Education, Higher - As enacted, divides the appointing authority for the nine voting members of the Tennessee higher education commission among the governor, the speaker of the senate, and the speaker of the house of rep, the official text

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                             PUBLIC CHAPTER NO. 799

                                                    SENATE BILL NO. 2079

                                        By Watson, Pody, Bailey, Bowling, Seal

                                           Substituted for: House Bill No. 1833

                                                            By Cepicky

AN ACT to amend Tennessee Code Annotated, Title 49, Chapter 14; Title 49, Chapter 7; Title 49,
          Chapter 8 and Title 49, Chapter 9, relative to higher education.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

          SECTION 1. Tennessee Code Annotated, Section 49-7-204(a)(1)(B), is amended by
designating the subdivision as subdivision (a)(1 )(B)(i) and adding the following as a new subdivision:

                    (ii) Beginning on the effective date of this act:

                              (a) The governor shall appoint three (3) voting members;

                              (b) The speaker of the senate shall appoint three (3) voting members, one (1)
                    of whom must be appointed as the successor to the voting member appointed from
                    the middle grand division by the governor pursuant to subdivision (a)(1 )(B)(i), whose
                    term expires on June 30, 2030, and one (1) of whom must be appointed as the
                    successor to the voting member appointed from the west grand division by the
                    speaker of the senate and speaker of house of representatives pursuant to
                    subdivision (a)(1)(B)(i), whose term expires on June 30, 2026; and

                              (c) The speaker of the house of representatives shall appoint three (3) voting
                    members, one (1) of whom must be appointed as the successor to the voting member
                    appointed from the middle grand division by the governor pursuant to subdivision
                    (a)(1)(B)(i), whose term expires on June 30, 2026, and one (1) of whom must be
                    appointed as the successor to the voting member appointed from the east grand
                    division by the governor pursuant to subdivision (a)(1)(B)(i), whose term expires on
                    June 30, 2031.

          SECTION 2. Tennessee Code Annotated, Section 49-7-204(b)(1), is amended by deleting
"subdivision (a)(2)(B)" and substituting "subdivision (a)(2)(B) or (a)(1 )(B)(ii)".

          SECTION 3. Tennessee Code Annotated, Section 49-7-202(f), is amended by adding the
following as a new subdivision:

                    (4) As used in this section, and for purposes of the state higher education policy and
          the outcomes-based funding formula, "on-time graduation" means that a student completed
          the student's first associate degree or first bachelor's degree in a standard program of study
          within or in:

                              (A) Four (4) academic years for students enrolled in a public university
                    governed by the board of trustees of the University of Tennessee or a state university
                    board; or

                              (B) Two (2) academic years for students enrolled in a community college
                    governed by the Tennessee board of regents.
SB 2079

                    (5) The commission shall establish a means of using inputs into the outcomes-based
          funding formula model to establish target on-time graduation rates for each state institution of
          higher education and publish the target rates at least once every five (5) years.
          SECTION 4. Tennessee Code Annotated, Section 49-7-202(n)(2)(B), is amended by deleting
the subdivision and substituting:

                    (B) Notwithstanding subdivision (n)(2)(A), the commission may approve separate
          maximum allowable tuition and fee increases for one (1) or more public institutions of higher
          education that differ from the tuition and fee policy approved pursuant to subdivision (n)(2)(A)
          if the commission determines that:

                              (i) A separate tuition and fee policy for an institution is necessary based on the
                    circumstances or needs of the respective institution; and

                              (ii) The institution has demonstrated positive growth in the institution's on-time
                    graduation rate calculated on a three-year rolling average.
          SECTION 5. Tennessee Code Annotated, Title 49, Chapter 7, Part 1, is amended by adding
the following as a new section:
                    (a) The board of trustees for the University of Tennessee, the board of regents, and
          each state university board shall adopt and implement a policy regarding the use of revenues
          generated by the out-of-state undergraduate tuition and fees charged by the institutions
          governed by the respective board.
                    (b) The policy must:

                              (1) Describe the board's utilization plan for revenues derived from the out-of-
                    state undergraduate tuition and fees charged by the institutions it governs and how
                    those revenues may be used to mitigate the tuition and fee costs for in-state
                    undergraduate students; and

                              (2) Be implemented no later than July 1, 2026.
          SECTION 6. Sections 1 and 2 of this act take effect upon becoming a law, the public welfare
requiring it. All other sections of this act take effect July 1, 2026, the public welfare requiring it, and
apply to the 2026-2027 academic year and each academic year thereafter.

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         SENATE BILL NO. 2079

PASSED:  April 6, 2026

                                     RANDY l\\cNALLY
                        SPEAKER OF THE ~ENA TE

                        CAMERON SEXTON, SPEAKER
                        HOUSE OF REPRESENTATIVES

M Apo\ APPROVED this
         day of                         2026

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                    BILL LEE, GOVERNOR