THEC warns of lottery 'structural deficit,' seeks funding to limit tuition increases
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Summary
Tennessee Higher Education Commission told the Education Committee it requested $74 million for outcomes‑based funding and warned of a projected structural deficit in the lottery program; THEC also sought TSAA increases and capital maintenance funding.
The Tennessee Higher Education Commission told the Senate Education Committee the agency is asking for more state support to avoid larger tuition increases and to sustain student aid programs.
In a budget presentation, THEC staff said the commission requested $74,000,000 in new money for the outcomes‑based funding formula and highlighted a $12,000,000 request for the Tennessee Student Assistance Award (TSAA), the state's need‑based grant program. THEC warned the committee that projections show a "structural deficit" in the lottery program in future years and said it will provide a follow‑up memo with recommendations for adjustments to expenditures.
"We requested $74,000,000 in new money to our outcomes based funding formula," the presenter said, noting the governor's budget included $16 million and that full funding would constrain tuition increases.
THEC also described capital maintenance and program requests: about $350 million in capital maintenance needs across higher education (the governor included roughly $70 million), a Career Start Here partnership proposal, and recurring funds to sustain workforce alignment initiatives. THEC said $12 million in TSAA funding would serve roughly 6,500 additional students.
The committee also heard the Tennessee Lottery presentation. Rebecca Paul, president of the lottery, reported strong sales and told members that profits were expected to be substantially higher year‑to‑date: "our sales are up dramatically, and our profits are expected to be 30,000,000 more than they were last year," she said. Lottery staff projected net proceeds in the $434 million–$445 million range for fiscal 2026 and discussed game categories, prize payouts and retail network growth.
Committee members asked about ranking lottery‑funded programs by cost‑effectiveness, dual‑enrollment growth and the timeframe for outcomes‑funding review. THEC staff said a statutory review committee will meet monthly and submit recommendations by July.