Gov. Bill Lee outlines $340M school boost, $1B rural health plan and regulatory changes in State of the State

NASHVILLE — Gov. Bill Lee used a joint convention of the Tennessee General Assembly on Feb. 2 to propose major budget and policy priorities for the coming year, centering on education, rural health and public safety while urging lawmakers to change state regulations to unlock federal funding.

Lee told legislators he would propose an additional $340 million for public schools in the coming budget, called for starting teacher pay to reach $50,000 in 2027 and argued that Tennessee must expand "education freedom" opportunities for families. "We are proposing in the budget an additional $340,000,000 directed to our public schools," Lee said.

The proposal follows what Lee described as prior large investments in education and a statewide literacy push focused on kindergarten through third grade. He pointed to the Education Freedom Scholarship program as a choice expansion, noting more demand than available slots: "Last year, more than 40,000 applications. This year, 54,000 applications for 20,000 spots," he said, and urged lawmakers to increase scholarship capacity so more students can access private alternatives.

On teacher pay, Lee said the state has increased starting salaries and proposed a plan that would raise starting pay to $50,000 by 2027, calling it part of recognizing "the dignity and value of Tennessee teachers."

Lee framed public safety as another budget priority, highlighting work in Memphis under the SAFETaskForce initiative and reporting reduced crime figures in Shelby County. He proposed $80 million in grants "to accelerate the momentum in Memphis" and said the state would permanently place 100 additional Tennessee Highway Patrol troopers in Shelby County while adding positions statewide to reach a benchmark of 1,300 troopers.

On rural health, Lee announced an award of federal resources he characterized as a $1 billion Rural Health Transformation Fund over five years and said Tennessee must take legislative action to qualify for and make the most of those dollars. "In order to be eligible for these federal dollars, Tennessee must take legislative action to make it easier for medical professionals to practice and easier for rural health care facilities to operate," he said, urging relief from what he described as burdensome regulation.

Lee singled out certificate-of-need laws as a barrier to investment, saying those rules "were created over 50 years ago to prevent hospital overbuilding. But today, what they do is block investment. They limit competition. They leave rural communities with few or even zero choices." He said the state has lost opportunities since 2000 because of those laws — a figure he characterized as nearly $1.5 billion in blocked healthcare investment — and urged the legislature to "finish the job" of reforming them this session.

The governor also highlighted Tennessee's recent economic momentum, citing Blue Oval City and other corporate relocations that he said contributed to more than $11 billion in investment in 2025 and about 300,000 new jobs during his tenure. He said the state's nuclear fund has helped recruit roughly $8 billion in investment and proposed adding $25 million to that fund to continue leveraging projects at sites such as Clinch River. He announced the Tennessee Quantum Initiative, aimed at positioning the state in quantum research and workforce development.

Procedural actions surrounding the address included motions to dispense with roll calls for both chambers and a committee appointment to notify the governor that the joint convention was in session. Leader Johnson moved to dispense with the Senate roll call and Leader Lambert moved to dispense with the House roll call; a committee of senators and representatives (including Senator Stevens as chairman) was named to notify the governor and the convention recessed pending his arrival.

Lee opened his remarks with a prayer and condolences for families affected by a recent winter storm and for the family of a fallen deputy, and he recognized state and federal law enforcement officers and emergency responders during the address.

The joint convention adjourned after the governor's remarks with the presiding officer declaring the purpose of the meeting accomplished.