On June 28, 2002, Provost Loren Crabtree announced that the first session of summer school would end on June 28, instead of on July 3 as scheduled, because of the failure of the state legislature to pass a budget bill. State law requires that a balanced budget be in place by the start of the fiscal year (July 1); otherwise, state government shuts down. During weekend sessions, the House and Senate approved a bill that gave Governor Don Sundquist power to keep essential services funded through July 5 while they continued to attempt to break the stalemate over how to resolve an $800 million deficit in the next year’s budget.
There had been a strong push to implement an income tax, but the legislators were not so inclined. One alternative budget would have required a cut of $50 million for the UT system. The budget was eventually balanced with a rise in the sales tax and changes in revenue projections, and the second session of summer school began on schedule. At its annual meeting, held in July rather than June because of the lack of a state budget to inform its decisions about tuition and pay raises, the board of trustees voted that employees normally scheduled to work during the July 1–July 3 period would be paid for scheduled work hours. Employees who worked during the furlough period were provided annual leave, hour per hour, for hours worked.