NASHVILLE-- Gov. Phil Bredesen says he wants to take a larger role in establishing and managing a state lottery. A legislative committee laid out plans Tuesday for setting up a lottery, which would be managed by a seven-member commission. Speakers of the House and Senate would appoint three members, and the governor would get one appointment under the proposed legislation. Thats not good enough for Bredesen. This goes against the norm. In the majority of states with lotteries, the governor appoints these boards, Bredesen said Thursday night in remarks prepared for the Tennessee Press Association. He noted that governors appoint lottery commissions, with legislative approval, in Georgia, Virginia and Louisiana. These states have healthy systems of checks and balances. While the legislature sets standards and provides oversight, the executive branch executes. No one branch of government has a disproportionate influence, Bredesen said. Id like to see Tennessees system set up with a similar set of checks and balances. State Sen. Steve Cohen, D-Memphis, and Rep. Chris Newton, R-Cleveland, the two prime lottery sponsors, split their legislation on Tuesday with a 73-page amendment that lays out their lottery plans. In his speech to newspaper executives, Bredesen said the governor has three main responsibilities concerning a lottery. He said the state should not have to foot the bill if lottery proceeds fail to live up to the college scholarships it was intended to finance. Second, we must be careful not to damage our higher education system with the lottery, Bredesen said. He said lottery legislation should ensure higher education is not burdened with more students than it can handle as a result of lottery-funded scholarships. Third, I believe I have a real obligation as governor to ensure a governance structure for the lottery that is effective and that clearly assigns responsibility for managing it well, he said. Im concerned about what has been proposed this week in the legislature. For one, it assigns the governor and the executive branch here in Tennessee the weakest role of any state in the nation in managing the lottery. Im concerned because if something goes wrong, Tennesseans Ð including many of you Ð will be standing at my door demanding to know what happened. Bredesen said TennCare, which has had eight directors in nine years, could be better managed through a joint operation, such as the University of Tennessee and Battelle Corp.s management of Oak Ridge National Laboratories. A similar arrangement could provide the sophistication, depth and stability that TennCare so desperately needs, he said. On another front, Bredesen said he is working on ways to equalize teacher pay between small, largely rural school districts and their wealthier neighbors. He said that once the equity issue is resolved, then he can begin work on ensuring that all teacher salaries can be raised. Cohen said Thursday night he was "really surprised" at the governor's opposition to the legislative formula for appointing lottery-commission members. "The reason we set it up like we did is that it is a creature of the General Assembly," Cohen said. "II think he [Bredesen] is making a mistake. I just want it to be fair." The Memphis senator, who spent 16 years spearheading the lottery issue through the legislature, said when he attempted to talk with the governor about the issue before the session, Bredesen professed no interest in the mechanics of the lottery and seemed to be totally preoccupied with TennCare and the budget. "I think that's changed now that lobbyists have gotten involved," Cohen suggested. After speaking to the TPA, Bredesen elaborated on his sentiments, saying that he had also been told by Cohen that the lottery in Tennessee would operate the same way as the Georgia lottery. "This is nothing like that,though," the governor said of the legislative plan formulated Tuesday. Cohen and Bredesen had evidently met behind closed doors to discuss the lottery issue Wednesday and were unable to agree on a format. The senator was reported to have been loquacious about the disagreement in conversations on Capitol Hill Thursday morning and made a floor speech to his Senate colleagues about it. Following is the text of the governor's remarks to the Tennessee Press Association Thursday night: Let me begin by saying a thank you to my hosts. First of all, TPA President Mike Pirtle. Your leadership and the work of your predecessors have helped foster a strong, independent press in Tennessee. Were better for it. To TPA Foundation President Joe Albrecht--thank you for the work your group does. Thanks to Hershel Lake, president of Tennessee Press Service. And thanks to John Shumaker and others from the University of Tennessee for their support of this Press Institute. A special thanks to the TPA staff, including Greg Sherrill and Robin Gentile, for their help. Most of all, to the members of the Tennessee Press Association, thank you for inviting me here tonight and thank you for serving as a vital information source for countless Tennesseans. Ive just come off of eighteen months on the campaign trail. I was reminded virtually every day of how hard you work to deliver the news fairly and impartially. You are part of a hardnosed, honorable profession. I salute you. More than most Tennesseans, the people in this room tonight have witnessed a lot of jarring things in our government, particularly in the past few years. Our recent legislative sessions had everything a good reporter could wish for: A willful governor, an angry and divided legislature, citizens who know how to use their car horns. Plenty of conflict. Plenty of personalities. As journalists, Im sure it was a fascinating scene to watch unfold. As citizens who care about the state in which they live, you probably felt like the rest of us: Bewildered. Concerned. A little saddened. Most of all, a feeling of Wait a minute, were better than this. Tonight, I am here to say I will end the long franchise on stories about dysfunctional state government. I especially want to end the hand-wringing about the problems and get us focused on solutions for the future. I had my first meeting as governor with the legislative leadership yesterday morning, and I am most proud that we spent one minute acknowledging the problems we face--Tenncare, education, the budget--and 59 minutes talking about solutions. Were not going to bat a thousand, but I assure you that state government is going to change the way it does business. During my inaugural address last month, I spoke at length about the need for a different approach to governing that sets aside partisan bickering and concentrates on finding straightforward solutions to our shared problems. I referred to it as the Third Way of running government. That wasnt just a passing remark. Its a mantra that Im going to repeat over and over again in the coming months--in cabinet meetings, in budget hearings and throughout state government. The Third Way really is all about common sense. It is about making sure that government fully leverages its existing resources to do as much as it can for as many people as possible. Its not about bigger government. Its not about smaller government. Its about more disciplined government. At a break in my first round of budget hearings Tuesday, a reporter asked a question--a very well-meaning question. It underscored just how much I need to change the way people look at these issues. The question came after I had asked the Arts Commission for a 7 % reduction in their budget. The question was: Are you saying there is 7 % fat in their budget? I was a little taken back by the question because I just dont think of these things in terms of fat and lean. These issues involve something entirely different. They involve choices. The key is figuring out how much we can spend in a given area, then deciding how we spend it. I can imagine the Arts Commission spending a million dollars promoting the arts, or two million, or the four million they now do, or even 10 million for that matter. Its not about fat and lean. Theres not some magic number to spend if you had perfect efficiency. That element of choice is obvious when it comes to funding for the Arts Commission. But the same choices exist at every level in state government, whether its the Department of Childrens Services, TDOT or Economic and Community Development. The third way is about making choices with discipline and then managing our operation to get the biggest bang for our buck. TennCare is a great place to begin the third way approach. My first days in office have been spent dealing with TennCare. I dont need to reiterate how many problems that program has. While there are cost pressures in all federal healthcare programs, TennCares failures are in part a reflection of a flawed management structure. TennCare has had eight directors in nine years. There is certainly a need for stability. One of the more frequent questions I get is: Who will be your TennCare director? More and more, Im feeling the name game is a losing game. It is unrealistic to invest so much in a single individual who might quit, get fired, get run over or get a better offer. When the captain leaves, you have a six billion dollar rudderless ship. And we all know that rudderless ships quickly end up on the rocks. We dont have to look far to see alternative models that work. Take a look at the joint venture between the University of Tennessee and Battelle to manage Oak Ridge National Laboratories. Under this structure, two major institutions--not a single person--manage a complex endeavor. A similar arrangement could provide the sophistication, depth, and stability that TennCare so desperately needs. This is the third way of doing things in TennCare. There are plenty of other areas where the third way can help. Another one is the lottery. Its design is very much in the mind of the General Assembly right now, and its implementation will very much be an issue throughout 2003. Let me say at the outset that Im somewhat of a latecomer to this issue. Senator Steve Cohen and others in the General Assembly have worked for years to make the lottery a reality. I have great respect for their views on the subject. But as the governor who will be responsible for making sure it runs properly, I have definite opinions on how it should be structured. There are issues related to the lottery in which the governor has a special role to play and a special responsibility as the chief of the executive branch of government. There are three of them. First, we must avoid promising more in new programs than we can deliver through lottery proceeds. The General Fund cannot be left on the hook for tens or hundreds of millions of dollars. We need a conservative approach at the outset. We must establish reserves and be careful that we dont create unrealistic expectations or entitlements that we cant support. In other words, dont promise $200 million in benefits until youre sure you have $200 million in lottery proceeds. That will mean considerable restraint in what we promise on the front end. What we need is some kind of mechanism that allows us to manage our commitments if revenues are not up to expectations. These are things Ill be looking at as governor to protect our state. Second, we must be careful not to damage our higher education system with the lottery. A number of people are very worried about this. I have also spoken with educators from Georgia who are very concerned about what has happened there. Heres the problem: Tuition provided by the lottery will cover only a fraction of the full cost of educating a student. Thats about 40% at the University of Tennessee, and even less at other institutions. If large numbers of new students enter our system--which I hope will happen--we run the risk of damaging the quality of our institutions by not covering the full cost of those students. We must carefully consider this issue during the design of the lottery. Its something I will be closely monitoring as governor. Third, I believe that I have a real obligation as governor to ensure a governance structure for the lottery that is effective and that clearly assigns responsibility for managing it well. Im concerned about what has been proposed this week in the legislature. For one, it assigns the governor and the executive branch here in Tennessee the weakest role of any state in the nation in managing the lottery. Im concerned because if something goes wrong, Tennesseans--including many of you--will be standing at my door demanding to know what happened. As well you should. As it stands, the proposal in Tennessee calls for the governor to appoint one member of the governance board and calls for the legislature to appoint six. This goes against the norm. In the majority of states with lotteries, the governor appoints these boards. For example, in Georgia the governor appoints the members of a seven-person board approved by the Senate. In Virginia, the governor appoints five board members who are approved by the legislature. In Louisiana, the governor appoints 9 members confirmed by the Senate. And the list goes on. These states have healthy systems of checks and balances. While the legislature sets standards and provides oversight, the executive branch executes. No one branch of government has a disproportionate influence. Id like to see Tennessees system set up with a similar set of checks and balances. Theres one more issue that Id like to touch on tonight. Its an important issue that, like the lottery, also deserves a little clarity. Im talking about teacher pay. Its a confusing subject in Tennessee right now, and Id like to do what I can to clear it up. We actually have two teacher pay issues in Tennessee that are distantly related but still separate. I need your help to help our citizens distinguish between the two. The first issue involves Tennessees average teacher salary. Our average teacher salary--approximately $37,000--is low relative to neighboring states such as Alabama and Georgia. That is a longstanding problem that I plan to address, given time. Addressing this issue was a campaign promise of mine. Yet before we can address this first issue, we must resolve a second issue: Basic equity in teacher pay between our rural and urban school districts. Our financing system for K-12 education in Tennessee is split, with the state providing 75% of the total and local governments providing 25%. However, the level of teacher pay outlined in our Basic Education Plan is unrealistically low. The result is a system where richer cities and counties supplement teacher pay with local tax monies beyond the 25% they are required to provide. And while it makes them more competitive in terms of teacher pay, it leaves the poorer districts behind. For years, rural school districts have argued the state must increase its financial commitment to them so they can hire the same quality of teachers that big-city and suburban school districts can hire. The issue reached a boiling point last fall when the Supreme Court agreed that the states formula for achieving equity in teacher pay falls woefully short. What Im saying--and what educators, parents and concerned citizens need to know--is this: Only after everyone has been elevated to a level playing field within Tennessee can we begin working together to raise all of our teachers salaries to make us more competitive with other states. All this can happen, with time. I am already working with all the interested parties--including the rural and urban school districts and officials at our state Department of Education--to begin the repair process. Before I conclude, I want to say once again how pleased I am to join you here tonight. I encourage you to continue your daily quest for truth. Our state is better for the accountability you help provide. I also want you to know how much I am enjoying this job. When I was sworn in as Mayor of Nashville back in 1991, I have to admit to you that I felt for several weeks like a bit of an outsider who had somehow taken over but didnt really belong in this nice palace. I secretly wondered if the real mayor would come back from vacation one day and call the police. Being the new governor is totally different. I feel at home, as though I was destined for this job. This is where I am meant to be. I find it challenging, but also invigorating. Above all, I look forward to producing real results. Im going to do it by finding a third way. Its not just rhetoric, you just watch. Thank you for listening.