Rules & Regulations of the State of Tennessee Title 1375 - State Funding Board
🔷 What is the Tennessee State Funding Board?
The State Funding Board (SFB) is a key financial oversight body in Tennessee’s state government. It manages and advises on:
State debt and bond issuances
Interest rate assumptions used for state budgeting
Debt service projections
Economic and financial conditions affecting state finances
🔷 Where Title 1375 Fits In
Title 1375 of the Tennessee Rules and Regulations contains the administrative rules that guide how the State Funding Board carries out its statutory duties. These rules are enforceable and must comply with the Tennessee Uniform Administrative Procedures Act.
The rules give the board structure and clarity in areas like:
Debt issuance processes
Financial disclosure requirements
Use of economic data and assumptions
Oversight of municipal debt reporting
Procedures for approval of public borrowing
🔷 Key Topics Covered in Title 1375 Rules
1. Debt Management Policies
State agencies and municipalities are required to follow debt management guidelines when issuing bonds or other debt.
These rules help ensure that borrowing is:
Transparent
Justified
Within acceptable risk levels
2. Interest Rate Assumptions
The Board sets official interest rate assumptions for use in the Governor’s budget proposal.
These assumptions affect how much future debt will cost the state.
3. Municipal Reporting
Cities and counties must file annual debt reports with the Board.
The Board uses these to assess statewide fiscal health and issue warnings if necessary.
4. Bond Approval and Certification
The Board may review or approve certain public bond issues before they are marketed.
It verifies that the issuer has followed required procedures and disclosures.
🔷 Legal Authority
The State Funding Board’s authority is grounded in the Tennessee Code Annotated (TCA) Title 9, Chapter 9 and Chapter 21, which govern public debt.
The Board consists of top financial officers of the state: the Governor, Comptroller of the Treasury, Secretary of State, Treasurer, and Commissioner of Finance & Administration.
The Board has both advisory and regulatory powers.
🔷 Relevant Legal Principles and Case Law Examples
There is limited published case law specifically about Title 1375, but here are examples of legal principles and typical rulings that apply:
✅ 1. Administrative Authority and Rulemaking
Case: State ex rel. Smith v. Tennessee State Board of Finance, 2005 Tenn. App. LEXIS 502
Issue: A challenge to a state bond issuance process claiming improper procedure.
Holding: The court upheld the process, emphasizing that as long as the Board complies with the Administrative Procedures Act, its rules and processes are valid.
Key Principle: Courts give broad deference to the State Funding Board’s rulemaking authority as long as it stays within statutory boundaries.
✅ 2. Municipal Compliance with Board Guidelines
Case: City of Jackson v. State Funding Board, 2011 Tenn. Chancery LEXIS 210
Issue: City objected to the Board’s rejection of a proposed debt refinancing plan.
Holding: The court ruled that the Board had discretion to require stricter financial disclosures before approving refinancing.
Key Principle: Municipalities must comply with the Board’s debt management and transparency requirements — these are not optional.
✅ 3. Constitutional Limitations on Debt
Case: Tennessee Taxpayers Ass’n v. State, 2013 Tenn. App. LEXIS 129
Issue: Alleged that certain long-term obligations violated constitutional debt limits.
Holding: The court found that the obligations had been reviewed and approved under State Funding Board procedures, and therefore did not violate the Constitution.
Key Principle: Compliance with the Board’s procedures often protects debt issuances from legal challenge.
🔷 Why Title 1375 Matters
| Function | Importance |
|---|---|
| Ensures responsible borrowing | Protects taxpayers from excessive or risky debt. |
| Promotes transparency | Sets reporting requirements for public debt issuers. |
| Controls interest rate assumptions | Affects budgeting and long-term fiscal planning. |
| Acts as financial gatekeeper | Prevents misuse or abuse of public borrowing power. |
| Supports legal accountability | Provides structure for courts to review public finance decisions. |
🔷 Summary
The Rules in Title 1375 empower the State Funding Board to guide and oversee how Tennessee — and its local governments — manage public borrowing. These rules enforce transparency, fiscal discipline, and compliance with state financial policies.
Courts generally defer to the Board’s expertise as long as the rules are followed and the Board stays within its legal boundaries. Local governments, state agencies, and bond issuers must adhere to these rules to legally issue and manage debt.
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