State Funding Board Adopts Revenue Estimates for Upcoming Year

From a press release:

The State Funding Board reached consensus Friday on the State’s revenue estimates for fiscal years 2010 and 2011. The board expects the revenue growth rates to range between -1.50% and -0.25% for fiscal year 2010 and 1.7 percent to 2.2 percent for fiscal year 2011.

The Funding Board’s revenue estimates are used by the administration and legislature in determining steps necessary to close the current year budget, ending June 30, 2010, and in preparing the budget for state government for the new fiscal year beginning July 1, 2010. The estimates are based on the assumption that there will be no increases or decreases in the state’s tax rates or its schedule of fees, fines or other charges.

On Monday, Funding Board members heard presentations from the Tennessee Department of Revenue, the General Assembly’s Fiscal Review Committee and Tennessee economists representing the three grand divisions of the state about their expectations for the revenue situation over the next fiscal year.

Following those presentations, the Funding Board staff worked throughout the week to develop a consensus for revenue estimates. Funding Board members chose to take a cautious approach.

“Estimating the state’s revenues is one of the most difficult tasks that we have,” said Comptroller Justin P. Wilson, who serves as the Funding Board’s Secretary. “But it’s also one of the most important tasks we have. We want these numbers to be as accurate as they possibly can be, given all of the unknown variables that go into economic forecasting.”

“With this economy, it is difficult to predict what’s going to happen this week, much less six to 18 months into the future,” said Treasurer David H. Lillard Jr., another Funding Board member. “There is some consensus that the economy is in the process of rebounding, but it is possible the recovery of state tax revenues will be constrained for a longer time because credit is tight for individuals and small businesses and the rate of personal savings is still high. Because of that uncertainty, I think most Tennesseans would agree it is prudent to be cautious in forecasting our estimates.”

“The Funding Board will continue to closely monitor Tennessee’s tax revenues each month. Another meeting will be held in the spring to review and possibly revise the estimates if conditions warrant that prior to final adoption of the Fiscal Year 2011 budget,” said Secretary of State Tre Hargett, another Funding Board member.

The Funding Board also estimated that the state lottery’s revenues will experience little to no growth over the next four fiscal years. The Board agreed on a range of lottery revenue projections that call for 0 percent to 1 percent growth through the fiscal year that ends June 30, 2014.

In addition to Wilson, Lillard and Hargett, the Funding Board members are Governor Phil Bredesen and Finance and Administration Commissioner David Goetz.

TN SCORE Announces Statewide Gubernatorial Forum on Education

The Tennessee County Commissioners Association is partnering with the Tennessee State Collaborative on Reforming Education (SCORE) and other partners to host next year's first statewide gubernatorial forum, focusing on education and economic development. The forum will be held on January 14, 2010, at 7:00 p.m. central time at the Curb Event Center on the Belmont University campus in Nashville. The forum will be broadcast live on CBS affilaites across the state.

If you are interested in attending this event in person, please contact me. Attendance will be limited, but our association will be able to provide tickets to interested officials.

Comptroller Extends Comment Period on Proposed Policy for Local Government Debt Management

Comptroller Justin P. Wilson has extended the deadline for providing public input on a model debt management policy for local governments until Jan. 8, 2010. Wilson initially set mid-December as a tentative deadline for collecting comments, but decided to extend the timetable a few more weeks to give people more time to respond.

After collecting more input from citizens, Wilson plans to submit a proposed model debt policy to the State Funding Board for consideration. If the Funding Board adopts the model debt policy, local governments throughout Tennessee may be required to develop and adopt debt policies of their own that are consistent with the model.

Wilson expects the model debt policy to make it easier for citizens and members of local governing bodies to get details about debt transactions, including the relationships between the parties involved in the transactions.

Wilson also expects the model debt policy to have provisions prohibiting an individual or company from representing more than one party in a local government bond transaction. For example, a local government’s financial advisor would be banned from also serving as the local government’s bond underwriter or bidding on the debt.

And Wilson expects all fees, relationships and contracts between companies, their employees and independent contractors to be disclosed under the new policy.

The full notice from the Comptroller can be viewed here. The notice includes a link to the proposed debt management policy.

Tennessee Unemployment Rate Down Slightly

Commissioner of Labor and Workforce Development James Neeley announced this week that Tennessee's unemployment rate for November was 10.3%, down 0.2% from October's rate.

For more details click here.

Special Session Planned on Education

In a press conference today, Gov. Bredesen announced plans to call the legislature into a special session in January to address education issues related to both k-12 education and higher education. The General Assembly was scheduled to reconvene in regular session on January 12. Now, when they return, the plan is to go immediately into a special session. The timing of the session is dictated by a need to have certain reforms in place in order to make application to the Federal Government for the so-called "race to the top" funds. According to the Governor, there are certain provisions in the law related to use and availability of data and the overall teacher evaluation process that need legislative changes in order to best position Tennessee to receive grants from this special Federal allocation. At stake is a potential grant in the hundreds of millions of dollars to Tennessee to advance reforms around four specific areas:

•Adopting standards and assessments that prepare students to succeed in college and the workplace and to compete in the global economy;
•Building data systems that measure student growth and success, and inform teachers and principals about how they can improve instruction;
•Recruiting, developing, rewarding, and retaining effective teachers and principals, especially where they are needed most; and
•Turning around our lowest-achieving schools.

For more information on Race to the Top, click here.

During his press conference, the Governor also indicated that the special session will include issues related to improving graduation rates in higher education institutions. These issues do not have the same short deadline as they are not related to the Race to the Top application. At any rate, it will require rapid action on behalf of the General Assembly to convene, get these proposals through education committees and subcommittees and voted on by the membership by the 19th.

Governor Expected to Call For Special Session

Governor Bredesen has called a press conference for this afternoon. He is expected to announce a call for a special legislative session to commence immediately upon the return of the General Assembly in January. Although there had been discussion that a special session could be called related to Worker's Compensation changes about to take effect, it is believed this call will relate to education reforms designed to position Tennessee better in the "Race to the Top" for additional Federal education dollars for innovation in K-12 education.

Court of Appeals Decision on E-mail and the Open Meetings Act

In a judicial challenge to a zoning decision by the Metro Nashville Council, plaintiffs challenged that the open meetings act was violated in part by metro council member e-mail correspondence related to the issue. The Court of Appeals found that the email correspondence constituted a violation of the Open
Meetings Act, but the legislative body engaged in a “new and substantial reconsideration” of the issues in the final meeting so as to cure the violation.

For a copy of the court's full decision, click here:
here.

Tennessee Waste Tire Task Force

Related to the post below, the TN Department of Environment and Conservation has been conducting a task force to look at issues relates to waste tire management. The task force has met twice this year. The department has a website related to the task force where you can find more information about this project and possible outcomes.


http://www.state.tn.us/environment/swm/tires/taskforce/

EPA Waste Tire Findings

Limited EPA Study Finds Low Level of Concern in Samples of Recycled Tires from Ballfield and Playground Surfaces

WASHINGTON - The U.S. Environmental Protection Agency has released results of a limited field monitoring study of artificial-turf playing fields and playgrounds constructed with recycled tire material or tire crumb. The study was intended to gain experience conducting field monitoring of recreational surfaces that contain tire crumb. EPA will use the information to help determine possible next steps to address questions regarding the safety of tire crumb infill in recreational fields.

"The limited data EPA collected during this study, which do not point to a concern, represent an important addition to the information gathered by various government agencies," said Peter Grevatt, director of EPA's Office of Children's Health Protection. "The study will help set the stage for a meeting this spring, where EPA will bring together officials from states and federal agencies to evaluate the existing body of science on this topic and determine what additional steps should be taken to ensure the safety of kids who play on these surfaces."

Recycled tire material, or "tire crumb," is used in many applications, including as a component in synthetic turf fields and playground installations. In response to concerns raised by the public, EPA conducted a limited "scoping study" of tire crumb, which consisted of collecting air and wipe samples at three locations near EPA laboratories at Raleigh, N.C., Athens, Ga., and Cincinnati, Ohio. Sampling also was conducted in the Washington, D.C. area.

The limited study, conducted in August through October 2008, found that the concentrations of materials that made up tire crumb were below levels considered harmful. However, given the limited nature of the study (limited number of constituents monitored, sample sites, and samples taken at each site) and the wide diversity of tire crumb material, it is not possible, without additional data, to extend the results beyond the four study sites to reach more comprehensive conclusions.

The study confirmed that most of the methods tested were accurate, reproducible and appropriate for measuring concentrations of tire crumb constituents and therefore can be used in future studies.

Study findings
Particulate matter, metals and volatile organic compound concentrations were measured in the air samples and compared with areas away from the turf fields (background levels). The levels found in air samples from the artificial turf were similar to background levels. No tire-related fibers were observed in the air samples. All air concentrations of particulate matter and lead were well below levels of concern. More than 90 percent of the lead in the tire crumb material was tightly bound and unavailable for absorption by users of the turf fields. Zinc, which is a known additive in tires, was found in tire crumb samples. However, air and surface wipe monitoring levels of zinc were found to be below levels of concern. EPA is aware that studies by other agencies were undertaken or completed while this survey was under way. EPA is planning a 2010 meeting with federal and state agencies to review all new study data and determine next steps.

For more information on artificial turf follow this link: http://www.epa.gov/nerl/features/tire_crumbs.html

Changes Coming to Governmental Fund Balance Reporting

The Division of County Audit recently sent our association a memorandum detailing the impact of a new Governmental Accounting Standard that is effective for fiscal year July 1, 2010 to June 30, 2011. GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, must be taken into account as you begin preparing your next budget in the spring of 2010. This leaves a very short window of opportunity for county governments to prepare for implementation. GASB Statement No. 54 will affect all county governments in the State of Tennessee regardless of size or complexity.

GASB Statement No. 54 will have a significant effect on the operations of county governments in the following ways:

1. The definitions and titles of all fund balance classifications currently in use are changed. Use of the words “reserves”, “designations”, and “undesignated fund balance” will no longer be acceptable. These old and familiar terms will be replaced by the terms Nonspendable, Restricted, Committed, Assigned, and Unassigned. Each of these new classification terms has a specific definition. The Uniform Chart of Accounts will need to be changed to accommodate these changes. This in turn will affect the monthly and annual closing process.
2. The definitions of special revenue funds and debt service funds have changed. This means that in some counties, a limited number of special revenue funds may need to be closed and combined with the General Fund. Direct purchases of capital assets from a Debt Service Fund will not be permitted.
3. In most cases, Rainy-Day Funds will need to be closed into the General Fund.
4. Encumbrances will no longer be presented as a reservation of Fund Balance.
5. The county’s policies for classifying revenues as restricted, committed, or assigned will need to be developed and disclosed in the notes to the financial statements.
6. When auditors find it necessary to propose significant audit adjustments to correct fund balances not properly classified under Statement No. 54, auditing standards require that the auditor publish the misstatement as a material weakness in internal control.

The intent of GASB Statement No. 54 was to enhance the usefulness of fund balance information by requiring all local governments to utilize the same classifications and definitions for reporting purposes. An important secondary effect will be to limit the number of special revenue funds that counties establish and to encourage the use of the General Fund to account for routine government operations.

In accounting literature, County Commissioners are described as “those charged with governance”. Those charged with governance” is further defined as “the person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity”. County Commissioners who take their oversight responsibilities seriously will need to lead their governments through the implementation of GASB Statement No. 54. At a minimum, County Commissioners should require that financial managers (County Mayors, Finance Directors, Highway Superintendents, Directors of Schools, etc.) receive training related to Statement No. 54 and that these managers report to the county commission about the status of the implementation process. Both the Division of County Audit and the County Technical Assistance Service are available as resources to assist county governments in compliance with this new standard.

Department of Treasury Announces 2010 Employer Seminars for Local Governments Participating in TCRS

The Tennessee Consolidated Retirement System (TCRS) performs actuarial valuations every two years for participating political subdivisions. In an effort to help these political subdivisions understand the employer rate changes and additional information about TCRS, seminars are behing held across the state in January. Dates and Locations for these meetings are as follows:

January 13 - Jackson City Hall
January 14 - Henry County Medical Center
January 21 - Cookeville City Hall
January 22 - Williamson County Agriculture Center
Janaury 26 - Jonesborough Visitor Center
January 27 - Sevierville Civic Center
January 28 - Chattanooga State Office Building

Gov. Bredesen Names Gayle Ray as Commissioner of Corrections

Last week, Governor Phil Bredesen appointed Gayle Ray to be the next Commissioner of the Department of Correction. Ray will assume her new role on January 1, 2010, following the departure of current Correction Commissioner George Little, who announced he will leave Bredesen's cabinet on December 31 to become chief administrative officer for newly-elected Memphis Mayor AC Wharton. Ray currently serves as deputy commissioner in the Department of Correction. She served as Davidson County sheriff from 1994 to 2002.

Business Tax Administration Shifts to Department of Revenue

This past legislative session, the 106th General Assembly enacted Public Chapter 530, shifting the administration and collection of business tax from local municipalities and counties to the Department of Revenue. With this change, the Department of Revenue will use its resources and experience in tax administration to collect the business tax. The hope is that this shift will result in greater efficiency in the collection process and increased revenue for the State and for local governments.

“This undertaking is a true partnership between state and the local governments,” said Commissioner Reagan Farr. “While increasing revenue through improved tax compliance, we also plan on simplifying the tax process for business owners including developing a new, simplified tax return and initiating major education programs.”

Beginning with Classification 1 taxpayers, due Feb. 28, 2010, all business tax returns will now be filed with the Tennessee Department of Revenue. Businesses will continue to obtain business licenses from the county clerks and/or municipal officials.

The Department of Revenue is working closely with local municipalities and counties to make this transition a smooth process. The department is currently gathering registration data from the counties and cities to register the business owners and mail out tax returns by the end of 2009. More information is available at the Department of Revenue’s Web site www.TN.gov/revenue.

County Officials Meet with the Governor to Discuss Upcoming Year

The following link connects you to an article from the Sparta Expositor that reports on a meeting of a small contingent of county officials with Governor Bredesen. The county officials met to discuss state and local government fiscal challenges as the Governor begins preparing what is expected to be a very challenging budget. Past TCCA President Wallace Austin (White County Commissioner) attended the meeting to represent county commissioners and is quoted in the article.

To read the full story, click here.

National Article on Consolidation of Local Governments

Click here

to access an article in the USA Today newspaper reporting on new efforts under consideration to consolidate local governments as a cost saving measure during dire economic times.

Commissioner Little to Leave Post at Department of Corrections

NASHVILLE - Governor Phil Bredesen announced today that George Little, commissioner of the Tennessee Department of Correction, will leave his Cabinet position effective December 31, 2009. Bredesen appointed Little in October 2005.

Statement from Commissioner George Little:

"It has been a pleasure to serve the citizens of Tennessee and Governor Bredesen as the Commissioner of Correction for the past four years. Under the Governor's leadership, the department has made tremendous progress in ensuring public safety and restoring the public's confidence in state government. I appreciate the opportunity to have been a part of this administration and to contribute to its accomplishments.

"I am honored to have worked alongside a talented and dedicated team of correctional system professionals. I know they will continue to efficiently manage the facilities and programs that house, supervise and rehabilitate convicted offenders in Tennessee."

Statement from Governor Phil Bredesen:

"Commissioner Little has guided the Department of Correction with a thoughtful, professional and steady hand, and I appreciate his service to the state of Tennessee. Over the past four years, he has led the department through a number of initiatives to keep our communities safe while fulfilling its mission to manage the state's correctional system.

"George has been a valuable member of my Cabinet and I wish him well in his future endeavors.

"We will immediately begin the process of identifying a highly-qualified candidate to succeed him in this important role. I am committed to continuing the progress he and his team have accomplished as we move through this transition and prepare to address the challenges that face the department and the state of Tennessee."

GASB 34 Compliance - Message from the Comptroller

Comptroller Justin Wilson recently addressed the TN General Assembly to notify members of an accomplishment by local governments in Tennessee:

"I want to share the good news that, thanks to the hard work and dedication of the General Assembly and local government officials, Tennessee is now one of the very few states where there is 100 percent compliance by local governments with the Governmental Accounting Standards Board (GASB) Statement No. 34. All local governments in Tennessee are now in compliance with this standard. This is a milestone achievement and should be a source of pride for all Tennesseans.

The purpose of GASB Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments, was to make government financial statements more user-friendly for people who access government financial information, to help states and local governments make better operating decisions and to make it easier to compare financial information from different state and local governments.

The Government Accounting Standards Board is responsible for establishing accounting standards for state and local governments in the United States. GASB Statement No. 34 was issued in June 1999 and is considered one of the most far-reaching – if not the most far-reaching – accounting standard ever issued by GASB. This standard is extremely detailed and difficult to implement.

The State of Tennessee implemented Statement No.34 for the fiscal year ended June 30, 2002, as required by the standard. However, due to the complexity of the standard, many local governments in Tennessee had difficulty complying and weren’t able to present financial statements in conformity with generally accepted accounting principles (GAAP).

In 2003, my predecessor as Comptroller, John Morgan, suggested a process for helping local governments achieve compliance with GASB Statement No. 34 and in May 2004 the General Assembly established a special joint committee that focused on financial accounting and reporting standards. The committee recommended legislation, later approved by the General Assembly, known as the Local Government Modernization Act of 2005. The purpose of the legislation was and is to ensure that local governments in Tennessee maintain adequate accounting records and comply with GAAP. Compliance with GAAP would help ensure local governments maintain their bond ratings.

When I became Comptroller, I made 100 percent compliance a priority of this office. As of June 30, 2009, every county and city in Tennessee has implemented this standard, a remarkable accomplishment for which each and every Tennessean can be proud.


Please join me in extending our congratulations to our local governments and officials."