NASHVILLE (AP) — Here's 10 items you should know about Tennessee Gov. Bill Haslam's $32.6 billion spending proposal for the budget year beginning in July:

DRIVE TO 55: The governor is proposing to waive tuition to two-year colleges in the state as part of his "Drive to 55" campaign to increase higher education graduation rates from the current 32 percent to 55 percent by 2025. The program would be paid for through an endowment created with lottery reserve money. He has also earmarked $15 million in new spending toward the effort.

K-12 EDUCATION: The state would spend $47 million to pay for growth and inflation in the statewide school funding formula. Another $63 million would go toward a 2 percent pay increase for teachers, the first step in the governor's goal of increasing those salaries in Tennessee more than in any other state by the time he finishes his second term. Haslam is up for re-election this fall.

COLLEGE TUITION: The budget proposal does not include the $40 million in operational expenses for colleges and universities that the Board of Regents schools had called for in order to keep tuition increases between 2 percent and 4 percent. The schools raised tuition by up to 6 percent for the current academic year, and have resorted to double-digit increases in previous years.

PAY RAISES: Teachers would receive a 2 percent pay raise, while state employees would state employees would get 1 percent. But the Haslam administration says after these, it will move away from across-the-board increases in favor of performance-based raises.

LAYOFFS: The spending plan calls for eliminating 664 positions in state government, including 100 that are currently filled. The reductions would bring the total number of state employees to 43,227 — about 3,000 fewer than when Haslam came in to office. The administration says it expects that trend to continue amid improvements in efficiency and technology.

RESERVES: The state's Rainy Day Fund would get a $40 million deposit to bring the reserve fund to nearly $500 million. The state would dip into 14 reserve funds worth $140 million to help close this year's budget books.

TENNCARE: Growth in the state's expanded Medicaid program is projected to cost the state an additional $180 million in the upcoming budget year, $77 million of that coming from the cost of covering a projected 52,000 people who were unaware they were eligible for the program until they were informed through the federal health care overhaul. Haslam has so far declined to participate in federally funded Medicaid expansion, though his budget does assume lawmakers will approve a $532 million assessment on hospitals and nursing homes to draw down federal money.

NEW SPENDING: Haslam is proposing $7 million in new spending for the Department of Intellectual & Developmental Disabilities and $6.4 million for the Department of Children's Services. About $1.7 million of that money is for transitional services related to the planned closure of the Clover Bottom Developmental Center in Nashville in May 2015. It would also pay for 40 new field service workers and case managers at DCS.

TAXES: The spending proposal includes the latest step toward doing away with the state's inheritance tax, but does not include any changes to the state's Hall income tax on interest and dividends.

BUDGET TOTAL: Haslam's annual budget proposal is $32.6 billion, about 2 percent less than the estimated combined state and federal spending in the current budget year.