NASHVILLE (AP) — Gov. Bill Haslam says he's committed to making Tennessee the fastest-improving state in the nation in terms of teacher pay and that his budget will reflect that commitment.

The Republican governor outlined his budget to the Tennessee General Assembly during his State of the State address Monday evening.

Despite making overall reductions of about $200 million, one of the highlights of Haslam's budget is an investment of $100 million that will go to school districts to increase teacher pay. The governor is also fully funding the state's school- funding formula, or BEP, with $44 million.

"We know that a big part of success is to have a great teacher leading every classroom," said Haslam, who received a standing ovation during his speech when he announced raises for teachers. "We want to recruit, retain and reward the best and brightest educators. A big piece of doing that is paying good teachers well."

Haslam had planned to increase teacher salaries in 2013, as well as pay for state employees, but decided not to because of poor state revenues.

He later vowed to make Tennessee's teachers' salaries competitive with other states, but acknowledged his actions would depend on state revenues. Haslam and state financial officials said earlier Monday that the revenue outlook for next year is promising.

"When we had the revenue shortfall, we had to make adjustments," Haslam told reporters earlier in the day. "I came out of that saying the thing that hurt me the most was having to make the adjustment ... to teacher salaries."

Tennessee teacher salaries have remained flat since 2011 — Haslam's first year in office — when compared with the Consumer Price Index, according to the Tennessee Education Association, the state's largest teachers union, which has been urging the governor to increase teacher pay.

Jim Wrye, TEA's assistant executive director, said he's pleased to see the governor taking action.

"I think every teacher in the state wants to see the governor's dream come true, in that we are the fastest improving in teacher salaries in the nation," Wrye said. "We look forward to working with the administration and the General Assembly to see that the governor's vision becomes a reality."

The governor also plans to fully invest in the funding formula for Tennessee's public higher education institutions with $25 million, and an additional $20 million to increase faculty salaries. Those institutions will also receive $260 million for capital projects.

"Funding the Tennessee Higher Education Commission recommendations ... will go a long way to helping us keep tuition in the 0 to 4 percent range recommended by THEC," said Tennessee Board of Regents Chancellor John Morgan, who oversees six state universities, 13 community colleges and 27 colleges of applied technology.

Haslam's State of the State comes exactly a week after he spoke to lawmakers at the beginning of a special session to hear his proposal to extend health coverage to 280,000 low-income Tennesseans. That measure failed 7-4 in the Senate Health Committee.

However, Haslam said Monday evening that the discussion about health coverage is not over.

"Last week, the decision was made not to move forward with Insure Tennessee. However, that does not mean the issues around health care go away," he said. "So, though the special session has ended, I hope we can find a way to work together to address those problems."

Following the special session, Haslam said his next challenge will be to keep Tennessee's rigorous education standards while abandoning the "worthless" brand of Common Core despised by groups ranging from teachers to tea partiers.

The governor said in his speech Monday that "it doesn't really matter what we call our standards."

"What does matter is that we continue to have high expectations for our students, teachers and this state," he said. "We can come up with Tennessee standards that allow our students to compete with anyone in the world."