The Volunteer State is drawing the roadmap for a return to federalism
A second Trump administration appears poised to dismantle significant vestiges of the federal bureaucracy. For small government advocates, this is a promise that’s been heard before—but there’s a new wrinkle, namely the potential elimination of the Department of Education.
Political battle lines are forming on this debate in Washington and amongst pundits, but states like Tennessee have already been working to untangle the influence federal dollars have on their education systems. Just one year ago, the Tennessee legislature took steps to explore rejecting federal education aid that equated to about $1.9 billion in annual funds. Prior to the Covid-19 pandemic, more than one in six of the state’s education dollars came from the federal government.
Of course, the mere consideration of turning federal education funding is extraordinary in modern American politics. But the notion isn’t all that surprising given Tennessee’s recent political manifestations. For decades, the Volunteer State’s leadership and electorate has provided a clear roadmap for how states can recover roles abdicated to the federal government and unravel decades of Washington’s expansion into every part of citizens’ lives.
End of COVID-19 relief funding
A critical moment for public education budgets provides the backdrop for the new Trump administration’s pending overhaul of the Department of Education. September of 2024 marked the end of nearly $190 billion in federal COVID-19 relief funding for school districts that are facing drastic cuts if they’re unable to find replacement dollars. The financial pinch for K-12 school systems nationwide will be severe as 60 percent of these dollars went to cover salaries and 1 in 4 school districts “won’t have any funding sources for expenses they’ve been covering with federal relief aid.”
These education shortfalls are sure to compound some states’ financial struggles as other pandemic-related aid dollars disappear. With the influx of federal cash, spending by states increased 40 percent since 2019; now, states like New York, California, and Maryland face multi-billion dollar shortfalls in the next few years.
That’s what makes Tennessee’s study of the ramifications of turning down federal dollars noteworthy — such a move would stand in stark contrast to the overall trend of states becoming increasingly reliant on Washington’s financial assistance. Despite the January 28, 2025 deadline looming for when Covid-19 relief funds can no longer be spent, the Biden administration is encouraging schools to file for extensions in order to avoid returning those funds to the federal government.
But Tennessee’s approach provides a rare glimpse at how austerity processes should work. In November 2023, the state General Assembly created a joint committee to review the impact of federal education funding, the conditions associated with the assistance, and restrictions tied to the money. While the legislators were unable to reach consensus on moving forward – and ultimately declined to move forward—a report published by the Tennessee House of Representatives did recommend further deliberation on the matter and discussed in granular detail how the state could resist unwanted restrictions that come with federal dollars.
What’s radical in America is a day ending in “Y” for Tennessee
Even considering the elimination of federal education dollars is radical in this day and age, but it is consistent with the typical standoffishness Tennessee has shown towards the federal government on a wide variety of issues. For example, Tennessee is one of the few remaining states where passengers can have an open container of alcohol while driving. Drinking and driving is illegal; but having an open container is not. And since allowing open containers on highways breaks with federal highway funds policies since the Clinton era, this seemingly insignificant, thumb-in-your-eye policy has cost the state an estimated $200 million in federal funding since 2000.
But this habit of rejecting federal encroachment comes from a position of principle — and a desire for good governance. The day after the Biden Administration announced the OSHA COVID-19 vaccine mandate for private sector employees in 2021, Tennessee joined six other states in a lawsuit to overturn the mandate. Two months later, the U.S. Supreme Court upheld an injunction against the mandate and OSHA withdrew the policy.
And most importantly, these actions create better outcomes for the people of Tennessee. When the legislature killed a proposal to expand Medicaid citing concerns that necessary funding by the federal government would eventually become a burden on taxpayers, the work didn’t stop there. Six years later, the state became the first in the union to successfully apply for a block-grant waiver that allows greater control over TennCare, the state Medicaid program. As a result, any savings realized under the block-grant program are reinvested back into provision of healthcare services. A spokesman for the Speaker of the Tennessee Senate explained how the block-grant system was superior saying, “Unlike Medicaid expansion, the block grant waiver is a sustainable model. It gives Tennessee unprecedented control over Medicaid dollars in order to find efficiencies and improve health outcomes for Tennesseans.” While the Biden administration eventually clawed back some of those gains, Tennessee’s authority may be elevated again under Trump.
In a similar situation, when Tennessee rejected over $8 million in federal HIV prevention grants in 2023, residents weren’t left high and dry. Lawmakers opted to use state funding for HIV programs in order to maintain control of how the money was used. Ironically, the federal Centers for Disease Control still sent $5 million for testing, further increasing the available resources to Tennessee residents.
Bold conservatism in state governance
While Tennessee is considered a deeply “red state” based on statewide election results —the partisan make-up of the GOP-led legislature is a relatively new phenomenon —even though its conservative ideals are not. Democrats actually held the Speaker’s office in the state House in 2008, albeit with a one seat minority (50-49) until 2011. But in the last decade, Republicans have taken the generally center-right agenda of the prior decades and set a new gold-standard for ramming through a conservative policy agenda, including:
- Eliminating an income tax on investment returns.
- Effectively banning abortion, drag shows aimed at children, and sex changes for minors.
- Establishing religious liberty protections for objections to same-sex marriage.
- Redistricting the opposition into oblivion (Republicans currently hold 10 of 11 Congressional posts and supermajorities in both state legislative bodies).
Lawmakers aren’t taking political risks with this approach. Their positions and priorities are in the close alignment of the state government’s actions with an electorate that emboldens its representatives. Here are some examples of how Tennesseans themselves have actively laid the groundwork for this governance approach:
The Tennessee Tax Revolt of 2001 – When a Republican governor, Don Sundquist, appeared poised to pass a state income tax — third rail of Tennessee politics — protesters took to the state capital building with horns blaring, ultimately leading to the proposal’s defeat. Sundquist’s misstep would play a role in costing Republicans the governorship for the next eight years as voters punished the GOP by electing a pro-business, moderate Democrat to replace him.
Amendment 1 – 2014 – Tennessee’s social conservatives approved a constitutional amendment by a margin of 52-47 stating no constitutional right to an abortion existed and affirming the state legislature’s authority to regulate the practice.
Amendment 3 – 2014. Tennessee voters put the final nail in the income tax coffin by approving a constitutional amendment prohibiting a state income tax by a margin of 66 to 34 percent.
Amendment 1 – 2022. Voters approved a constitutional amendment declaring Tennessee a “Right-to-Work” state by a margin of 70 to 30 percent.
Good politics leads to great growth
The results speak for themselves, and not just on the scorecard of partisan wins for a heavily-Republican legislature. Tennesseans enjoy the 2nd lowest tax burden in the United States and the economic indicators are off the charts. In recent years, the Secretary of State has bragged about record numbers of new business filings and the state’s GDP growth is outperforming the nation as a whole.
Also, while Tennessee is one of the fastest growing states in the county, it’s not just new residents coming to enjoy what the state has to offer. Major corporations are flocking to Tennessee to take advantage of the business environment. Companies like Oracle, Mitsubishi-North America, Kaiser Aluminum and Allianz Bernstein have all relocated their headquarters to Tennessee in the last few years. Amazon and iHeartMedia have recently opened major operations facilities. Plus, major brands like Healthcare Corporation of America, FedEx, Dollar General, and Autozone have called Tennessee home for decades.
Texas and Florida may dominate the national headlines for when they make moves contrary to the federal government, but Tennessee has quietly become the gold-standard for upholding the principles of self-governance. While the historical record shows the state government has actively pursued this trajectory, it’s been a two-pronged approach.
The roadmap Tennessee has laid out for other states to follow does involve a bold legislative approach. However, it also shows that a return to federalism also depends on a citizenry willing to engage and endorse such a philosophy through action. Political leaders in other states wishing to turn back decades of the federal government’s intrusion should recognize it requires a partnership with the constituents, and not just pulling the levers of state government.
Robert Kuykendall is director of accounts at Proven Media Solutions.
