FW Rank: 6

1992 Rank: 5

Population: 4.9 million

Moody's bond rating: Aaa

Standard & Poor's bond rating: AA+

Governor: Ned Ray McWherter, Democrat

Legislature: Democratic majority in House and Senate

-- Ranking pluses: Replenished rainy day fund; increased efforts toward long-range planning, good Medicaid estimates; extremely responsible budgeting with high degree of caution regarding nonrecurring revenues; good program evaluation, wide- spread quality-management initiatives and emphasis on customer service and accountability (particularly in education ); very cautious accounting for budget as well as financial report; GFOA Certificate of Achievement for Excellence in Financial Reporting; extremely well funded pension.

-- Ranking minuses: Underestimation of prison expenditures over several years; scheduled preventive maintenance somewhat below average for highways and bridges; somewhat imprecise revenue estimates.

-- Comments: Last year's half-cent sales tax increase has added $330 million to the school budget. More money is being pumped into classroom supplies, including computers, reducing pupil/teacher ratios and especially into poor rural school districts; But money isn't being blindly thrown at teachers. State emphasizes accountability, including report cards on schools. With his education program in its first year, the governor, who has a year and a half left in office, is turning his attention to major health care reform and hoping for waivers from Washington to replace the state's Medicaid program with a statewide managed care system that would provide universal coverage.

Source: "The State of the States," Financial World Magazine, May 11, 1993 (Vol. 161, No. 10); New York, NY.