and higher education commission, enter into a memorandum of understanding with the institution to
(i)
outline the duties and responsibilities of the parties;

(ii) establish detailed and specific requirements that the institution must meet for its capital outlay funds to be redirected, which must be tailored to the specific institution, including periodic benchmarks for the incremental disbursement of capital outlay funds; and

(iii) other provisions that the parties deem necessary to effectuate the memorandum of understanding.



Authorizes the
comptroller and the commissioner
to
, after consulting with the institution and higher education commission, amend the memorandum of understanding to ensure the requirements are relevant and aligned with state higher education goals and principles of financial stability.

NOTICE TO FINANCE COMMITTEE CHAIRS–FUND DISBURSEMENT



Requires, subject
to appropriation, the comptroller and the commissioner
to (i)

a
pprove or deny the redirection of all or a portion of the capital outlay funds;

(ii) monitor and review an institution's progress in meeting the requirements and other provisions established in the memorandum of understanding; and

(iii) determine the appropriate amount of capital outlay funds to be redirected.



Provides that if
the comptroller and the commissioner approve redirection of a portion, but not all, of the capital outlay funds available, then the comptroller and the commissioner, after consulting with the institution and higher education commission, may amend the memorandum of understanding to establish additional requirements that the institution must meet before additional capital outlay funds are approved for redirection. Subsequent approvals and disbursements are contingent on the institution's compliance with requirements established in the memorandum of understanding.



Provides that if
a redirection of capital outlay funds is approved, then the commissioner
must
submit written notice to the chair
s
of
legislative
committee
s
having jurisdiction over finance. The redirection of capital outlay funds must not be disbursed to the institution until the chairs have acknowledged in writing receipt of the written notice
. However,
a redirection of capital outlay notice must not be acknowledged by the chairs during a time that the general assembly is in regular, annual session until each committee has held a hearing on the proposed disbursement, or the committees have held a joint hearing. It is the legislative intent that the notice be acknowledged by the chairs within seven business days of receipt, or in the case of a public hearing, within seven business days from conclusion of the hearing.



Requires, upon
acknowledgement by the chairs, the department of finance and administration
to
disburse the redirected capital outlay funds to the institution.



Provides that the f
ailure of an institution to meet the requirements or other provisions established in the memorandum of understanding may result in a denial of capital outlay funds disbursement.

IMPLEMENTATION AND COMPLIANCE



Requires i
nstitutions requesting redirection of capital outlay funds
to
comply with requests for information from the comptroller or the commissioner that are necessary to determine the institution's compliance with the requirements or other provisions established in the memorandum of understanding.

JOINT QUARTERLY REPORTS



Requires the
comptroller and the commissioner
to
submit joint quarterly reports to the speaker of the senate, the speaker of the house of representatives, the chair
s
of
legislative
committee
s
having jurisdiction over finance,
and
the chair
s
of
legislative
committee
s
having jurisdiction over education for each institution that requests redirection of capital outlay funds until all available capital outlay funds have been approved for redirection or the institution no longer seeks redirection of capital outlay funds. The report must include a brief synopsis of each request submitted, the requirements and other provisions established in the memorandum of understanding, and a brief synopsis of the institution's progress in meeting the requirements and other provisions established in the memorandum of understanding.

AMENDMENT #2 changes the requirements to consult with the higher education commission to, instead, consult with the higher education commission staff.

Current Bill Text

HOUSE BILL 1344
By Lamberth

SENATE BILL 1359
By Watson

SB1359
003347
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 4;
Title 8; Title 9; Title 10; Title 12; Title 49; Title 66
and Title 67, relative to higher education.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 49-7-112(e), is amended by deleting
the first sentence of the subsection and substituting instead the following:
The commission shall, by July 1, 2025, and by each July 1 thereafter, provide a
copy of the report to the governor, the education and commerce and labor
committees of the senate, and the committees of the house of representatives
having jurisdiction over higher education and commerce, respectively.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.