In 1987, the state legislature passed the Wastewater Facilities Act. T.C.A. § 68-221-1001 to 1015. This provides a method for the state to intervene in the financial affairs of any financially distressed, publicly owned wastewater facility. In 1997 the Wastewater Facilities Act was amended to also include authority over financially distressed water systems that do not already have a combined fund with the sewer system. In 2023 the state legislature consolidated the two boards responsible for this section of law into one board. The new board is called the Tennessee Board of Utility Regulation.

In Tennessee, the state comptroller prescribes accounting standards and procedures. Some of the alternatives discussed in this manual exceed “recommended practices and procedures.” The comptroller has the final say over what’s acceptable in municipal accounting practices.