Tennessee House Bill HB0966

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/10/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 4, Chapter 51; Title 8, Chapter 4; Title 9 and Title 49, relative to the use of excess lottery funds pursuant to Article XI, Section 5 of the Constitution of Tennessee.

Summary

HB0966 restructures the use of excess Tennessee lottery revenues by creating two new special accounts in the state treasury: a K-12 lottery capital outlay special account and an early learning program account. At the end of each fiscal year, lottery-for-education funds above $250 million, including certain reserve balances, would be treated as excess lottery funds and split evenly between the two accounts. The bill directs that money in the K-12 account be used only for capital outlay projects for K-12 educational facilities, while money in the early learning account be used only for expenses to operate new or existing pre-kindergarten programs. The bill also establishes a grant framework administered by the Comptroller of the Treasury. The comptroller would create application procedures, set matching requirements based on need, award grants annually to local education agencies (LEAs), and audit LEAs for compliance. Grant amounts would generally be distributed based on each LEA’s share of statewide average daily membership, with unused amounts and interest carried forward for the benefit of the individual LEA. The bill further amends existing law to reflect that excess lottery funds may be allocated not only to early learning programs but also to K-12 capital outlay projects, and it authorizes emergency rulemaking to implement the act. The bill’s impact on state law is to change how excess lottery proceeds are handled under Tennessee’s constitutional and statutory education funding framework. It creates new dedicated accounts, changes the allocation formula for funds above the reserve threshold, and adds a new statutory grant program for school facilities and pre-K operations. It also limits reversion of unused balances and interest, ensuring those funds remain available for future education-related spending rather than returning to the general fund or the broader lottery-for-education account. Overall sentiment appears supportive of education investment, particularly in school infrastructure and early learning, though no committee transcripts or recorded votes are available in the provided materials to show debate or opposition. The bill’s structure suggests a policy preference for directing surplus lottery revenue into targeted education uses rather than general budget flexibility. Any likely concerns would center on the comptroller’s administrative role, the grant formula, and whether diverting excess lottery funds into separate accounts could reduce legislative discretion over future spending.

Impact

HB0966 would amend Tennessee’s lottery-funds statutes to create two dedicated treasury accounts and redirect excess lottery-for-education balances above $250 million into those accounts. It would require the Comptroller of the Treasury to administer grant programs for K-12 capital outlay projects and pre-K programs, establish application and matching rules, audit recipients, and carry forward unused balances and interest. The bill changes the statutory allocation of excess lottery funds and expands the authorized uses of those funds to include school facility capital projects and early learning operations.

Sentiment

No committee discussion or vote history was provided, so there is no recorded debate to gauge detailed support or opposition. Based on the bill text, the measure appears generally pro-education and likely to be viewed favorably by supporters of school construction funding and pre-kindergarten expansion. The absence of recorded objections in the provided materials leaves the overall sentiment as neutral-to-supportive, with the policy emphasis clearly on directing surplus lottery revenue to education-related purposes.

Contention

The main points of potential contention are the diversion of excess lottery funds into two earmarked accounts, the comptroller’s new administrative and auditing responsibilities, and the grant distribution formula tied to average daily membership and matching requirements. Critics could question whether the bill reduces flexibility in the use of lottery revenues or whether the split between K-12 capital outlay and pre-K operations is the best allocation. Supporters would likely emphasize the benefit of dedicated, nonreverting funding for school facilities and early learning programs.