Can the Tennessee Department of Finance or another state agency override pay raises the State Board of Education approves for its own staff?

Subject

Opinion No. 11-81, Authority of the State Board of Education to Set Compensation, December 5, 2011

Plain-English summary

Executive Director Nixon at the State Board of Education asked the AG a focused turf question: if the Board votes to raise its Executive Director's salary, and the Executive Director then recommends pay raises for other Board staff, and the Board has enough budget to cover the increases, can the Department of Finance and Administration or any other state agency block those raises?

The short answer is yes, they can. The longer answer is that the Board's compensation authority under Tenn. Code Ann. § 49-1-305(c) is limited by language in the same statute requiring the Board's staff to remain subject to "generally applicable" state employment policies and regulations.

Section 49-1-305 sets up a structure where Board staff are "independent of all agencies or departments of state government and subject only to the state board." That sounds like total autonomy. But subsection (b) walks it back: Board staff "remain subject to personnel regulations and policies that are applicable to state employees in general, such as leave, compensation, classification, travel regulations, etc." Compensation is explicitly named in the carve-out.

Subsection (c) gives the Board direct compensation-setting authority. The Executive Director's pay is "fixed by the state board" and "shall not be less than the compensation provided for an assistant commissioner in the department of education." Pay for other Board employees is "set by the executive director with the approval of the state board."

So the Board has authority. But the Board exercises it inside the general state employment framework. The 2011 Appropriations Act (2011 Tenn. Pub. Ch. 473, § 30) makes that framework explicit on the compensation side: "[A]ll other salaries and wages in departments, institutions, offices, and agencies shall be approved by the Commissioner of Human Resources, provided, however, that the establishment of salary ranges within such departments, institutions, offices, and agencies shall be subject to the approval of the Commissioner of Finance and Administration."

The AG read § 49-1-305(b) and the Appropriations Act § 30 together using standard rules of statutory construction. Shelby County Health Care Corp. (Tenn. 2010) directs courts to apply unambiguous statutes according to plain meaning. Carver v. Citizens Utility Co. (Tenn. 1997) calls for harmonious operation rather than conflict between interrelating statutes. The harmony here is: Board sets compensation, but Board's exercise of that authority is subject to HR Commissioner sign-off on the specific salaries and F&A Commissioner sign-off on the salary range structure.

The opinion is short and clean. It doesn't resolve any specific dispute. It just confirms that another statewide gatekeeper exists.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Tennessee Appropriations Act is enacted every fiscal year. Section 30's exact language has been re-enacted in similar form in subsequent appropriations acts. The state has reorganized HR functions since 2011; verify which commissioners currently hold the approval authority.

Background and statutory framework

Board's staff authority. Tenn. Code Ann. § 49-1-305(a): The State Board of Education's staff is "independent of all agencies or departments of state government and shall be subject only to the state board."

Subjection to general state regulations. Tenn. Code Ann. § 49-1-305(b): Board staff "remain subject to personnel regulations and policies that are applicable to state employees in general, such as leave, compensation, classification, travel regulations, etc."

Compensation-setting structure. Tenn. Code Ann. § 49-1-305(c): "The compensation of the executive director shall be fixed by the state board and the compensation shall not be less than the compensation provided for an assistant commissioner in the department of education. The compensation of other employees of the board shall be set by the executive director with the approval of the state board."

State employment framework. Tenn. Code Ann. §§ 8-30-201 to 403; Tenn. Comp. R. & Regs. 1120-01 to 14.

The 2011 Appropriations Act, Section 30. "[A]ll other salaries and wages in departments, institutions, offices, and agencies shall be approved by the Commissioner of Human Resources, provided, however, that the establishment of salary ranges within such departments, institutions, offices, and agencies shall be subject to the approval of the Commissioner of Finance and Administration."

Statutory construction rules. Shelby County Health Care Corp. v. Nationwide Mut. Ins. Co., 325 S.W.3d 88, 92 (Tenn. 2010) (unambiguous statutes applied per plain meaning); Carver v. Citizens Utility Co., 954 S.W.2d 34, 35 (Tenn. 1997) (interpret to avoid conflict and provide harmonious operation).

Common questions

Does this mean F&A can effectively block any Board pay raise?

Functionally, yes. The Commissioner of Human Resources must approve the specific salary, and the Commissioner of Finance and Administration must approve the salary range structure that contains it. Either gatekeeper can withhold approval.

What about the Executive Director's salary specifically?

The Executive Director's compensation is "fixed by the state board" under § 49-1-305(c), but § 49-1-305(b) keeps the Board's staff inside the general state employment system, which includes compensation. The Appropriations Act language sweeps in "all other salaries and wages in departments, institutions, offices, and agencies." The Executive Director's salary is no exception.

Can the Board bypass approval by paying from its own budget surplus?

The opinion expressly assumed sufficient funds in the Board's budget. Even with budget headroom, the substantive approval authority of HR and F&A applies. The constraint is procedural, not budgetary.

Are there exceptions for unique or merit-based pay actions?

The 2011 Appropriations Act, § 30, included exceptions not addressed in this opinion. The AG noted "Subject to certain limited exceptions not relevant to this opinion request." Anyone working through a specific compensation action should look at the full text of § 30 in the relevant year's appropriations act.

What happens if HR or F&A delay or refuse to act on a Board request?

The opinion did not address remedies for inaction. As a general matter, the Board would have to use administrative processes or seek declaratory or injunctive relief if it believed the approval authority was being abused.

Citations

• Tenn. Code Ann. § 49-1-305
• Tenn. Code Ann. § 49-1-305(a)
• Tenn. Code Ann. § 49-1-305(b)
• Tenn. Code Ann. § 49-1-305(c)
• Tenn. Code Ann. §§ 8-30-201 to 403
• Tenn. Comp. R. & Regs. 1120-01 to 14
• 2011 Tenn. Pub. Ch. 473, § 30
• Shelby County Health Care Corp. v. Nationwide Mut. Ins. Co., 325 S.W.3d 88 (Tenn. 2010)
• Carver v. Citizens Utility Co., 954 S.W.2d 34 (Tenn. 1997)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2011/op11-081.pdf

Original opinion text

December 5, 2011
Opinion No. 11-81
Authority of the State Board of Education to Set Compensation

QUESTION

Assuming the State Board of Education takes appropriate action to approve an increase in compensation for its Executive Director and to approve the Executive Director's recommendation to increase the compensation for other employees of the Board, and assuming the Board has sufficient funds for such increases within its budget, does any other Tennessee department or agency (including the Tennessee Department of Finance and Administration) have the authority to override or disapprove these compensation decisions by the Board and its Executive Director?

OPINION

Yes, under Tennessee law the Commissioners of Human Resources and of Finance and Administration have oversight and approval authority over any compensation increases for the staff of the State Board of Education.

ANALYSIS

The State Board of Education has authority to select and compensate its staff, subject to generally applicable state employment regulations. See Tenn. Code Ann. § 49-1-305. See also Tenn. Code Ann. §§ 8-30-201 to 403; Tenn. Comp. R. & Regs. 1120-01 to 14. The staff of the State Board of Education are "independent of all agencies or departments of state government and shall be subject only to the state board." Tenn. Code Ann. § 49-1-305(a). The Board's staff's compensation is set as follows:

The compensation of the executive director shall be fixed by the state board and the compensation shall not be less than the compensation provided for an assistant commissioner in the department of education. The compensation of other employees of the board shall be set by the executive director with the approval of the state board.

Tenn. Code Ann. § 49-1-305(c).

Nonetheless these statutes specifically recognize that the staff of the State Board "remain subject to personnel regulations and policies that are applicable to state employees in general, such as leave, compensation, classification, travel regulations, etc." Tenn. Code Ann. § 49-1-305(b) (emphasis added). Therefore, although the compensation of Board of Education staff may be established at the discretion of the State Board, that discretion is limited by generally applicable state employment regulations and policies.

Accordingly, any actions of the State Board relating to compensation would be subject to generally applicable state employment provisions, including those incorporated in the 2011 Appropriations Act. Subject to certain limited exceptions not relevant to this opinion request, the 2011 Appropriations Act grants the Commissioners of Human Resources and Finance and Administration oversight authority over salaries and wages in "departments, institutions, offices and agencies," a comprehensive list that would include the State Board of Education. The Act states in pertinent part:

[A]ll other salaries and wages in departments, institutions, offices, and agencies shall be approved by the Commissioner of Human Resources, provided, however, that the establishment of salary ranges within such departments, institutions, offices, and agencies shall be subject to the approval of the Commissioner of Finance and Administration.

2011 Tenn. Pub. Ch. 473, § 30.

Section 30 of the 2011 Appropriations Act and Tenn. Code Ann. § 49-1-305(b) must be read together and applied as written, so as to avoid conflict between their interrelating provisions. See Shelby County Health Care Corp. v Nationwide Mut. Ins. Co., 325 S.W.3d 88, 92 (2010) (stating a statute that is unambiguous must be applied according to its plain meaning); Carver v. Citizens Utility Co., 954 S.W.2d 34, 35 (Tenn. 1997) (one goal of statutory construction is to avoid conflict and provide for a harmonious operation of the laws). The statutes governing the State Board grant the Board the authority to set its compensation, with the caveat that the Board must abide by generally applicable State employment policies and regulations governing the compensation of State employees. Thus, the State Board of Education has authority to set the compensation of its staff subject to the oversight granted by the General Assembly to the Commissioners of Human Resources and Finance and Administration in the 2011 Appropriations Act.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

ADAM B. FUTRELL
Assistant Attorney General

Requested by:
Dr. Gary Nixon, Executive Director
Tennessee State Board of Education
710 James Robertson Parkway
9th Floor, Andrew Johnson Tower
Nashville, TN 37243-1050