Tennessee health licensing boards report multi‑year deficits; fee increases, rulemaking cited as fixes

The Tennessee Joint Government Operations Committee heard Feb. 19 from the Department of Health about multi‑year deficits in several health‑related licensing boards and the fee changes and monitoring steps officials say are needed to restore reserve balances.

Assistant Commissioner Jennifer Putnam told the committee the Board of Nursing ran deficits of $1,155,843 in fiscal 2024 and $2,487,597 in fiscal 2025 and “maintains a reserve balance of $3,494,880, which does fall below the division's reserve balance guideline by $16,410,250.” The nursing board has a fee increase set to take effect April 8, she said. Putnam also reported large shortfalls for the Board of Dentistry (FY24 deficit $1,040,331; FY25 $921,649) and said that board approved a fee increase at its Jan. 8 meeting.

Department fiscal director Matt McSpadden told lawmakers the department projects that, under the January fee proposal presented by the boards, many boards should reach self‑sufficiency within three fiscal years. “We would be looking at self sufficiency within 3 fiscal years based on the fee proposal that was before the board in January,” McSpadden said, noting projections factor in the boards’ two‑year license renewal cycles and assumptions about modest revenue and expenditure growth.

Legal counsel Doug Garrett told the committee that those projections are inherently estimates and that a two‑to‑three year window is common because rulemaking and evaluation typically take months. Garrett said rulemaking often takes six to nine months and monitoring another year, which makes three‑year projections “not out of the norm.”

Committee members pressed department officials on drivers behind the recent increases in deficits. Putnam cited three main factors for the FY25 spikes: higher state salary costs following a market study, increased investigations that raise legal and investigative expenses as professions grow, and higher technology and licensing‑system modernization costs.

Not every board showed large shortfalls. Putnam said the Board of Chiropractic Examiners finished FY25 down roughly $29,482 but maintains a reserve of $638,916 that exceeds division guidelines, while the Board of Dispensing Opticians had small recent deficits and a reserve that exceeds guidelines after a fee decrease in FY23. Several boards have already approved or implemented fee changes: the occupational therapy board approved a fee increase Oct. 24, 2024; physical therapy’s fee increase took effect Dec. 31, 2025; the dentistry board approved a fee increase Jan. 8, 2026; and the medical laboratory board will consider a fee proposal at its meeting on April 24, 2026.

Representative John Hardaway raised a historical charge that earlier administrations had taken regulatory fee reserves into the general fund. “We had the governor stealing money that was going towards licensing and regulatory fees and taking it and putting it into the general fund,” Hardaway said. Doug Garrett responded that such "sweeps" were statutory actions that had occurred in the past and said he would check the relevant statutes and history; he later told the committee he did not believe recent sweeps had occurred under the current administration.

Putnam and McSpadden said boards and the division will continue monitoring balances and bring additional rule changes as needed; the committee met its statutory requirement for the hearing, and no committee votes or formal actions were taken that day. Chair Senator Rose said the committee can call boards back for follow‑up if problems persist.

The department’s presentations included specific reserve and deficit figures for each board and several upcoming rule or fee‑making dates; members requested clearer projections showing the year each board is expected to return to balance. The committee adjourned the self‑sufficiency hearing and moved to the next subcommittee meeting.