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PUBLIC CHAPTER NO. 467
SENATE BILL NO. 1359
By Watson, Bowling
Substituted for: House Bill No. 1344
By Lamberth, Williams
AN ACT to amend Tennessee Code Annotated, Title 4; Title 8; Title 9; Title 1O; Title 12; Title 49;
Title 66 and Title 67, relative to higher education.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 49, Chapter 7, is amended by adding the
following as a new part:
49-7-3101. Part definitions.
As used in this part:
(1) "Capital outlay funds" means any non-committed funds remaining from the
moneys appropriated to institutions of higher education and directed to be transferred
to the capital projects fund pursuant to chapter 1130, § 1 of the Public Acts of 2022;
(2) "Commissioner" means the commissioner of finance and administration;
(3) "Comptroller" means the comptroller of the treasury; and
(4) "Institution of higher education" or "institution" means a public four-year
college or university located in this state.
49-7-3102. Conditions for redirecting capital outlay funds.
Subject to appropriation, an institution of higher education may request to redirect the
institution's capital outlay funds for purposes other than those set out in chapter 1130, § 1 of
the Public Acts of 2022. An institution shall submit a request to redirect capital outlay funds to
the commissioner. The request to redirect capital outlay funds must include a summary
demonstrating that the proposed expenditure is essential to fulfilling the institution's mission
and that alternative funding sources are not available.
49-7-3103. Memorandum of understanding - Requirements for fund redirection.
(a) Upon receipt of a request to redirect capital outlay funds submitted under§ 49-7-
3102, the comptroller and the commissioner shall, in consultation with the institution and
higher education commission staff, enter into a memorandum of understanding with the
institution to:
(1) Outline the duties and responsibilities of the parties;
(2) Establish detailed and specific requirements that the institution must meet
for its capital outlay funds to be redirected, which must be tailored to the specific
institution, including periodic benchmarks for the incremental disbursement of capital
outlay funds; and
(3) Other provisions that the parties deem necessary to effectuate the
memorandum of understanding.
SB 1359
(b) The comptroller and the commissioner may, after consulting with the institution
and higher education commission staff, amend the memorandum of understanding to ensure
the requirements are relevant and aligned with state higher education goals and principles of
financial stability.
49-7-3104. Notice to finance committee chairs - Fund disbursement.
(a) Subject to appropriation, the comptroller and the commissioner shall:
(1) Approve or deny the redirection of all or a portion of the capital outlay
funds;
(2) Monitor and review an institution's progress in meeting the requirements
and other provisions established in the memorandum of understanding entered into
pursuant to § 49-7-3103; and
(3) Determine the appropriate amount of capital outlay funds to be redirected.
(b) If the comptroller and the commissioner approve redirection of a portion, but not
all, of the capital outlay funds available, then the comptroller and the commissioner, after
consulting with the institution and higher education commission staff, may amend the
memorandum of understanding to establish additional requirements that the institution must
meet before additional capital outlay funds are approved for redirection. Subsequent
approvals and disbursements are contingent on the institution's compliance with
requirements established in the memorandum of understanding in accordance with § 49-7-
3103.
(c) If a redirection of capital outlay funds is approved pursuant to this part, then the
commissioner shall submit written notice to the chair of the finance, ways and means
committee of the senate and the committee of the house of representatives having
jurisdiction over finance. The redirection of capital outlay funds must not be disbursed to the
institution until the chairs have acknowledged in writing receipt of the written notice; provided,
that a redirection of capital outlay notice must not be acknowledged by the chairs during a
time that the general assembly is in regular, annual session until each committee has held a
hearing on the proposed disbursement, or the committees have held a joint hearing. It is the
legislative intent that the notice be acknowledged by the chairs within seven (7) business
days of receipt, or in the case of a public hearing, within seven (7) business days from
conclusion of the hearing.
(d) Upon acknowledgement by the chairs pursuant to subsection (c), the department
of finance and administration shall disburse the redirected capital outlay funds to the
institution.
(e) Failure of an institution to meet the requirements or other provisions established in
the memorandum of understanding may result in a denial of capital outlay funds
disbursement.
49-7-3105. Implementation and compliance.
Institutions requesting redirection of capital outlay funds pursuant to this part shall
comply with requests for information from the comptroller or the commissioner that are
necessary to determine the institution's compliance with the requirements or other provisions
established in the memorandum of understanding entered into pursuant to§ 49-7-3103.
49-7-3106. Joint quarterly reports.
The comptroller and the commissioner shall submit joint quarterly reports to the
speaker of the senate, the speaker of the house of representatives, the chair of the finance,
ways and means committee of the senate, the chair of the committee of the house of
representatives having jurisdiction over finance, the chair of the education committee of the
senate, and the chair of the committee of the house of representatives having jurisdiction
over education for each institution that requests redirection of capital outlay funds pursuant to
this part until all available capital outlay funds have been approved for redirection or the
institution no longer seeks redirection of capital outlay funds. The report must include a brief
synopsis of each request submitted pursuant to § 49-7-3102, the requirements and other
provisions established in the memorandum of understanding entered into pursuant to§ 49-7-
3103, and a brief synopsis of the institution's progress in meeting the requirements and other
provisions established in the memorandum of understanding.
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SB 1359
SECTION 2. The headings in this act are for reference purposes only and do not constitute a
part of the law enacted by this act. However, the Tennessee Code Commission is requested to
include the headings in any compilation or publication containing this act.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it.
3
SENATE BILL NO. 1359
PASSED: April 22, 2025
RANDY MclNALLY
SPEAKER OF THE SENATE
C S O ~ , SPEAKER
HOUSE OF REPRESENTATIVES
gtt.. APPROVED this day o f ~ 2025
le,
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