New TN Laws Effective July 1, Part 2: Workforce Supports & Education

In Part 1 of our look at new laws passed by the 114th General Assembly during its 2026 regular session which took effect on July 1, we outlined new laws affecting the operating environment for Tennessee business leaders.

Today, in Part 2, we turn our focus to new laws that took effect on July 1 which will have a variety of direct and indirect effects our state's business climate for the long term. In particular, we take a closer look below at several new laws that will affect workforce supports and education - key inputs supporting the readiness and success of the Tennesseans who power our businesses and our state's economic prosperity for the long term.

Workforce Supports – Child Care and Housing

SB1683 (Public Chapter No. 695) – TN Child Care Hosting Safe Harbor Act

Sponsors – Sen. Ferrell Haile (R-Gallatin); Rep. Andy Farmer (R-Sevierville)

• Provides that an employer or host entity is not liable in a civil action for damages arising from the acts or omissions of a child care provider that is licensed under state law and provides child care services on property owned, leased, or otherwise made available by the employer or host entity.

• Provides that such immunity does not apply to the employer or host entity if:

  • its gross negligence or willful misconduct is the proximate cause of the injury, harm, or loss;

  • it operates, controls, or manages the child care provider;

  • it is licensed as a child care provider; or

  • it employs, supervises, or directs the child care provider's staff.

HB2509 (Public Chapter No. 1037) – Community Workforce Housing Innovation Pilot Program

Sponsors – House Speaker Cameron Sexton (R-Crossville); Sen. Bill Powers (R-Clarksville)

Establishes the Community Workforce Housing Innovation Pilot Program, to be administered by the Tennessee Housing Development Agency.

• Establishes that the purpose of the pilot program is to provide “affordable rental and home ownership community workforce housing for persons affected by the high cost of housing, using regulatory incentives and state and local funds to promote local public private partnerships and leverage government and private resources.”

• Authorizes THDA to provide loans to an applicant for construction or rehabilitation of workforce housing in each of the three grand divisions.

• Defines “workforce housing” as “housing affordable to natural persons or families whose total annual household income is more than eighty percent (80%) but does not exceed one hundred fifty percent (150%) of area median income, adjusted for household size.”

• Includes numerous additional technical and administrative requirements.

SB2509 (Public Chapter No. 980) – TN Child Care Red Tape Reduction Act

Sponsors – Sen. Charlane Oliver (D-Nashville); Rep. Harold Love, Jr. (D-Nashville)

• Requires local governments to establish and maintain an expedited review process for all child care agency permit applications.

• Requires the State Fire Marshal's Office to exclusively conduct fire safety inspections for a child care agency and establishes standards and timeframes for such fire safety inspections.

• Requires local jurisdictions to ensure that local building and fire safety codes and align with the state standards established, and the pre-licensing standards and rules of the Dept. of Human Services, in a manner that imposes the least additional regulatory burdens practicable to child care agencies in the local jurisdiction.

SB2404 (Public Chapter No. 1133) – Early educator workforce development resource task force

Sponsors – Sen. Dawn White (R-Murfreesboro); Rep. Mark White (R-Memphis)

• Creates an early educator workforce development resource task force to:

  • assess the existing state workforce, education, and training resources available to support early educators or aspiring early educators, and to

  • identify gaps and opportunities to strengthen workforce pathways for early educators, in a manner consistent with the state's workforce development priorities.

• Allows, under certain  circumstances, privately operated child care programs and child care agencies that serve children from birth until kindergarten enrollment to be eligible to be approved as a clinical practice site for an educator preparation program.

SB2525 (Public Chapter 873) – Work-based learning in child care for certain high school students

Sponsors – Sen. Tom Hatcher (R-Maryville); Rep. Tom Stinnett (R-Friendsville)

Allows a high school student who is older than 16 but younger than 19 to work in a child care center outside of school hours or during school hours through a work-based learning program if the student meets certain criteria.

SB2637 (Public Chapter No. 679) – Minimum age for workers caring for children 4 and under

Sponsors – Sen. Kerry Roberts (R-Springfield); Rep. Sabi “Doc” Kumar (R-Springfield)

Prohibits an individual from serving as a teacher or assistant teacher in a child care program for children who are four or younger unless the individual is at least 18.

Education

SB2079 (Public Chapter No. 799) – Public higher-ed graduation rates & funding

Sponsors – Sen. Bo Watson (R-Hixson); Rep. Scott Cepicky (R-Culleoka)

• Revises THEC's outcomes-based funding formula to include on-time graduation metrics for public universities (four years) and community colleges (two years).

• Authorizes THEC to approve separate maximum allowable tuition and fee increases for a public institution of higher learning if THEC determines it is necessary and if the institution demonstrates three-year average positive growth in its on-time graduation rates.

• Requires TN public higher education institutions to adopt and implement policies regarding how they will plan to use revenues generated by out-of-state undergraduate tuition and fees to mitigate tuition and fee costs for in-state undergraduate students.

SB2141 (Public Chapter No. 899) – Public higher education - scholarships, transfer pathways, THEC

Sponsors – Sen. Dawn White (R-Murfreesboro); Rep. Mark White (R-Memphis)

Makes numerous changes to public higher education requirements, including:

• Clarifies and makes changes to the rules and regulations of scholarships awarded under the Tennessee Student Assistance Corporation (TSAC).

• Creates new technical Tennessee Transfer Pathways for students; requires THEC to review all new or existing transfer pathways on a rotating basis at least once every five years. [Note: these two provisions took effect upon the signing of the bill by Gov. Lee on May 5.]

• Allows THEC to designate public and private nonprofit higher education institutions as transfer designation institutions.

• Allows THEC to conduct private meetings to discuss or deliberate on certain matters so long as no action is taken on the matters discussed.

• Exempts education offered to an apprentice through an approved Tennessee Department of Labor and Workforce Development Registered Apprenticeship Program from the Tennessee Higher Education Authorization Act of 2016.

HB2533 (Public Chapter No. 1040) – Amendments to state K-12 education provisions

Sponsors – Rep. William Lamberth (R-Portland); Sen. Jack Johnson (R-Franklin)

Makes dozens of relatively limited-in-scope, yet significant changes to state laws governing K-12 education in Tennessee.

SB2403 (Public Chapter No. 1132) – Student ELA proficiency on state TCAP tests

Sponsors – Sen. Dawn White (R-Murfreesboro); Rep. Scott Cepicky (R-Culleoka)

• Requires the Dept. of Education to create a framework to determine a student's projected proficiency level on the English language arts portion of the TCAP test.

• Requires the Department to publish on its website the percentage of students who attained each projected proficiency level for the ELA portion of the TCAP test based on the frameworks created.

• [Note: This bill contains other provisions relating to reporting by public schools to the state on local student assessments, and creating a new state TCAP assessment review board, which took effect upon signature of the bill into law by Gov. Lee on May 22.]

SB1585 (Public Chapter No. 1069) – Non-TCAP testing option for ESA recipients

Sponsors – Sen. Jack Johnson (R-Franklin); Rep. William Slater (R-Gallatin)

Revises the assessment testing requirements for students who participate in the education savings account (ESA) program (the limited private-school 'voucher' program enacted in 2019) to permit ESA award recipients in grades 3-11, instead of being required to take the state TCAP tests for math and English Language Arts, to be given either:

• “a nationally standardized achievement test that is aligned to the respective participating school's instructional plan, as determined by rules promulgated by the state board”, or

• the state TCAP tests for math and English language arts.

SB2441 (Public Chapter No. 905) – Closure of virtual schools for non-performance

Sponsors – Sen. Bill Powers (R-Clarksville); Rep. Mark White (R-Memphis)

• Requires a public school district to close a virtual school not meeting certain requirements for continued operation.

• Requires the department of education to maintain and publish on the department's website a list of providers that operated or managed a virtual school that was closed for not meeting the requirements for continued operation; makes other related changes.

HB2177 (Public Chapter No. 1012) – Public charter schools; public school/district financials

Sponsors – Rep. William Slater (R-Gallatin); Sen. Bo Watson (R-Hixson)

Makes numerous changes and additions to state laws concerning public education; most of these concern requirements relating to public charter schools, while a few others relate to public school and school district audits, budgets and financial reporting.

Learn more about the Tennessee Business Roundtable's Agenda for Tennessee - what we want 'not for ourselves alone, but for all Tennessee' - on our Policy Priorities page.