NASHVILLE (AP) — Gov. Bill Haslam has made it tough for graduating high school seniors in Tennessee to find an excuse not to further their education.

During his State of the State address Monday evening, the Republican goverrnor unveiled a plan to allow them to attend two years of community college or a college of applied technology free of tuition and fees.

"Through the 'Tennessee Promise', we are fighting the rising cost of higher education, and we are raising our expectations as a state," Haslam said. "We are committed to making a clear statement to families that education beyond high school is a priority in the state of Tennessee."

Haslam's speech included details of his $32.6 billion state spending proposal and a rundown of some of his top legislative priorities for the year. His new education initiative was undoubtedly the highlight of his address, drawing praise from Republicans and Democrats, as well as state education officials.

"It gives them a jumpstart on college," said Democratic Rep. Harold Love of Nashville. "That's a wonderful opportunity."

Rep. Harry Brooks agreed.

"It ... relieves the pressure from what has been a circumstance where a lot of students are saying, I can't afford it, or my parents don't have a way to do it," said Brooks, a Knoxville Republican and chairman of the House Education Committee.

The proposal would be part of Haslam's so-called "Drive to 55" initiative, whose goal is to improve Tennessee's graduate rates from colleges and universities from the current 32 percent to 55 percent by 2025.

The new proposal would lower the current $4,000 lottery scholarship amount at four-year colleges to $3,000 for freshmen and sophomores, but increase it to $5,000 for juniors and seniors. The move is meant to encourage students to go to two-year colleges first.

Senate Speaker Ron Ramsey, R-Blountville, acknowledged that the proposed change will likely have to overcome some resistance, "but in the end it means more people going to college," he said.

After graduation, students who choose to attend a four-year school will be able to do so as a junior. Haslam plans to fund the program — expected to cost about $34 million annually — through an endowment that will be comprised of lottery reserve funds. The state has about $400 million in reserves.

Tennessee Board of Regents Chancellor John Morgan said he was "thrilled" to hear the announcement about the program.

"We very much appreciate the governor ... recognizing that this is something that truly can make the difference in the lives of individuals," said Morgan, who oversees six state universities, 13 community colleges and 27 colleges of applied technology.

The governor plans to also put $47 million into the state's school-funding formula following criticism that the current Basic Education Program does not adequately fund districts statewide. Haslam is also allocating $63 million to give teachers a 2 percent raise.

"In Tennessee, education is a priority," he said. "We've ... set a goal to be the fastest-growing state in the country when it comes to paying our teachers."

Earlier in the day, Haslam met with reporters and reiterated what state financial officials have been reporting over the past several months, that revenue collections have failed to meet projections.

He noted the state has $260 million in new revenue for the budget year beginning in July. However, $180 million will go toward costs to TennCare — the state's expanded Medicaid program — and $120 million is proposed for education.

He also said health insurance costs for state workers are up $40 million.

"So, before putting anything toward anything else, we already have an $80 million deficit," which will require the state to make some cuts, he said.

In his speech, Haslam acknowledged that trying to meet the needs of TennCare — which covers 1.2 million Tennesseans — has meant "squeezing out other critical needs." About $77 million of the money for TennCare would be used to care for the thousands of people identified by the federal health care law's online exchanges as eligible for TennCare but not enrolled.

Tennessee is among 36 states that have deferred operation of the exchanges to the federal government, and Haslam in March declined to accept $1.4 billion in federal funds to cover about 140,000 uninsured Tennesseans under the terms the money was offered.

Haslam once again defended his decision not to accept the federal funds in his speech.

"My concern has been that the federal government isn't giving us the tools to do that in a cost-effective way or in a way that will ultimately impact the health of Tennesseans for the better," he said.